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CHAPTER

The Foundations of Entrepreneurship

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2011 Pearson Education, Inc. Publishing as Prentice Hall

Instructor: Dr. Abdul Moneim Hafez


Ph.D., in Productivity Measurement, California, U.S.A. Board Member, Alexandria Business Association, Chairman of SMEs Committee. Chairman and Managing Director of MAP Company (Management Process Improvement) Worked as instructor with AUC for about 10 years in cooperation with their management institution, where I developed and conducted over 200 training courses for public and private sector. 30 years of experience in management consulting and training in Egypt, U.S.A., Saudi Arabia, Kuwait, Syria, and Lebanon with multinational companies, well managed private sector companies, public sector, and governmental organizations. Conducted, designed, and developed tailor-made training courses for more than 500 courses in different areas of management. Academic supervisor at American University at Cairo AUC. Visited professor at ESLSCA University. Consultant and advisor for different world organizations, such as: The World Bank, IFC, Islamic Development Bank.

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Course Syllabus
COURSE DESCRIPTION This class addresses the unique entrepreneurial experience of conceiving, evaluating, creating, managing, and potentially selling a business. The goal is to provide a solid background with practical application of important concepts applicable to entrepreneurial environment. Entrepreneurial discussions regarding the key business areas of finance, accounting, marketing and management include the creative aspects of entrepreneurship. The course relies on classroom discussion, participation, guest speakers, case analysis, the creation of a feasibility plan, and building a business plan to develop a comprehensive strategy for launching and managing a business. Students will need to draw upon their business education and experience, and apply it to the task of launching a new venture. Students are expected to interact with the business community, advisors, be able to work effectively in teams, and be active participants in classroom discussions and exercises.

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COURSE OBJECTIVES To possess a well grounded understanding of essential entrepreneurial business principals. To develop an understanding of important business issues as they relate to new ventures. To identify, appreciate, and assess the knowledge, attitudes, and skills of an entrepreneur. To study and observe entrepreneurial settings and entrepreneurial role models through exposure to actual business settings and experiences. To have an expanded awareness of the resources available for creating a business plan. To establish a level of confidence in creating a business plan as a tool to assess, create and communicate a business concept.
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RESOURCES Textbook Essentials of Entrepreneurship and Small Business Management, 6th Edition, Scarborough, Norman M., Upper Saddle River, NJ: Pearson Prentice Hall Publishing Co., 2011.

GRADING

Class Attendance Class Participation Midterm Exam Final Exam


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Percentage 10% 20% 30% 40%


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Ch. 1: The Foundations of Entrepreneurship

NOTE: Class attendance and participation in class discussion is expected and absences will affect your final grade. The due dates for assignments are non-negotiable and late work will be penalized. All assignments are to be professional in appearance and typed to receive full credit.

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COURSE OUTLINE
W EEK 1 2 Designing a Competitive Business Model and Building a Solid Strategic Plan 3 Conducting a Feasibility Analysis and Crafting a Winning Business Plan Forms of Business Ownership Franchising and the Entrepreneur Buying an Existing Business Building a Powerful Marketing Plan E-Commerce and the Entrepreneur Midterm Exam Pricing Strategies Creating a Successful Business Plan 9 Managing Cash Flow Sources of Financing: Debt and Equity 12 13 4 TOPIC Course Overview & Introduction The Challenge of Entrepreneurship
READING ASSIGNMENTS

1 2 3 1

5 6 7 8

5 6 7 8 9
10 11

10 Choosing the Right Location and Layout Global Opportunities


11 Building a Team and Management Succession Course Conclusion Final Exam
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14 15
4 16

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Attendance Policy University policy and related rules will be employed. Attendance will be taken at the beginning of the class. Please notify the lecturer in advance of any anticipated absence. More than one absenceanticipated or unanticipatedwill be reflected in the class participation component of the grade.

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The World of the Entrepreneur

Every year U.S. entrepreneurs launch 550,000 new businesses. Entrepreneurial spirit - the most significant economic development in recent history. GEM study: 18.7% of adult population in the U.S. is actively involved in trying to start a new business.

