essential of technology entrep & innovation- chapter one introduction to entrepreneurship

Introduction To EntrepreneurshipCS443 Course

p pSpring 2009, Modern Science & Arts University

Chapter One: Introduction To Entrepreneurship

Instructor:Al-Motaz Bellah Alaa Al-Agamawi

Chapter Source, “chapter one: what business do you want to start” from “entrepreneurship: starting and operating a small business” book, by Steve Mariotti, 2007, Pearson Education

Introduction to Entrepreneurship Course By: Motaz Al-AgamawiChapter 1

Inc.

Difference Between Products and Services2

Products: some thing that exist in nature or is made by human being.Service: is work that provide time, skills or experience in exchange for money.

Products is tangibles, meaning that it can be touched.Products is tangibles, meaning that it can be touched.Services is intangibles, meaning that you can not actually touch it.


Definition of Employee3

Some one who earns a living by working for some one else’s business is an employee.Employees all have one thing in common…

They do not own a business.They work for other who do.They know how much money they can earn.They know how much money they can earn.The money they earn is limited to Salary, Bonuses and Stock Options.


Definition of Entrepreneur4

P l h i b i d k f h l ll d EPeople start their own business and work for themselves are called Entrepreneurs.An Entrepreneur is someone who recognize an opportunity to start a business that

other people may not have noticed and jump on it.Unlike Employees Entrepreneur…

Own his or her business.Own the profit that his/her business earnsOwn the profit that his/her business earns.Own the decision of reinvest profits in business or use it to pay him/herself.

The word Entrepreneur first surfaced in France in Seventeenth century…I d d ib h d k jIt was used to describe some who undertook a project.After while it came to mean someone who start a new business…

Who start a new kind of business or


new or improved way of doing business

Example for Entrepreneur5

Steve Jobs and Stephen Wozniak were barely out of College when p y gthey invented the personal computers in a Garage in Cupertino, California. Now Apple Sells millions of iPhones, iPods, iBooks and other innovative Products.

Bill Gates and his friend Paul Allen were handing out at Harvard S t d d t d th l t t i f P l El t i O Square newsstand and stopped the latest issue of Popular Electronics. On the cover was a picture of a build-it yourself microprocessor kit called the Altair 8800 “This is our chance ” said Allen to Gates Gates spent 5 the Altair 8800. This is our chance, said Allen to Gates. Gates spent 5 weeks writing the Basic program for the machine and in the winter 1975-the world first microprocessor SW company was born “Microsoft”. (Source “


p p y (What the Best CEOs Know” by Jeffrey A Krames, McGrawHill Book)

Free Enterprise6

Free Enterprise is on voluntary exchange.Voluntary exchange is a trade between two parties who agree to trade money

for products or services.for products or services.No one is forced to trade, each is excited by the opportunity the trade offers.Both parties agree to the exchange because they both benefit.

We all benefit from living is a free enterprise system because…It Discourage entrepreneurs who waste resources by driving them out of

business.It Encourage entrepreneurs who use resource efficiently to satisfy customer


cou age e ep e eu s o use esou ce e c e y o sa s y cus o e needs by reward them with profit.

What is Small Business?7

S ll B i l l th 100 d h l l l th 5 Small Business employees less than 100 and have yearly sales less than 5 Million (this is the US Small business Administration)

This definition can varies from country to another depending on many parameters including market size, demand and other factors.

Most multimillion dollar companies started as small, entrepreneurial venture. This is why Entrepreneurship is often called the engine of economy.is why Entrepreneurship is often called the engine of economy.

In the USA which is the most Entrepreneurship country in the world…22.4 million non-agriculture small business (according to 2001 Small Business

Administration)Administration)14% of fastest growing companies in US started with less than 1,000 USD

(Inc, October 2002).Small Business represent more than 99% of all employers (S ll B i


Small Business represent more than 99% of all employers (Small Business Administration, December 2000)

Business and Profit8

P fi h h f i i b i t b t Profit means that the amount of money coming in business must be greater than the amount of money required to pay the bills.

No matter how big or small a business, business must make a profit.When starting a business it is good rule to expect to lose money for the first

period which could various from 3 to 6 months.Closing a business is nothing to be ashamed of if you learn from the Closing a business is nothing to be ashamed of if you learn from the

experience. Most successful entrepreneurs open and closed more than one business during their lives.

E t h b i ti lif ti i t Entrepreneur may change business many times over life time in response to changing competition and consumer needs.

Entrepreneur choice is directly affect how much profit the business makes…


Trade-off: you are giving up one thing for other.

Cost & Benefit of Becoming & Entrepreneur9

B fi i l dBenefit includes…IndependenceSatisfactionFinancial rewardSelf-Esteem

Cost includes…Cost includes…Business FailureObstaclesL liLonelinessFinancial InsecurityLong Hours/Hard word


Desire of Making Money is not only a Good Reason10

Starting a business is an opportunity and like any opportunity it should be evaluated by taking a careful look at cost and benefit.

