Review CHAPTER 1I.Introduction to EntrepreneurshipA.What is Entrepreneurship?1.

The word entrepreneur derives from the French words entre, meaningbetween, and prendre, meaning to take. The word was originally usedto describe people who take on the risk between buyers and sellers or who undertake a task such as starting a new venture.2.Inventors and entrepreneurs differ from one another. An inventor createssomething new. An entrepreneur assembles and then integrates all theresources needed to transform the invention into a viable business.3.Entrepreneurship (according to the classic definition) is the process bywhich individuals pursue opportunities without regard to resources theycurrently control.4.Established firms with an orientation to behave entrepreneurially practicecorporate entrepreneurship.a. All firms fall on a conceptual continuum that ranges from highlyconservative to highly entrepreneurial. The position of a firm onthis continuum is referred to as its entrepreneurial intensity. b. Entrepreneurial firms are typically proactive innovators and are notadverse to risk. In contrast, conservative firms take a more wait andsee posture, are less innovative, and are risk averse.B.Why Become an Entrepreneur?1. The three primary reasons that people become entrepreneurs and start their own firms are to (1) be their own boss, (2) pursue their own ideas, and(3) realize financial goals.a. Be your own boss. Many entrepreneurs want to be their own bossbecause either they have had a long-term ambition to own their ownfirm or they have become frustrated working in traditional jobs. b. Pursue their own ideas. Some people are naturally alert, and whenthey recognize ideas for new products or services, they have a desireto see those ideas realized.c. Realize financial goals. People start their own firms to pursue financialrewards. This motivation, however, is typically secondary to the firsttwo and often fails to live up to its hype.

C.Characteristics of Successful Entrepreneur 1. Passion for the Businessa. The number one characteristic shared by successful entrepreneurs ispassion for their business. This passion typically stems from theentrepreneurs belief that the business will positively influence peoples lives.2.Product/Customer Focusa. An entrepreneurs keen focus on products and customers typicallystems from the fact that most successful entrepreneurs are, at heart,craftspeople.3.Tenacity Despite Failurea. Because entrepreneurs are typically trying something new, the failurerate associated with their efforts is naturally high. b. Developing a new business may require a certain degree of experimentation before a success is attained. Setbacks and failuresinevitably occur during this process. The litmus test for entrepreneurs is their ability to persevere through setbacks andfailures.4.Execution Intelligencea. The ability to fashion a solid business idea into a viable business is akey characteristic of successful entrepreneurs. b. The ability to effectively execute a business idea means developing a business model, putting together a new venture team, raising money,establishing a partnership, managing finances, leading and motivatingemployees, and so on. It also demands the ability to

translate thought,creativity, and imagination into action and measurable results.D.Common Myths About Entrepreneurs1. Myth 1: Entrepreneurs are born, not made.a. This myth is based on the mistaken belief that some people aregenetically predisposed to be an entrepreneur.2.Myth 2: Entrepreneur are gamblers.a. Entrepreneurs are usually moderate risk takers, as are mostpeople.3.Myth 3: Entrepreneurs are motivated primarily by money.

a. It is nave to think that entrepreneurs dont seek financial rewards.As discussed previously, however, money is rarely the primaryreason entrepreneurs start new firms.4.Myth 4: Entrepreneurs should be young and energetic.a. While it is important to be energetic, investors often cite the strengthof the entrepreneur (in terms of business experience, skill and talent) astheir most important criterion in the decision to fund new ventures. b. More often than not, older, rather than younger, entrepreneurs have thequalities that investors are looking for.E.Types of Start-Up Firms1. Salary-substitute firms are small firms that afford their owner or owners asimilar level of income to what they would earn in a conventional job.a. Examples of salary-substitute firms are dry cleaners, conveniencestores, restaurants, accounting firms, retail stores, and hairstylingsalons.2.Lifestyle firms provide their owner or owners the opportunity to pursuea particular lifestyle and earn a living while doing so.a. Examples of lifestyle firms include ski instructors, golf pros, and tour guides.3.Entrepreneurial firms bring new products and services to market bycreating and seizing opportunities.a. Google, eBay and Starbucks are wellknown, highly successfulexamples of entrepreneurial firms.II.Changing Demographics of EntrepreneursA.Women Entrepreneurs1.There were 6.5 million women-owned businesses in 2002, the mostrecent year the U.S. Census Bureau collected business ownership data.That number is up 20 percent from 1997.2.Although historically, women-owned firms have primarily been in health-care and professional services, that emphasis is changing. Between 1997and 2002, the fastest-growing areas of women-owned firms wereconstruction (30 percent increase), agricultural services (24 percentincrease), transportation (20 percent increase), communications (20 percent increase), and public utilities (20 percent increase).