# Distribución F y análisis de varianza anova de una vía

## La distribución F y el cociente F

La distribución utilizada para la prueba de hipótesis es nueva. Se llama distribución, en honor al estadístico inglés Sir Ronald Fisher. El estadístico F es un cociente (una fracción). Hay dos conjuntos de grados de libertad; uno para el numerador y otro para el denominador.
Por ejemplo, si F sigue una distribución F y el número de grados de libertad para el numerador es cuatro y el número de grados de libertad para el denominador es diez, entonces F ~ F.
Para calcular el cociente  se hacen dos estimaciones de la varianza.
1. Varianza entre muestras: Una estimación de σ2 que es la varianza de las medias muestrales multiplicada por n (cuando los tamaños de las muestras son iguales). Si las muestras son de diferentes tamaños, la varianza entre las muestras se pondera para tener en cuenta los diferentes tamaños de las muestras. La varianza también se denomina variación debido al tratamiento o variación explicada.
2. Varianza dentro de las muestras: Una estimación de σ2 que es el promedio de las varianzas de la muestra (también conocida como varianza combinada). Cuando los tamaños de las muestras son diferentes, se pondera la varianza dentro de las muestras. La varianza también se denomina variación debido al error o variación no explicada.
1. SSentre = la suma de los cuadrados que representa la variación entre las diferentes muestras
2. SSdentro = la suma de los cuadrados que representa la variación dentro de las muestras debido al azar.
Hallar una “suma de cuadrados” significa sumar cantidades al cuadrado que, en algunos casos, pueden estar ponderadas. Utilizamos la suma de cuadrados para calcular la varianza de la muestra y la desviación típica de la muestra en Estadística Descriptiva.
MS significa “media cuadrática“ (mean square, MS). MSentre es la varianza entre grupos y MSdentro es la varianza dentro de los grupos.
Cálculo de la suma de cuadrados y de la media cuadrática
MSentre y MSdentro se pueden escribir como sigue:
1.

2.

La prueba de ANOVA de una vía depende del hecho de que el MSentre puede estar influenciado por las diferencias poblacionales entre las medias de los distintos grupos. Dado que el MSdentro compara los valores de cada grupo con su propia media de grupo, el hecho de que las medias de los grupos puedan ser diferentes no afecta al MSdentro.
La hipótesis nula dice que todos los grupos son muestras de poblaciones que tienen la misma distribución normal. La hipótesis alternativa dice que, al menos, dos de los grupos de la muestra proceden de poblaciones con distribuciones normales diferentes. Si la hipótesis nula es verdadera, tanto MSentre como MSdentro deberían estimar el mismo valor.
El cociente

Si MSentre y MSdentro estiman el mismo valor (siguiendo la creencia de que H es verdadera), entonces el cociente F debería ser aproximadamente igual a uno. En su mayoría, solo los errores de muestreo contribuirían a variaciones alejadas de uno. Resulta que MSentre consiste en la varianza de la población más una varianza producida por las diferencias entre las muestras. MSdentro es una estimación de la varianza de la población. Dado que las varianzas son siempre positivas, si la hipótesis nula es falsa, MSentre será generalmente mayor que MSdentro. Entonces el cociente F será mayor que uno. Sin embargo, si el efecto de la población es pequeño, no es improbable que MSdentro sea mayor en una muestra determinada.
Los cálculos anteriores se hicieron con grupos de diferentes tamaños. Si los grupos son del mismo tamaño, los cálculos se simplifican un poco y el cociente F se puede escribir como:
Fórmula del cociente

2. n = el tamaño de la muestra
3.  dfnumerador = k – 1
4.  dfdenominador = n – k
5. s2 combinada = la media de las varianzas de la muestra (varianza combinada)
6.
 = la varianza de las medias muestrales
Los datos se suelen poner en una tabla para facilitar su visualización. Los resultados del ANOVA de una vía suelen mostrarse de esta manera en softwares.

La prueba de hipótesis del ANOVA de una vía es siempre de cola derecha porque los valores F más grandes están en la cola derecha de la curva de distribución F y tienden a hacernos rechazar H.

### Notación

La notación para la distribución F es F ~ F
donde df(num) = dfentre y df(denom) = dfdentro
La media de la distribución F es

### Referencias

Datos sobre el tomate, Escuela de Ciencias del Marist College (investigación inédita de un estudiante)

### Repaso del capítulo

El análisis de la varianza compara las medias de una variable de respuesta para varios grupos. El ANOVA compara la variación dentro de cada grupo con la variación de la media de cada grupo. El cociente de estos dos es el estadístico F de una distribución F con (número de grupos – 1) como grados de libertad del numerador y (número de observaciones – número de grupos) como grados de libertad del denominador. Estas estadísticas se resumen en la tabla de ANOVA.

