ENTPR PERSPECTIVES (CH 1-5) TAMU

Entrepreneurship

Process by which individuals pursue opportunities without regard to resources they currently control, turning an idea into a business that creates value.

Corporate entrepreneurship

Conceptualization of entrepreneurship at the firm level; firms fall on a continuum from highly conservative to highly entrepreneurial, described by their entrepreneurial intensity.

Entrepreneurial firm

Proactive, innovative, risk‑taking firm that creates new products/services and aggressively pursues opportunities.

Conservative firm

"Wait and see" posture, less innovative, risk‑averse.

Three main reasons people become entrepreneurs

Desire to be their own boss, desire to pursue their own ideas, desire for financial rewards.

Four primary characteristics of successful entrepreneurs

Passion for the business, product/customer focus, tenacity despite failure, execution intelligence.

Passion for the business

Strong belief that the business will positively influence people's lives; most frequently cited trait of successful entrepreneurs.

Product/customer focus

Strong emphasis on meeting customer needs and crafting high‑quality products/services; many entrepreneurs are "craftspeople at heart."

Tenacity despite failure

Ability to persevere through setbacks and high failure rates typical of new ventures.

Execution intelligence

Ability to translate a solid business idea into a viable, operating business.

Five myths about entrepreneurs

(1) Entrepreneurs are born, not made; (2) Entrepreneurs are gamblers; (3) Entrepreneurs are motivated primarily by money; (4) Entrepreneurs should be young and energetic; (5) Entrepreneurs love the spotlight.

Traits associated with successful entrepreneurs (examples)

Moderate risk taker, persuasive, promoter, creative, self‑starter, tenacious, tolerant of ambiguity, visionary, optimistic, networker, achievement‑motivated, alert to opportunities, self‑confident, decisive, energetic.

Types of start‑up firms

Salary‑substitute firms (income similar to a job), lifestyle firms (support desired lifestyle), entrepreneurial firms (innovative, growth‑oriented, create new products/services).

Changing demographics - women entrepreneurs

Over 11.3 million women‑owned businesses in the U.S. as of 2016; number growing faster than national average.

Changing demographics - minority entrepreneurs

About 8 million minority‑owned firms in the U.S., with large percentage growth since 2007, supported by associations and support organizations.

Changing demographics - senior entrepreneurs

Rising share of start‑ups founded by people 62+; many have experience, resources, health, making them strong candidates.

Changing demographics - millennial entrepreneurs

High desire for entrepreneurship, but only a small percentage of businesses owned by under‑30s; key obstacles: lack of finances, knowledge, desire, fear of failure.

Positive effects of entrepreneurship (economic and social)

Drives innovation, creates jobs (especially from small firms), increases competition, improves products/services, and often improves quality of life.

Four steps in the entrepreneurial process

(1) Deciding to become an entrepreneur; (2) Developing successful business ideas; (3) Moving from an idea to an entrepreneurial firm; (4) Managing and growing the entrepreneurial firm.

Opportunity (definition)

Favorable set of circumstances that creates a need for a new product, service, or business.

Idea vs. opportunity

An idea is just a thought or suggestion; an opportunity meets four tests: attractive, timely, durable, and value‑creating for buyers.

Four essential qualities of an opportunity

Attractive, timely, durable, and anchored in a product, service, or business that creates or adds value for its buyer/end user.

Window of opportunity

Time period during which a firm can realistically enter a market to exploit an opportunity before conditions change.

Three ways to identify opportunities

Observing trends, solving a problem, finding gaps in the marketplace.

Observing trends - four key categories

Economic forces, social forces, technological advances, political and regulatory changes.

Economic trends (example)

State of the economy, level of disposable income, consumer spending; e.g., weak economy favors cost‑saving start‑ups like GasBuddy.

Social trends (examples)

Aging population, increased diversity, millennials in workforce, mobile device usage, focus on health and wellness.

Technological advances (examples)

New technologies create entire industries (computer, Internet, biotech, digital photography) and secondary products (e.g., Rokit Boost accessories for smartphones).

Political and regulatory changes (examples)

New laws/policies (Affordable Care Act, security concerns) create opportunities for firms like electronic health record start‑ups and Evolv Technology.

Second approach - solving a problem

Identify a problem via trends, intuition, serendipity, or personal experience and create a solution (e.g., Eton BoostTurbine crank charger for phones).

