MGSD24 New Venture Planning

Topic #2

Entrepreneurs
Last updated January 13, 2016

Quick Review: Last Week

What course is about: Write a business plan
How course works: Group work / 3 stages

SMEs in Canada:
98+% of all businesses
50% of all jobs (and growing)
78% of all job creation 2002-2012

Quick Review: Last Week

You are more likely to get a job with
a small business than a large one
You might as well learn
to start your own

Quick Review
People who write a plan:
More likely to finish product development

More likely to start marketing

6X times more likely to actually start
Less likely to quit

Quick Review
people

market
gazelle

today
resources

Readings
Angel Investment Criteria
Richard Sudek
Journal of Small Business Strategy
Vol. 17 No. 2 Fall/Winter 2006-7
Examines what angel (private) investors
look for in business plans

Readings
Nature or Nurture?
Decoding The DNA of an Entrepreneur
Ernst & Young
E & Y survey 685 successful
entrepreneurs about their background,
motivations and key success factors

Sudek Angel Investment Criteria

.

Sudek Angel Investment Criteria

.

Sudek Angel Investment Criteria

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Sudek Angel Investment Criteria

.

Ernst & Young: DNA of Entrepreneur

.

E&Y Survey of 658 Entrepreneurs

.

Readings on the Blackboard

See?

Purpose of Reading/Lecture
Examine psychological/personality
characteristics of entrepreneurs
Examine demographic characteristics
of entrepreneurs
Have you consider your motivations
and suitability for starting your own
venture

Business Survival Rates (Canada)

85%
70%
62%
53%

51%

Source: Industry Canada, Key Small Business Statistics, July 2012.

SME Survival Rate - USA

Source: Scott Shane, Illusions of Entrepreneurship: The Costly Myths that

Entrepreneurs, Investors, and Policy Makers Live By. Data from US Bureau of the
Census, for the Office of Advocacy of the U.S. Small Business Administration.

Interesting Fact About Entrepreneurs

Prof. Jeffrey Timmons (Harvard) is
authority on new business start-up
He researched attitudes and beliefs of
would-be entrepreneurs
Most think the odds of survival are
worse than they really are!

Who Starts A Business? - Entrepreneur

Individual who organises and co-ordinates
the activities required to start new business
"Entrepreneur" from French:
entrer: to enter
prendre: to take

Why Is This Important?

Opening pages of plan must convince
reader that you are:
driven
confident
risk tolerant
prepared to work
And

you have support (friends/family)

Entrepreneur Explained
entrepreneur is not a job
entrepreneur is a role
entrepreneur is a personality type

22

Entrepreneurs: Personality Traits

Risk tolerance
Internal locus of control
High Need for Achievement
Self Confident

Risk Tolerance
Risk defined:

Uncertainty of outcome
People see risk:
From new situations,
complexity, or the unknown.

Risk Tolerance
Risk Intolerance:
New or previously unknown
situations are threatening
Risk Tolerance:
New or previously unknown
situations are desirable.

Threatening or Inviting?
.
.

Entrepreneurs: Risk Tolerant

Entrepreneurs start new businesses
Entrepreneurs try new opportunities
Entrepreneurs know: they might fail
Entrepreneurs are risk tolerant

Q. What have you done that

others might consider to have
been risky?

Locus of Control
A person's belief about what causes
good or bad results in his or her life.
The extent to which people believe
that they can control events that
affect them.

Internal Locus of Control

People belief that events result from
their own behavior and actions.
internals try to influence others.
internals assume their efforts will
succeed

External Locus of Control

People who believe that powerful
others, fate, or chance determine
events.
Less likely to be leaders
Less likely to take risks
Less likely to start their own business

Entrepreneurs are Internals

Entrepreneurs:
recognise opportunities
assemble and mobilise resources
assume risks to realise rewards
Entrepreneurs are internals

Q. What have you done to

bring about change to a large
organisation or activity?

Need for Achievement

Psychologist David McClelland
(1961)
Needs Motivation Theory
Three basic human motivations

Needs Motivation Theory

Need for power (N-Pow)
People who are 'authority motivated'. They need
to be influential. N-Pow produces a need to lead.
These people need personal status and prestige.
Need for affiliation (N-Aff)
People who need friendly relationships, motivated
by interaction with others. N-Aff produces need
to be liked, held in high regard. Team players.
Need for achievement (N-Ach)
People who seek achievement, want to attain
challenging goals. N-Ach produces people who
need accomplishment.

Needs Motivation Theory

Entrepreneurs seek challenges.
Entrepreneurs set goals.
Entrepreneurs take risks.
Entrepreneurs:
Very high Need for Achievement

Q. What have you achieved

that you are proud of?
Q. What have you accomplished?

Entrepreneurs: Demographic Traits

Kids of entrepreneurs
Immigrants/kids of immigrants
Older than average worker
Not great students
Women more successful

Kids of Entrepreneurs
Entrepreneur in family: single most telling
indicator of successful entrepreneurs

80% of entrepreneurs have heritage of

family business
Importance of Role Models (Nurture)
Genetic Predispositions (Nature)

Kids of Entrepreneurs
Importance of Role Models (Nurture)

Genetic Predispositions (Nature)

Q. Have you been positively

influenced by the example of your
parents?
Q. Can you look to your family for
experience and advice?

Immigrant Entrepreneurs
Immigrants / their children thought to
make good entrepreneurs.
Immigrants to Canada are economic
migrants. Packed up lives, belongings,
families, to improve economic well-being
Immigrants need: confidence, willingness
to take reasonable risks, high need to
achieve

Immigrant Entrepreneurs
confident

willing to take risks

high need to achieve

Older Than Average

Average Canadian employee: 34
Average Canadian entrepreneur: 42

and rising!

Older Than Average

Why?
It takes experience
It takes confidence
It takes contacts
It takes $$$ to start a business.
See also the Huffingtom Post:
http://www.huffingtonpost.com/2011/01/04/older-entrepreneu
rs-are-t_n_803986.html

Entrepreneurs: Average Students

Entrepreneurs: doers not thinkers

Prefer action to contemplation

Entrepreneurs: Average Students

A students more likely to

become:
academics
researchers
professionals (doctors, lawyers)

Women Are More Successful

Women start business with fewer $$$
But, women owned businesses:
less likely to fail
more profitable
grow faster
take on more employees
Why?

Why Is This Important?

people

market
gazelle

resources