Determining Entrepreneurial Potential

1. Determining Entrepreneurial Potential

2. Some Definitions of an Entrepreneur someone who seeks to capitalize on new and profitable endeavors or business; usually with considerable initiative and risk . . . Wikipedia one who organizes, manages, and assumes the risks of a business or enterprise . . . Merriam-Webster Online an individual engaged in the process of starting and growing one's own business or idea . . . The Public Forum Institute those who perceive and pursue opportunities that enhance the regional and global economy . . . LA Tech University Center for Entrepreneurship and Information Technology (CEnIT)

3. More Descriptions of Entrepreneurs 6 – 7% of U.S. population is in the process of starting a business at any given time 53% of new small businesses begin in the home with less than $10,000 entrepreneurial activity for men has declined activity for women remained the same immigrants outpace native-born Americans older individuals (55-64) increasingly engaged in new business starts

4. What is Entrepreneurship? http://abese.org/videos/FinalLarge.wmv

5. Indicators of Entrepreneurial Aptitude Persistence Desire for immediate feedback Inquisitiveness Strong drive to achieve High energy level Goal oriented behavior Independent Demanding Self-confidentCalculated risk taker Creative Innovative Vision Commitment Problem solving skills Tolerance for ambiguity Strong integrity Highly reliable Personal initiative Ability to consolidate resources Competitive Change agent Tolerance for failure Desire to work hard Strong management Organizational skills Luck

6. More Characteristics of Successful Entrepreneurs Able to do many things at once Likes a challenge Likes to work for self and be in control Not easily discouraged Good health, lots of energy and handles stress well Positive thinker, does not dwell on setbacks Focused on success rather than chances of failure Often has close friend or relative who owns a business Recent immigrant to N America (within two generations)

7. Common Reasons for Business Startup Seize an opportunity (17%) Personal accomplishment (13%) Dream to run own business (9%) Use experience or skills (9%) Be own boss (8%) Economic necessity to make living (7%) Had previous experience (7%) Supplement income from other employment (5%) Create job for self (4%) Frustrated in previous job (3%) Make lots of money (3%) Other reasons (15%)

8. Importance of Entrepreneurship • about 50% of private sector employment • youngest and smallest firms are the biggest job producers • firms with fewer than 20 employees generate majority of net newjobs in the U.S • fast-growth companies responsible for about two-thirds of new jobs created between 1993 and 1996 • since 1980, Fortune 500 companies have lost five million jobs, while the United States as a whole has added 34 million new jobs • JOBS

9. Importance of Entrepreneurship • Small businesses developed significant number of this nation’s most important inventions and innovations • Entrepreneurs responsible for 67 percent of inventions and 95 percent of radical innovations since World War II • Small firms produce more highly cited patents than large firms • Small patenting firms produce 13-14 times more patents per employee • Small companies represent 65% of new companies in the list of most highly innovative companies in 2002 • INNOVATION

10. Importance of Entrepreneurship • American small business is the world’s third largest economy, trailing only the U.S. as a whole and Japan • mall businesses generate about half of nonfarm private gross domestic product • Economic models show that firm births are positively correlated with innovation and regional growth (employment, wage and productivity) • In 2004, the median net worth for self employed households was $335,600 compared to $67,200 for those that worked for others • WEALTH CREATION

11. Sobering Statistics About 50% of small businesses fail/close within the first five years Of the 50% closing, only about one-third closed under circumstances that owners considered unsuccessful Within a 10 year period, about 64.2% of businesses fail/close, but only 5.3% actually filed for bankruptcy during a decade NFIB estimates that over the lifetime of a business, 39% are profitable, 30% break even, and 30% lose money, with 1% falling in the "unable to determine" category

12. Striving to Survive More likely to close: Relatively young owners Services or retail trade Insufficient start-up capital Being in an urban/suburban area Greater chance of survival: Starting with some resources and size Having employees Sufficient starting capital Educated owner Previously owning another business Having multiple owners Home-based at startup Being an employer main factor leading to survival

13. Common Reasons for Business Failure Lack of experience Insufficient capital Poor location Poor inventory management Over-investment fixed assets Poor credit arrangements Personal use of business funds Unexpected growth Competition Low sales

14. Defining the Opportunity Improves understanding of factors affecting sales potential Provides tools for basic assessment of business feasibility

15. Bringing the Right People on Board Provides understanding for development of initial management team Introduces framework for defining and prioritizing staffing needs

16. Calculating the Financial Need Provides understanding of basic budgeting Allows rough estimate of funding needs

17. Choosing an Ownership Structure Provides understanding of factors influencing choice of legal entity Helps with deciding on best form of business organization

18. Learning from Experienced Entrepreneurs Provides understanding of how to prepare for business ownership Helps avoid common mistakes

19. Prepare for Success

20. Assistance and Support for New Ventures • Technology Business Development Center (TBDC) • Kathy Wyatt, Director: kwyatt@latech.edu • Center for Entrepreneurship & Information Technology (CEnIT) • Jon Pratt, Director: jpratt@latech.edu • Association of Business, Engineering, & Science Entrepreneurs • Dr. Mark Barker and Mrs. Debbie Inman, Advisors: abese@latech.edu • LSU-S Small Business Development Center • Cooper Cochran, Director: ccochran@lsbdc.org • LA SBDC State Office: https://www.lsbdc.org

21. Reports & Studies on Entrepreneurship Kauffman Index of Entrepreneurial Activity, 1996-2005 http://www.kauffman.org/items.cfm?itemID=704 National Dialogue on Entrepreneurship http://www.publicforuminstitute.org/nde/entre/index.htm SBA Office of Advocacy http://www.sba.gov/advo/index.html National Federation of Independent Business http://www.nfib.com/ Kauffman eVenturing http://www.eventuring.com/eShip/appmanager/eVenturing/eVenturingDesktop

22. Next Steps Decide whether you are committed enough to continue Determine how you want to conclude/exit Develop brief, but clear and compelling, explanation of your concept Start building the team needed to succeed Set some goals and timelines Get the plan in writing

23. Next Steps The beginning is the most important part of the work. Plato Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible. St. Francis of Assisi

24. LA Tech TBDC Louisiana Tech University Technology Business Development Center P.O. Box 3145, Ruston, LA 71272 Phone: (318) 257-3537 Fax: (318) 257-4442 Email: tbdc@latech.edu Contact: Kathy Wyatt, Director