Third approach - finding gaps in the marketplace

Identify niche needs too small or specific for mainstream firms (e.g., Daisy Rock guitars designed specifically for women and girls).

Personal characteristics aiding opportunity recognition

Prior industry experience, cognitive factors (entrepreneurial alertness), strong social networks, creativity.

Prior industry experience - effect

Helps entrepreneurs spot underserved niches and build networks that reveal opportunities; sometimes outsiders can innovate due to fresh eyes.

Entrepreneurial alertness

"Sixth sense" or cognitive ability to notice opportunities without deliberate search.

Social networks - strong vs. weak ties

Strong ties (close, frequent contact) often reinforce existing ideas; weak ties (acquaintances) more likely to expose truly new ideas, so new business ideas often come from weak ties.

Creativity (definition)

Process of generating a novel or useful idea; central to opportunity recognition.

Five‑step creative process

Preparation → Incubation → Insight ("eureka" moment) → Evaluation → Elaboration.

Techniques for generating ideas

Brainstorming, focus groups, library research, Internet research, customer advisory boards, day‑in‑the‑life research.

Brainstorming - key rules

No criticism, freewheeling encouraged, session moves quickly, "leap‑frogging" on others' ideas encouraged.

Focus group - use

Small group familiar with topic discusses questions; best used after a general business idea exists to refine and clarify it.

Library research - role in ideas

Use trade journals, industry reports, and specialized databases (e.g., IBISWorld, ProQuest) via librarians to spark new business ideas.

Internet research - examples

Search 'new business ideas,' set Google Alerts on topics, use industry sites/blogs to track emerging opportunities.

Customer advisory boards

Groups of customers meeting regularly to discuss needs, wants, and problems that can generate new product or service ideas.

Day‑in‑the‑life research

Company employees spend an entire day with a customer, observing behavior and pain points to uncover opportunities.

Opportunity recognition process (Venn idea)

Intersection of environmental trends (economic, social, technological, political/regulatory) with entrepreneur traits (prior experience, cognition, networks, creativity) creates opportunity gaps leading to business ideas.

Feasibility analysis (definition)

Preliminary process of determining whether a business idea is viable and worth pursuing before writing a full business plan.

When to conduct feasibility analysis

Early in thinking about a new business to screen ideas before committing significant time and resources.

Four components of feasibility analysis

Product/service feasibility, industry/target market feasibility, organizational feasibility, financial feasibility.

Product/service feasibility - purpose

Assess overall appeal and desirability of the proposed product/service and whether customers actually want it.

Product/service feasibility - two components

Product/service desirability and product/service demand.

Product/service desirability - initial questions

Does it make sense and excite customers? Does it exploit a trend, solve a problem, or fill a gap? Is timing good? Any fatal flaws in design/concept?

Concept statement

One‑page description of a product/service idea distributed to people for feedback on viability and suggestions for improvement.

Assessing demand - three steps

(1) Talk face‑to‑face with potential customers; (2) use online tools; (3) do library, Internet, and 'gumshoe' research.

Online tools for demand assessment

Online surveys, Q&A sites, Google Trends, Google AdWords plus landing pages to measure interest.

Google Trends - use in feasibility

Shows whether search interest in a term is rising or falling, indicating changing consumer interest.

Google AdWords plus landing page test

Buy search ads leading to a landing page describing the idea, then track click‑throughs and email sign‑ups to estimate demand.

Gumshoe research

Low‑tech detective work: talk to people, observe real settings, volunteer or shadow relevant environments to gauge real demand.

Industry/target market feasibility - purpose

Evaluate overall attractiveness of the industry and specific target market a venture plans to serve.

Industry vs. target market

Industry = group of firms producing similar products/services; target market = narrow segment of customers within that industry the firm will pursue.

Industry/target market feasibility - two components

Industry attractiveness and target market attractiveness.

Characteristics of attractive industries (examples)

Young, early in life cycle, fragmented, growing, products customers must have, not overcrowded, high operating margins, not dependent on one cheap input.

Target market attractiveness - challenge

Market must be large enough for the new venture but small enough to discourage large competitors; requires creativity to gather data.

Organizational feasibility - purpose

Determine whether the proposed business has sufficient management expertise, organizational competence, and non‑financial resources to launch.

Organizational feasibility - two components

Management prowess and resource sufficiency.

Management prowess - key factors

Passion of founder(s) for the idea and depth of understanding of the markets they will serve.

