Entrepreneurial Mindset Notes
Overview
No precise formula guarantees success in entrepreneurship education and training.
A mindset guides decisions, enabling entrepreneurs to succeed.
Entrepreneurial Mindset Definition:
Underlying beliefs and assumptions that drive behavior enabling entrepreneurs to succeed.
Anyone can benefit from understanding and applying an entrepreneurial mindset.
Course designed to:
Immerse students in learning fundamental aspects of an entrepreneurial mindset.
Enable application of knowledge to create, implement, and evaluate a self-directed project.
Module Objectives
Use critical thinking skills to:
Identify and evaluate entrepreneurial opportunities.
Manage risks.
Learn from results of evaluating the process.
Understand the process that enables e idea into a sustainable success with limited resources.
Recognize and apply fundamental aspects of entrepreneurial thinking across disciplines and as a means of personal development.
Establish goals, identify resources, and determine steps required to address those goals.
Use critical inquiry skills to:
Identify, interview, and generally build relationships with local innovators, entrepreneurs, and other community leaders
Class Standing (70%)
Assignments
Seatwork
Midterm/Final Examinations (30%)
Total: 100%
Final Grade Calculatio
Topic 1: Empowering Entrepreneurs
Examine beliefs and assumptions that empower entrepreneurs.
Analyze circumstances surrounding entrepreneurial successes and failures.
Entrepreneurial Mindset Definitions:
Hisrich, Peters, and Shepherd (2017): Ability to rapidly sense, act, and mobilize, even under uncertain conditions.
Bosman and Fernhaber (2018): Inclination to discover, evaluate, and exploit opportunities.
H. Neck, C. Neck, and Murray (2017): Ability to quickly sense, act, and get organized under uncertain conditions.
Entrepreneurial Mindset Traits (Venturelab.org):
Curiosity: Ask “what if” and “why” to seek new and creative ways of learning and doing.
Growth Mindset: Recognize potential for learning and achieving anything, with the power to stretch brains and sharpen minds.
Courage: Dare to step out of comfort zones to accomplish great things.
Persistence and Grit: Learn to work through failure to create solutions for problems they are passionate about.
Opportunity-seeking: Actively observe, identify, and act on circumstances where they can innovate or solve a problem.
Problem-solving: Proactively develop creative solutions to the problems around them.
Redefining Failure: See failure as a learning opportunity and a launchpad for their next success or discovery.
Optimism: Be confident in their ability to innovate and in their potential for making an impact.
Resourcefulness: Develop quick and clever ways to overcome challenges.
Adaptability: Make smart changes when challenges arise without losing heart or giving up.
Empathy: Think about other people’s needs and feelings, keeping these in mind when solving a problem.
Entrepreneurial Skillset
Entrepreneurs with an entrepreneurial mindset are halfway there to bringing their innovative ideas to life.
Entrepreneurs need to learn the practical tools or skills that successful entrepreneurs have.
Creativity: Being bold and imaginative, not limiting their thinking to what has already been done.
Teamwork: Seeking out teams with diverse perspectives, skills, and talents.
Idea Generation: Letting the mind spread its wings and fly; the more ideas, the better; wildly and silly ideas are also welcome.
Opportunity Analysis: Looking for and analyzing different patterns and trends to see if an idea will be successful and if it is the right time to get started.
Market Research and Customer Validation: Gathering information about potential clients or customers; turning customer ideas into something they will want.
Design Thinking: Putting the user first and seeking feedback to design with users in mind to develop effective solutions.
Prototyping: Creating simple models to explain ideas, get feedback, and learn how their product can be improved.
Business Model Methodology: Helps answer questions like:
What will it cost to make your product?
What should you charge?
Pitching: Effectively rallying the entrepreneur’s idea to people; effective pitches to potential users and investors are clear, short, and persuasive.
Public Speaking: Speaking about his/her idea as effectively as possible when the entrepreneur has opportunities to speak.
