What Strategies Do Entrepreneurs Use?
Many people regard entrepreneurs as lucky business people with “bright ideas.” While they certainly have good ideas, their success is seldom based on luck. Successful entrepreneurs often follow one or more of these paths.
Unexpected opportunities. A major producer of animal medicines got started in the 1950s when companies producing antibiotics for humans were embarrassed to sell to veterinarians.
Changing market conditions. In the United States, hospitals have traditionally treated most illnesses and medical problems. Recently, entrepreneurs have organized walk-in emergency clinics, birthing centers, X-ray labs, and other facilities that provide specific medical services at lower costs than hospitals. Similarly, consumer concern about personal health has created a market for health spas, exercise equipment, and even exercise apparel. Early computer developers believed that computers would be used primarily for scientific research. During the 1950s, IBM became the industry leader by providing computers to business.
Improving a product or process. Early cameras required cumbersome and fragile glass plates. George Eastman developed an inexpensive, light, but rugged cellulose film that completely change photography. Eastman-Kodak continues to be a leader in the field.
Providing an alternative product or service. Tylenol and other aspirin substitutes were developed to meet the needs of the relatively small number of people who could not take aspirin. Today the “headache relief” market is dominated by aspirin substitutes. Federal Express and others in the air freight business – UPS, Emery, DHL – provided a service the U.S. Postal Service did not consider important – i.e. overnight delivery of packages. This service is in great demand today and it is extremely profitable.
Identifying population trends. Changing population trends provide many opportunities. The growth in the number of working mothers has created a need for child-care facilities. Similarly, as the population “ages” in the 1990s, there will be greater demand for additional nursing homes or other health-care alternatives.
Traveling these pathways requires creative and energetic business people. But the true key for success as an entrepreneur is the careful study of the marketplace to identify opportunities for products or services that meet consumers’ needs and make more efficient use of our resources.
In this chapter you will learn about what it takes to be an entrepreneur and about the risks and rewards of business ownership. You also will have the opportunity to apply these principles as you and your class begin the process of forming and operating your student company.
The Economic Role of Small Business
What Is a Small Business? The enterprise begun by Jobs, Gates, Nemeth, and Smith all started small. A small business in one that is independently owned and operated, and ti does not dominate its field. In fact, the Small Business Administration (SBA) defines it as one with annual sales below $3.5 million, with fewer than 500 employees.