The desire to make money, alone is not a good enough reason to start business.The desire to make money, alone is not a good enough reason to start business.Financial rewards of owning your business may not happened until you put in

years of hard work.D i t k t b h t k i th h th Desire to make money may not be enough to keep you going through the

difficulty of early period.Most successful companies have been founded by an entrepreneur with a

powerful and motivated dream.


Henry Ford’s (Entrepreneur of the chapter) Case study11

F d d d f h l i h A i d iFord dreamed of a horseless carriage that average American can drive.Ford needed this strong vision to sustain him through years of Business Failure.By the time he was almost forty, ford had been trying to get his vision off the

ground for many years.Several his attempts to produce and sell cars failed.He continued to direct all his effort toward making his vision real and created the He continued to direct all his effort toward making his vision real and created the

Ford Motor Company.By the time he was fifty, Ford was one of the riches and most famous men in the ldworld.

After 100 years Ford Motors Company is still a major American Company.The dream provides the motivation to Succeed.


pWhat vision will sustain you?

Henry Ford’s (Entrepreneur of the chapter) Case study12


In Class Activity13

Do you have What it takes?Uncalculated quiz, it will not affect your score.It is a self evaluation quiz to determine if you have what it takes to be an

entrepreneur.You have ten minutes to complete the quiz. You have ten minutes to complete the quiz.


How do Entrepreneurs find Opportunity?14

An Entrepreneur definition “An Entrepreneur creates value by exploiting an p p y p ginvention or, more generally an untried technology possibility for producing a new commodity or producing an old one in anew way, by opening up a new source of supply of material or a new outlet for products by reorganizing an industry ” supply of material or a new outlet for products, by reorganizing an industry,… . By Joseph Schumpeter, in 1900s.

Five basic ways the Entrepreneur find opportunities to create a new business…Use a new technology to produce a new product.Use an existing technology to produce a new product.g gy p pUse an existing technology to produce an old product in a new way.Find a new source of resources that might enable him/her to produce a product

more cheaply


more cheaply.Develop a new market for an existing product.

Internal/External Opportunities15

An Internal Opportunity is one that comes from inside you- from hobby or an interest, or even a passion.

An External Opportunity are circumstances you notice that make you say to yourself, “That would make a great business”.

The best business opportunity often combine both internal and external factor. The best business opportunity often combine both internal and external factor. Ideally, a business that you are passionate about fills a huge need in the marketplace.


Entrepreneurs Creativity16

Peter Drucker pointed that for a business to be entrepreneurial, it should exploit p p , pchanges in the world…

These changes can be technological, like the explosion in computer technology that led Bill Gates to start Microsofttechnology that led Bill Gates to start Microsoft,…

Drucker defines an Entrepreneur as some one who “always search for change responds to it and exploits it as an opportunity”

Entrepreneur recognize opportunity while other people see only problems.The Entrepreneur recognize that the problem was actually an opportunity.

Where there are dissatisfied customer, there are definitely an opportunity., y pp yBill Gates is a problem solver, before he started Microsoft, most SW was

complicated and confusing to average person. Gates decided to use his programming aptitude to create SW that should be User Friendly fun and easy


programming aptitude to create SW that should be User Friendly-fun and easy for average person.

Train Your Mind to Recognize Business Opportunity17

First step to become an Entrepreneur is to train you mind to…p p yRecognize opportunity.Next step is to let your creativity fly.

Develop your Entrepreneurial skills by asking your self the following questions:Develop your Entrepreneurial skills by asking your self the following questions:What frustrates me the most when I try to buy something?What product or service would really make my life better?What makes me annoyed for angry?What product or service would take away my aggravation?

Entrepreneurs not only fume about products and services they would love to have p y p yin their lives. Imagine by asking yourself questions like…

What is the one thing you would love to have more than any-thing else?What would it look like? Taste Like?


What would it look like? Taste Like?What would it do?

An Idea isn’t Necessarily an Opportunity18

Not every business idea you may have is an opportunityNot every business idea you may have is an opportunity.An Opportunity is an idea that is based on what consumers need or want.Successful business sells products or services that customers need at a prices they are

illi willing to pay.


An Idea isn’t Necessarily an Opportunity19

“ An opportunity has the qualities of being attractive durable and timely and is An opportunity has the qualities of being attractive, durable, and timely and is anchored in a product or service which creates or adds value for it buyer or end user”, by Jeffry Timmons. Timmons defines a business opportunity as an idea, plus the following f h i ifour characteristics

It is attractive to customers.It will work in your business environment.It can be executed in the window of opportunity that exists.You have the resources and skills to create the business, or you know

someone who does and who might want to form the business with you.someone who does and who might want to form the business with you.Window of opportunity is the amount of time you have to get your business idea

to market.F id t b t it it t l d t th d l t f d t i


For idea to be an opportunity, it must lead to the development of a product or service that is of value to a customer.