Metacognition
Successful entrepreneurs use their intelligence effectively.
Cognitive strategies are ways people solve problems (reasoning, analyzing, experimenting).
The entrepreneurial mindset involves employing numerous cognitive strategies to identify opportunities, consider alternative options, and take action.
The entrepreneurial mindset requires constant thinking and rethinking, adaptability, and self-regulation (capacity to control our emotions and impulses).
Metacognition: thinking about thinking, understanding one’s performance.
Entrepreneurs regularly engage in metacognitive processes to adapt to changing circumstances by thinking about alternative routes to take.
Metacognitive awareness is part of the mindset and can be developed over time through continuous practice.
Passion and Entrepreneurship
Passion is an intense positive emotion related to entrepreneurs engaged in meaningful ventures.
Passion motivates and stimulates entrepreneurs to overcome obstacles and remain focused on their goals.
Passion can enhance mental activity, provide meaning to everyday work, and foster creativity and recognition of new patterns critical in opportunity exploitation.
Passion has been associated with strength, courage, motivation, energy, drive, tenacity, strong initiative, resilience, love, pride, pleasure, enthusiasm, and joy.
Dysfunctional side of passion: becoming blinded by passion and obsessed with an idea, failing to heed warning signs or listen to negative feedback, which can curb business growth and limit the ability to creatively solve problems.
Entrepreneurship as a Habit
Mindset is not a predisposed condition; anyone can develop a more entrepreneurial mindset.
A habit is a sometimes-unconscious pattern of behavior that is carried out often and regularly; good habits can be learned through a habit loop.
The habit loop is a process by which our brain decides whether a certain behavior should be stored and repeated.
Three habits that need to be cultivated for an entrepreneurial mindset:
Self-leadership
Creativity
Improvisation
Self-Leadership Habit
Self-leadership is a process whereby people can influence and control their behavior, actions, and thinking to achieve the self-direction and self-motivation necessary to build their entrepreneurial business ventures.
It consists of three main strategies: behavior-focused strategies; natural reward strategies; and constructive thought pattern strategies.
Behavior-focused Strategies
Helps increase self-awareness to manage behaviors, particularly when dealing with necessary but unpleasant tasks.
Includes self-observation, self-goal setting, self-reward, self-punishment, and self-cueing.
Self-observation: Raises awareness of how, when, and why we behave the way we do in certain circumstances.
Self-goal setting: Setting individual goals for ourselves, especially effective when accompanied by self-reward.
Self-reward: Compensating oneself for achieving goals, which can be tangible or intangible.
Self-punishment or self-correcting feedback: Examining one’s own behaviors in a constructive way to reshape them (excessive self-punishment can be harmful).
Self-cuing: Prompting that acts as a reminder of desired goals and keeps an individual’s attention on what they are trying to achieve.
Natural Reward Strategies
Endeavors to make aspects of a task or activity more enjoyable by building in certain features or reshaping perceptions to focus on the most positive aspects of the task and the value it holds.
Constructive Thought Patterns
Helps to form positive and productive ways of thinking that benefit performance.
Includes identifying destructive beliefs and assumptions and reframing those thoughts through practicing self-talk and mental imagery.
Creativity Habit
Creativity: The capacity to produce new ideas, insights, inventions, products, or artistic objects that are considered to be unique, useful, and of value to others.
Creativity is not something people are born with, but a developed skill.
The Fear Factor (James L. Adams): Six main emotional roadblocks preventing people from practicing creativity:
Fear
No appetite for chaos
Preferences for judging over generating ideas
Dislike for incubating ideas
Perceived lack of challenge
Inability to distinguish reality from fantasy
Fear can cause self-doubt, insecurity, and discomfort, blocking people from sharing their creativity.
Improvisation Habit
Improvisation: the art of spontaneously creating something without preparation.
Improvisation helps develop the cognitive ability to rapidly sense and act, as well as change direction quickly.
Entrepreneurs may begin with a certain idea or direction, but obstacles can prevent them from executing their initial plans.
