The Environment of Entrepreneurship and Small Business Management

Dr. Berna Bridge İYTE Leadership and Management

Entrepreneurship

Entrepreneurship: The process of initiating a bussiness venture, organising the necessary resources, and assuming the associated risks and rewards.

Entrepreneur: Someone who recognises a viable idea for a bussiness product or service and carries it out.

The economy changes constantly, providing opportunities for new bussinesses.

Definition of Small Bussiness

If a bussiness has less than 500 employees, it can be classified as small bussiness.

Small bussinesses are driving the US economy. (90 % of bussinesses in the USA employ less than 20 people)

Small bussinesses are driving the Turkish economy.

More and more the internet is being used to start new bussinesses quickly and inexpensively.

Traditionally new entrepreneurs start bussiness in the areas of:

Services and restaurants, nowadays fitness, home health care, children’s market.

Job creation: Many new jobs created by small bussiness.

Innovation: Many innovations, too...

Diversity: There is the opportunity for individuals who may feel blocked in established corporations.

(Women owned and minority owned bussinesses)

Bill Gates, Henry Ford… are all entrepreneurs.

They start with a vision.

Often they are unhappy with their present jobs.

They see an opportunity to bring together the resources neede for a new venture.

Entrepreneurial personality: Internal Locus of Control Tolerence for Ambiguity High Energy Level Need to Achieve Awareness of Passing Time Self-Confidence

Entrepreneurs want something from life than do traditional managers.

They place high importance on being free to achieve and maximise their potential.

Internal Locus of Control: Belief by individuals that their future is within their control and that other external forces will have little influence.

Energy level: A bussiness start up requires great effort. (Struggle and hardship) Many work for 60 hours per week.

Need to Achieve: People motivated to excel and pick situations in which success is likely.

Self-Confidence: People who start and run a bussiness must act decisively, must be able to deal with anything complex, unanticipated problems...

Awareness of Passing Time: Impatience, sense of urgency.

Tolerance for Ambiguity: A person who is not troubled by uncertainty or disorder.

Other: First born in the families, parents entrepreneurs, children of immigrants, windows of opportunity, all ages, combination of personality traits.

Reasons for Starting a Bussiness

To create something new (29 %) To control my life (24 %) To make money (14 %) To be my own boss (14 %) To prove I could do it (10 %) Frustration at a large company (8 %) Other (2 %)

Source of New Bussiness Ideas

In depth understanding ındustry/profession (37 %)

Market niche spotted (36 %) Brainstorming (7 %) Copying someone else (4 %) Hobby (4 %) Other (11 %)

Bussiness Plan

Demonstrate a clear compelling vision that creates an air of excitement

Provide clear and realistic financial projections Give detailed information about the target market Include detailed information about the industry

and competitors Provide evidence of an efffective entrepreneurial

management team Pay attention to good formatting and clear writing Keep the plan short-no more than 50 pages

Highlight critical risks that may threaten bussiness success

Spell out the sources and uses of start up funds and operating funds

Capture the reader’s interest with a killer summary

Legal Form

Proprietorship: An unincorporated bussiness owned by an individual for profit (Ticari bir kuruluşun sahibi)

Partnership: An unincorporated bussiness owned by two or more people (Ortaklık)

Corporation: An artificial entity created by the state snd existing apart from its owners (Anonim Şirket)

Financial Resources

Dept Financing: Borrowing money that has to be repaid at a later date in order to start a bussiness.

Equity Financing: Financing that consists of funds that are invested in exchange for ownership in the company.

Venture Capital Firm: A group of companies or individuals that invests money in new or expanding bussinesses for ownership and potential profits.

Tactics

Start a new bussiness-start from scratch

By an existing bussiness

Buy a Franchise-an arrangement by which the owner of a product or service allows others to purchase the right to distrbute the product or service with the help from the owner.

Bussiness incubator: provides shared office space, management support services, and management advice to entrepreneurs.

Be a spin off: An independent company producing a product or service similar to that produced by the entrepreneur’s formal employer.

Try globalization: Don’t ignore overseas markets.

Stages of Growth

There are distinct stages of growth: Existence-Producing the product and obtaining

the customer Survival-Generating sufficient cash flow to run

the bussiness Success-Solidly based and profitable. Takeoff-How to grow rapidly, learn to delegate Resource maturity-There are substantial

financial gains.

Planning Organising Leading Controlling Coping with chaotic times

Intrapreneurship

The process of recognising the need for innovation and promoting it within an organisation.

Encourage action Use informal meetings whenever possible Tolerate failure and use it as a learning experience Be persistent in getting an idea to a market Reward innovation for innovation’s sake Plan the pysical layout of the firm to encourage

informal communication

Encourage clever ideas Organise people into small teams for future

projects Strip away rigid procedures, get rid of red tape Reward and promote innovative personnel

……like Hewlett Packard….