Cost/Benefit Analysis20

To turn opportunity into a business you will have to invest both time and money. Before making this investment, look carefully at two factors…

Cost: The money and time you have to invest.Benefits: The money you will earn and the knowledge and experience you

will gain.will gain.Cost/benefit analysis can be inaccurate, without including opportunity cost…

Opportunity cost: is the cost of your next best investment.Each time you make a decision about what to do with your time, energy and

money, think about the cost of opportunity that you are giving up.


SWOT- Strengths, Weakness, Opportunity, Threats21

Strength WeaknessAll f h bili i d i i i All of the negative that the entrepreneur All of the capabilities and positive points that the entrepreneur has, from experience to contacts.

All of the negative that the entrepreneur faces, such as lake of capital or training or failure to set up a workable accounting system.

Opportunity ThreatsOpportunity ThreatsAny luck break or creativity insight that can help the entrepreneur get ahead of the

Anything that can jeopardize the existence of the business to intimidate the entrepreneur,


p p gcompetition

p ,from competitors to legal issues.

Opportunity is Situational22

Opportunity is situational, meaning it is depending on situations. You cannot generalize about when or where an opportunity might appear.

Wisdom was that only the biggest telecom companies were going to be in a Wisdom was that only the biggest telecom companies were going to be in a position of exploit in the internet and the opposite has been true, however Entrepreneurs have penetrated and indeed dominated the market for Internet b d i AOL G l < N t d Y h th th AT&Tbased services. AOL, Google< Netscape and Yahoo, rather than AT&T.

It can take a huge cooperation (think dinosaurs) over six years to develop and implement a new business strategy. Entrepreneurs, in contrast, can dart in and out of the markets like roadrunners.

According to a study by the National Science Foundation, 95% of technological innovation since world Ware II have been developed and exploited by


o a o s ce o d a e a e bee de e oped a d e p o ed by entrepreneurial companies.

Five Roots of Opportunity in the Marketplace23

There are five roots of opportunity in the market place that entrepreneurs can exploit:

Problems that your business can solve.Changes in law, situations or trends.Inventions of totally new products or services.Inventions of totally new products or services.Competition. If you can find a way to beat the competition on the price,

location, quality, reputation, reliability or speed, you can create a very f l b i ith i ti d t isuccessful business with an existing product or service.

Technology Advances. Scientist may invent new technology but entrepreneurs figure out how to use and sell it.


What/Why a Business Plan?24

A business plan is a document thoroughly explains a business idea and how it will be p g y pcarried out. The plan should include:

All cost and a marketing plan.An explain how the business will be financedAn explain how the business will be financed.An estimate of what the earnings are expected to be.

The number 1 reason to write a business plan is to organize your thoughts before starting a business.

Bankers and other potential investors, will refuse to see an entrepreneur who doesn’t have a business plan.p

A well-written BP will show investors that you have carefully though through what you intend to do.

Business Plan will save you time and money because before you start you will figure


Business Plan will save you time and money, because before you start you will figure out many required details.

Seven Rules for Building Successful Business25

Recognize an Opportunity.Evaluate it with Critical Thinking.Build a Team.Write.Gather Resources.Gather Resources.Decide Ownership.Create Wealth.


Chapter Assignment…26

From the text Book, Application Exercise, Page 30.Describe three business opportunities, each in half A4 maximum.Use Checklist (in text book page 30), to evaluate the three business opportunities.Chose the best business opportunity and write a SWOT.Write a cost/benefit analysis to analysis the cost and benefits to start this Write a cost/benefit analysis to analysis the cost and benefits to start this

business.

A D dl N W k lAssignment Deadline: Newt Week lecture.


Bonus Activity…27

Go to…http://money.cnn.com/galleries/2007/fortune/0711/gallery.power_25.fortune//index.html

Chose one of the 25 most powerful people in Business and in one A4 page…Describe his journey in one paragraph using your own words.List the most important milestones which made his in the list, from your own point of view.List the most important milestones which made his in the list, from your own point of view.Describe why he was your choice in one paragraph.Use the internet and get more details about the person you chose and write it in a

maximum of 10 lines using your own wording.maximum of 10 lines using your own wording.

By doing this activity you will take bonus (same weight of assignment)Else you will not loose score


Else you will not loose scoreActivity Deadline: Newt Week lecture.

Extra Resources for Entrepreneur of the Chapter…28

For Henry Ford you can visit:http://en.wikipedia.org/wiki/Henry_Ford

//http://www.hfmgv.orghttp://inventors.about.com/od/fstartinventors/a/HenryFord.htmhttp://www.time.com/time/time100/builder/profile/ford.html

// /http://www.encyclomedia.com/video-henry_ford.htmlhttp://thinkexist.com/quotes/henry_ford/


29

thank you…