Improvisation is especially relevant to the world of entrepreneurship where uncertainty is high and the ability to react is essential.
Improvisation Guidelines:
Improvisation is not just for actors or musicians.
There is no such thing as being wrong.
Nothing suggested is questioned or rejected (no matter how crazy it might sound).
Ideas are taken on board, expanded, and passed on for further input.
Everything is important.
It is a group activity – you will have the support of the group.
You can trust that the group will solve a certain problem.
It is about listening closely and accepting what you are given.
It is about being spontaneous, imaginative, and dealing with the unexpected.
The Power of Beliefs
Belief: a feeling of confidence that something exists, is true, or is good.
Beliefs can make ordinary people do great things; limiting beliefs can make talented people fail.
Examples: Bill Gates, the Wright brothers, Li Ka-Shing achieved extraordinary things because of their beliefs.
Entrepreneur’s beliefs will drive their actions.
Beliefs allow entrepreneurs to tap into their potential, passion, creativity, energy, and resources.
Resolve: the determination that governs how people think, act, and behave.
Example: Terry Fox, a teenager with cancer, managed to run a marathon with only one leg.
Limiting Beliefs
In our lives, we are taught many things that are not true.
To succeed, we sometimes have to break these mental barriers and myths that may limit us.
Limiting beliefs about identity and capability:
I am too young/old.
Not Talented/smart enough.
Not creative enough.
Cannot manage people?
Limiting beliefs about money:
Money is difficult to earn.
Money will lead to problems.
Impossible to access money.
Money is the root of all evil.
Limiting beliefs about relationships and people:
People cannot be trusted.
“Perfect partner” for life is a myth.
Limiting beliefs about my career or business:
Market is too saturated.
No one will trust my new idea.
Its hard to get a job if I quit.
Formula for Success
To succeed, entrepreneurs must first have a clear and tangible goal.
Entrepreneurs need to develop a strategy.
To succeed, one has to do and take action; without action, your goals are nothing but dreams.
Turn failure into feedback and develop a new strategy for success.
Ways of dealing with failure:
Get Feedback, change strategy, and take action. Keep repeating the process until you succeed.
*Example: Thomas Edison took almost 10,000 attempts before inventing the light bulb.
Topic 2: Transforming Entrepreneurial Concepts
Identify requirements of implementing an entrepreneurial concept.
Identify actions necessary to move from implementing the concept to achieving sustainable success.
What is the Business Plan?
Business Plan (Hisrich, Peters, and Shepherd, 2017): A written document prepared by the entrepreneur that outlines all applicable external and internal elements involved in the start-up of a new business.
It is often an integration of functional plans such as marketing, finance, manufacturing, and human resources.
It also addresses both short-term and long-term decision making for the first three years of operation.
Answers the questions: Where am I now? Where am I going? and How will I get there?
Essential for potential investors, suppliers, and even customers.
Scope and Value of the Business Plan
It may be read by employees, investors, bankers, venture capitalists, suppliers, customers, advisors, and consultants.
Three perspectives to consider in preparing the plan:
Entrepreneur: Articulate what the venture is all about.
Marketing: View the business through the eyes of their customer.
Investor: Sound financial projections are required.
The depth and detail depend on the size and scope of the proposed new venture.
Valuable to familiarizing themselves with the venture, its goals, and objectives.
The business plan is important because:
It helps determine the viability of the venture in a designated market.
It provides guidance to the entrepreneur in organizing their planning activities.
It serves as an important tool in helping to obtain financing.
Business Plan Writing
The business plan should be comprehensive enough to give any potential investor a complete picture and understanding of the new venture.