Resource sufficiency - focus

Check availability of 6-12 critical non‑financial resources (people, key partners, IP, space) needed to move the idea forward.

Examples of critical non‑financial resources

Affordable office or lab space, contract manufacturers, key management and support personnel, IP protection ability, potential business partners.

Financial feasibility - purpose

Provide a preliminary financial assessment of the venture's viability; last component of feasibility analysis.

Financial feasibility - three components

Total start‑up cash needed, financial performance of similar businesses, overall financial attractiveness of the venture.

Total start‑up cash needed

Amount of cash required to get to first sale; should list all capital and operating expenses needed to generate first dollar of revenue.

Benchmarking against similar businesses

Estimate financial performance by examining industry data, observing comparable firms, or using industry reports.

Financial factors associated with promising opportunities (examples)

Steady, rapid sales growth in first 5-7 years; high recurring revenue; reasonable forecasting; internally generated growth funds; clear exit opportunities.

Feasibility analysis template - 'First Screen'

Structured tool dividing feasibility into product/service, industry/market, organizational, and financial sections to systematically evaluate a business idea.

Business model (definition)

Firm's plan or 'recipe' for how it creates, delivers, and captures value for its stakeholders.

Role/timing of business model

Developed after feasibility analysis; guides short‑ and long‑term success and should be continuously updated.

Standard business model

Widely used pattern for creating/delivering/capturing value (e.g., subscription, freemium, razor‑and‑blades).

Disruptive business model

Uncommon, novel model that does not fit standard patterns and significantly alters how an industry operates.

Examples of standard business models

Advertising (Google, Facebook), auction (eBay), bricks‑and‑clicks (Apple), franchise, freemium (Dropbox), low‑cost (Southwest), manufacturer/retailer (Tesla), peer‑to‑peer (Airbnb), subscription (Netflix), razor‑and‑blades.

Examples of disruptive business models

Dell's direct‑to‑consumer PCs, Google/Yahoo online text ads, Salesforce SaaS, Uber/Lyft ride‑sharing platforms.

Barringer/Ireland Business Model Template - four main areas

Core strategy, resources, financials, operations.

Core strategy - elements

Business mission, basis of differentiation, target market, product/market scope.

Business mission

Statement describing why the business exists and what its business model should accomplish; guides major decisions.

Basis of differentiation

Key reasons customers choose one firm's offerings over competitors; should be 2-3 benefit‑oriented points, not just features.

Target market (in business model)

Narrow group within a broader market that shares similar interests and is explicitly identified in the model.

Product/market scope

Range of products and markets the firm will initially serve, plus 3-5‑year view of likely expansion.

Resources (in business model)

Inputs used to produce, sell, distribute, and service offerings; must be hard to imitate or substitute to sustain advantage.

Core competency (business model context)

Unique capability that supports the business model and sets the firm apart (e.g., proprietary know‑how, efficient process, strong brand, design skill).

Key assets - four types

Physical (space, equipment, distribution), financial (cash, credit, investor commitments), intellectual (IP, brand, reputation), human (founders, employees, advisors).

Financials (business model) - main elements

Revenue streams, cost structure, financing/funding.

Revenue streams

Specific ways the firm makes money (e.g., product sales, subscriptions, ads, licensing, ancillary services).

Cost structure

Most important costs needed to support the business model; includes whether the firm is cost‑driven or value‑driven, nature of costs, and major cost categories.

Financing/funding - three cost categories

Capital costs, one‑time expenses (e.g., website build, initial training), and ramp‑up expenses before revenues arrive.

Operations (business model) - three elements

Product (or service) production, channels, key partners.

Product (or service) production choices

In‑house production, contract manufacturing, or outsourcing; approach has major implications for the entire model.

Channels (definition)

How the firm delivers its product/service to customers (direct sales, intermediaries, online platforms, sales force).

Key partners - why start‑ups need them

Start‑ups often lack all needed resources; they rely on partners for manufacturing, distribution, technology, or complementary services.

Common forms of business partnerships

Joint ventures, networks, consortia, strategic alliances, trade associations.

Industry (definition)

Group of firms producing a similar product or service, such as Pilates studios or solar panel manufacturers.

Industry analysis (definition)

Business research focusing on the potential and structure of an industry, not just individual firms.

Why industry analysis is important

Helps determine if the identified target market is favorable and whether there is an accessible, attractive position for a new venture.