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Ch. 1: The Foundations of Entrepreneurship

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The World of the Entrepreneur

Global Entrepreneurship Monitor (GEM) study reports:


Men are twice as likely to start a business as women. Most entrepreneurs turn to family members and friends for capital. Entrepreneurs are most likely to launch businesses when they are between the ages of 25 and 44.

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What is an Entrepreneur?
One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them.

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Characteristics of Entrepreneurs

Desire for responsibility Preference for moderate levels of risk risk eliminators Confidence in their ability to succeed Desire for immediate feedback High level of energy Future orientation serial entrepreneurs Skilled at organizing Value achievement over money
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Entrepreneurship

One characteristic of entrepreneurs stands out:

Diversity!

Anyone regardless of age, race, gender, color, national origin, or any other characteristic can become an entrepreneur (although not everyone should).
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Benefits of Entrepreneurship
The opportunity to:

Create your own destiny


Make a difference Reach your full potential Reap impressive profits Contribute to society and to be recognized for your efforts Do what you enjoy and to have fun at it
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Drawbacks of Entrepreneurship

Uncertainty of income Risk of losing your entire investment Long hours and hard work Lower quality of life until the business gets established High levels of stress Complete responsibility Discouragement
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Feeding the Entrepreneurial Fire


Entrepreneurs as heroes
Entrepreneurial education Demographic and economic factors Shift to a service economy Technology advancements

Independent lifestyle
E-commerce and the Internet
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FIGURE 1.3

U.S. Retail E-Commerce Revenues

Source: Based on Forrester Research, 2008.

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Feeding the Entrepreneurial Fire


(continued)

Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technology advancements Independent lifestyles E-commerce and the Internet International opportunities
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The Cultural Diversity of Entrepreneurship

Young entrepreneurs

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The Cultural Diversity of Entrepreneurship


(continued)

Young entrepreneurs Women entrepreneurs

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FIGURE 1.4 Why Women Start Businesses Source: U.S. Small Business Administration, 2007.

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The Cultural Diversity of Entrepreneurship


(continued)

Young entrepreneurs Women entrepreneurs Minority-owned enterprises Immigrant entrepreneurs Part-time entrepreneurs

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The Cultural Diversity of Entrepreneurship


(continued)

Home-based businesses Family businesses Copreneurs Corporate castoffs Corporate dropouts Social entrepreneurs Retiring Baby Boomers

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Small Businesses ...

Make up 99.7% of the 30.14 million businesses in the U.S. Employ 51% of the nations private sector workforce. Create more jobs than big businesses.

60% to 80% of net new jobs over the last decade

Are leaders in offering training and advancement opportunities to workers.


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Small Businesses ...


(continued)

Produce 51% of the nations private GDP. Account for 47% of business sales. Create 13 times more patents per employees than large companies.

Zipper, light bulb, FM radio, laser, air conditioning, escalator, personal computer, automatic transmission, and many more!
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FIGURE 1.5 Small Business by Industry Source: U.S. Small Business Administration, 2007.

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Ten Deadly Mistakes of Entrepreneurship


1. Management mistakes 2. Lack of experience 3. Poor financial control 4. Weak marketing efforts 5. Failure to develop a strategic plan

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Ten Deadly Mistakes of Entrepreneurship


6. Uncontrolled growth 7. Poor location 8. Improper inventory control 9. Incorrect pricing 10. Inability to make the entrepreneurial transition

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Putting Failure Into Perspective

Entrepreneurs are not paralyzed by the prospect of failure.


Failure a natural part of the creative process. Successful entrepreneurs learn to fail intelligently.

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Avoiding the Pitfalls of Small Business Failure

Know your business in depth Develop a solid business plan Manage financial resources Understand financial statements Learn to manage people effectively Set your business apart from the competition Maintain a positive attitude
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Conclusion
Entrepreneurs:

Are an important part of the free enterprise system Are a diverse and talented group of people Represent a cross-section of society as a whole Are able to enhance the profitability of their businesses through acquiring additional knowledge and experience

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What is Ahead?
Section 1: The Challenge of Entrepreneurship Section 2: Building a Business Plan: Beginning Considerations Section 3: Building a Business Plan: Marketing Considerations Section 4: Building a Business Plan: Financial Matters

Section 5: Putting the Business Plan to Work: Making the New Venture a Success

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

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