Outline for a Business Plan:I. Introductory Page
A. Name and address of business
B. Name(s) and address(es) of principal(s)
C. Name of business
D. Statement of financing needed
E. Statement of confidentiality of report
II. Executive Summary – Two to three pages summarizing the complete business plan
III. Industry Analysis
A. Future outlook and trends
B. Analysis of competitors
C. Market segmentation
D. Industry and market forecasts
IV. Description of Venture
A. Product(s)
B. Service(s)
C. Size of business
D. Office equipment and personnel
E. Background of entrepreneur(s)
V. Production Plan
A. Manufacturing process (amount subcontracted)
B. Physical plant
C. Machinery and equipment
D. Names of suppliers of raw materials
VI. Operations Plan
A. Description of company’s operation
B. Flow of orders for goods and/or services
C. Technology utilization
VII. Marketing Plan
A. Pricing
B. Distribution
C. Promotion
D. Product forecasts
E. Controls
VIII. Organizational Plan
A. Form of ownership
B. Identification of partners or principal shareholders
C. Authority of principals
D. Management team background
E. Roles and responsibilities of members of organization
IX. Assessment of Risk
A. Evaluate weakness(es) of business
B. New technologies
C. Contingency plans
X. Financial Plan
A. Assumptions
B. Pro forma income statement
C. Cash flow projections
D. Pro forma balance sheet
E. Break-even analysis
F. Sources and applications of funds
XI. Appendix (contains backup material)
A. Letters
B. Market research data
C. Leases or contracts
D. Price lists from suppliers
Introductory Page
This is the title or cover page that provides a summary of the business plan’s contents.
The introductory page should contain the following:
The name and address of the company.
The name of the entrepreneur(s), telephone number, fax number, e-mail address, and Web site address if available.
A paragraph describing the company and the nature of the business.
The amount of financing needed.
A statement of the confidentiality of the report.
*This title page sets out the basic concept that the entrepreneur is attempting to develop.
Executive Summary
This section of the business plan is prepared after the total plan is written.
About two to three pages in length, the executive summary should stimulate the interest of the potential investor.
The executive summary should address a number of issues or questions that anyone picking up the written plan for the first time would want to know.
What is the business concept or model?
How is this business concept or model unique?
Who are the individuals starting this business?
How will they make money and how much?
Environmental and Industry Analysis
Environmental analysis is an assessment of external uncontrollable variables that may impact the business plan.
It is done to identify trends and changes occurring on a national and international level that may impact the new venture.
Examples of these environmental factors are:
Economy.
Culture.
Technology.
Legal concerns.
Industry analysis reviews industry trends and competitive strategies.
Some examples of these factors are:
Industry demand.
Competition.
Description of Venture
The description of the venture provides a complete overview of the product(s), service(s), and operations of a new venture.
This section will enable the investor to ascertain the size and scope of the business.
After the mission statement, discuss several important factors that provide a clear description and understanding of the business venture.
Key elements are the product(s) or service(s), the location and size of the business, the personnel and office equipment that will be needed, the background of the entrepreneur(s), and the history of the venture.
Production Plan
The production plan details how the product(s) will be manufactured.
If some or all the manufacturing process is to be subcontracted, the plan should describe the subcontractor(s), including location, reasons for selection, costs, and any contracts that have been completed.
If the manufacturing is to be carried out in whole or in part by the entrepreneur, he or she will need to describe the physical plant layout; the machinery and equipment needed to perform the manufacturing operations; raw materials and suppliers’ names, addresses, and terms; costs of manufacturing; and any future capital equipment needs.
Operations Plan
All businesses—manufacturing or nonmanufacturing—should include an operations plan as part of the business plan.
This section goes beyond the manufacturing process (when the new venture involves manufacturing) and describes the flow of goods and services from production to the customer.
Marketing Plan
This describes market conditions and strategy related to how the product(s) and service(a) will be distributed, priced, and promoted.
Marketing research evidence to support any of the critical marketing decision strategies as well as for forecasting sales should be described in this section.
Organizational Plan
It describes the form of ownership and lines of authority and responsibility of members of new venture.
If the venture is a corporation, it is important to detail the shares of stock authorized and share options, as well as the names, addresses, and resumes of the directors and officers of the corporation.
It is also helpful to provide an organization chart indicating the line of authority and the responsibilities of the members of the organization.
Assessment of Risk
This identifies potential hazards and alternative strategies to meet business plan goals and objectives.
The entrepreneur should indicate the potential risks to the new venture.
Financial Plan
This is a projection of key financial data that determine economic feasibility and necessary financial investment commitment.
It determines the potential investment commitment needed for the new venture and indicates whether the business plan is economically feasible.
Three financial areas are discussed in this section of the business plan:
A summary of the forecasted sales and the appropriate expenses for at least the first three years, with the first year’s projections provided monthly.
Cash flow figures for at least three years, although sometimes investors may want to see five-year projections.
The projected balance sheet.
Appendix
Generally contains any backup material that is not necessary in the text of the document.
Using and Implementing the Business Plan
The business plan is designed to guide the entrepreneur through the first year of operations.
During the introductory phases of the start-up, the entrepreneur should determine the points at which decisions should be made as to whether the goals or objectives are on schedule.
Measuring Plan Progress
On a frequent basis, the entrepreneur should check the profit and loss statement; cash flow projections; and information on inventory, production, quality, sales, collection of accounts receivable, and disbursements for the previous month.
Updating the Plan
If changes are likely to affect the business plan, the entrepreneur should determine what revisions are needed.
Why Some Business Plans Fail
Generally, a poorly prepared business plan can be blamed on one or more of the following factors:
Goals set by the entrepreneur are unreasonable.
Objectives are not measurable.
The entrepreneur has not made a total commitment to the business or to the family.
The entrepreneur has no experience in the planned business.
The entrepreneur has no sense of potential threats or weaknesses to the business.
No customer need was established for the proposed product or service.
Topic 3: Entrepreneurial Opportunities
Identify opportunities that ignite ambition and foster self-reliance, resourcefulness, perseverance, and determination.
Analyze circumstances, skills, and strategies which yield entrepreneurial success.
What is an Opportunity?
Opportunity: An apparent way of generating value through unique, novel, or desirable products, services, and even processes that have not been previously exploited.
For an opportunity to be viable, the idea must have the capacity to generate value.
Value can take many forms: economic value, social value, and environmental value.
Innovation, Invention, Improvement, or Irrelevant?
Ideas can be an innovation, an invention, an improvement, or irrelevant.
Innovations and inventions are high in novelty, while improvements and irrelevant ideas are low in novelty.
A successful idea scores highly as an innovation if the product or service is novel, useful, and valuable.
Inventions that succeed in finding a market move to the innovation stage.
There are many ideas that focus on improvement, which are based on enhancing existing products.
Seven Strategies for Idea Generation
Analytical strategies
Search strategies
Imagination-based strategies
Habit-breaking strategies
Relationship-seeking strategies
Development strategies
Interpersonal strategies
Two Pathways to Opportunity Identification
Finding Approach: Assumes that opportunities exist independent of entrepreneurs and are waiting to be found.
Building Approach: Assumes that opportunities do not exist independent of entrepreneurs but are instead a product of the mind.
Opportunities Through Active Search and Alertness
Access to the right information is one of the key influences of opportunity identification.
Entrepreneurs often engage in active search to discover existing opportunities.
Active Search: Accessing a wealth of information and information sets by searching one’s existing knowledge.
Alertness: The ability to identify opportunities in their environment.
Building Opportunities: Prior Knowledge and Pattern Recognition
Prior Knowledge: Preexisting information gained from a combination of life and work experience.
Pattern Recognition: The process of identifying links or connections between apparently unrelated things or events.
From Idea Generation to Opportunity Recognition
For an opportunity to be viable, the idea must be new or unique or at least a variation on an existing theme that you are confident that people will accept and adopt.
Idea Generation → Creativity → Opportunity Recognition
SEEC Model:
Securing: the capacity to focus on and sustain new ideas.
Expanding: broadening or the acquisition of new skills that enable people to generate ideas and share knowledge.
Exposing: involves the skills required to open ourselves to diverse and fluctuating circumstances and events.
Challenging: the process of building on past failures by braving new encounters.
Topic 4: Goal Setting
Review goals set by other entrepreneurs and the impact of goal setting on entrepreneurial success
Apply the course content, establish individual goals to develop personal entrepreneurial skills.
Starting Setting Goals
Start setting goals in every major area of life and business.
Mind needs to be focused on something that can lead to success.
Why Do People Not Plan?
Limiting Beliefs
“I don’t know”
Fear of Failure
Inertia
Failed and Gave Up
Secrets to Powerful Goals
Specific and Measurable
Passionate and Exciting
HUGGs (Huge, Unbelievable Greatly Goals)
Topic 5: Learning Strategies
Identify the impact of knowledge applied to effort.
Analyze the power of self-directed life-long learning.
Learning
Learning always involves self-development - learning to act differently, think differently, and act differently.
Learning is natural; we learn as we live, and it is part of adapting to changing circumstances.
Learning differs from education.
Main Stages of Traditional Learning
Unconscious Incompetence: You don’t know and you just don’t know.
Conscious Incompetence: You’ve tried it before, but you are still not good at it.
Conscious Competence: You have the skill, but you are still not yet consistent and habitual.
Unconscious Competence: Now your skill is habitual and automatic; you don’t have to think about it.
Mastery: More than unconscious competence; it is an extra dimension that few attain.
The Learning Zone
Three Scenarios for New Ideas or Behaviors:
Anxiety Zone: You are completely stuck and do not know what to do next; perceived difficulty exceeds the resources you have.
Drone Zone: It seems all too easy that you seem to be able to do it without much challenge.
Learning Zone: Perceived difficulty roughly matches perceived resources.
.
Types of Learning
Simple Learning (Simple Loop Learning): There is a gap between what to know and what you want to know, and you take actions to close that gaps. The results are feedback leading to increased knowledge and skills.
Generative Learning (Double Loop Learning): Brings our beliefs and assumptions about the issue into the feedback loop.
Other Tips to Enhance and Accelerate Learning
Identity
Belief
Capability
Behavior
Environment
Topic 6: Creating Sustainable Wealth
Demonstrate an understanding of basic financial literacy.
Illustrate how entrepreneurs create sustainable wealth regardless of circumstances.
Financial Resources
Estimating the Cost of Launching A Business
Premises
Utilities
Equipment
Initial stock
Insurance, etc.
Ways of obtaining Funds
Personal savings
Family funds
Community co-operative organizations
Banks, etc.
Managing My Money
When funds have been obtained for the purpose of launching a business, the entrepreneur needs to be meticulous about keeping records of income on the one hand, and expenditures on the other.
Profit
If you are, to be able to run a business successfully over time the business must generate a profit.
To find out if the business will be profitable you must make an income/expenditure budget.
Costs
These can be grouped into different categories:
Costs for buying raw materials or readymade products for sale.
Costs for wages and labor.
Miscellaneous costs such as training, transport, telephones, repairs, marketing materials, bookkeeping etc.
Interest on loans.
Income Statement
An income statement is a simple summary of the business’ cash generating ability.
Income
Cost of materials
Operating expenses
Repayment of loan
Gross profit
Taxes
Net profit
Cash Flow Statement
Important because it gives the entrepreneur an idea of the amount of liquid cash available in the business at any given time.
Balance Sheet
Summary of the business’ assets, liabilities, and equity:
Assets are the premises, materials, equipment and stock owned by the business.
Liabilities are the financial obligations of the business, such as rent for premises, loan repayments, etc.
Equity is the difference between the monetary value of the assets and the liabilities.
Topic 7: Building a Sustainable Brand
Recognize the importance of reliability as a key to building a successful and sustainable brand.
Discuss the impact responsibility plays in building a successful and sustainable brand.