### Revisión de la fórmula

dfentre = df(num) = k – 1
dfdentro = df(denom) = n – k
MSentre =

MSdentro =

F =

Cociente F cuando los grupos son del mismo tamaño: F =

Media de la distribución F: µ =

donde:
Use la siguiente información para responder los próximos ocho ejercicios. Se van a analizar grupos de hombres de tres zonas diferentes del país para determinar su peso medio. Las entradas en la  son las ponderaciones de los diferentes grupos.
Use la siguiente información para responder los próximos ocho ejercicios. Las niñas de cuatro equipos de fútbol diferentes se someterán a pruebas para conocer la media de goles marcados por partido. Las entradas de la tabla son los goles por partido de los diferentes equipos. Los resultados del ANOVA de una vía se muestran en la .

### Tarea para la casa

Use la siguiente información para responder los próximos tres ejercicios. Supongamos que un grupo está interesado en determinar si los adolescentes obtienen su licencia de conducir alrededor de la misma edad promedio en todo el país. Supongamos que se recopilan al azar los siguientes datos de cinco adolescentes de cada región del país. Los números representan la edad a la que los adolescentes obtuvieron la licencia de conducir.

H: µ1 = µ2 = µ3 = µ4 = µ5
Hα: Al menos dos de las medias de grupo µ1, µ2, …, µ5 no son iguales.


# Distribución F y análisis de varianza anova de una vía

## Datos sobre la distribución F

Estos son algunos datos sobre la distribución
1. La curva no es simétrica, sino que está distorsionada hacia la derecha.
2. Hay una curva diferente para cada conjunto de df.
3. El estadístico F es mayor o igual a cero.
4. A medida que aumentan los grados de libertad del numerador y del denominador, la curva se normaliza.
5. Otros usos de la distribución F incluyen la comparación de dos varianzas y el análisis de varianza bidireccional. El análisis bidireccional queda fuera del alcance de este capítulo.

### Referencias

Datos de un aula de cuarto grado en 1994 en una escuela privada de kínder a 12.º grado en San José, CA.
Hand, D. J., F. Daly, A. D. Lunn, K. J. McConway y E. Ostrowski. A Handbook of Small Datasets: Data for Fruitfly Fecundity. Londres: Chapman & Hall, 1994.
Hand, D. J., F. Daly, A. D. Lunn, K. J. McConway y E. Ostrowski. A Handbook of Small Datasets. Londres: Chapman & Hall, 1994, pág. 50.
Hand, D. J., F. Daly, A. D. Lunn, K. J. McConway y E. Ostrowski. A Handbook of Small Datasets. Londres: Chapman & Hall, 1994, pág. 118.
“MLB Standings – 2012”. Disponible en línea en http://espn.go.com/mlb/standings/_/year/2012.
Mackowiak, P. A., Wasserman, S. S. y Levine, M. M. (1992), “A Critical Appraisal of 98,6 Degrees F, the Upper Limit of the Normal Body Temperature, and Other Legacies of Carl Reinhold August Wunderlich”, Journal of the American Medical Association, 268, 1578-1580.

### Repaso del capítulo

El gráfico de la distribución F es siempre positivo y es asimétrico hacia la derecha, aunque la forma puede ser redondeada o exponencial dependiendo de la combinación de grados de libertad del numerador y del denominador. El estadístico F es el cociente entre una medida de la variación de las medias de los grupos y una medida similar de la variación dentro de los grupos. Si la hipótesis nula es correcta, el numerador debe ser pequeño en comparación con el denominador. El resultado será un estadístico F pequeño y el área debajo de la curva F a la derecha será grande, lo que representa un valor p grande. Cuando la hipótesis nula de la igualdad de las medias de los grupos es incorrecta, el numerador debe ser grande comparado con el denominador, lo que da un estadístico F grande y un área pequeña (valor p pequeño) a la derecha del estadístico debajo de la curva F.
Cuando los datos tienen tamaños de grupo desiguales (datos no equilibrados), hay que utilizar las técnicas de la 13.2 La distribución F y el cociente de F para los cálculos manuales. Sin embargo, en el caso de datos equilibrados (los grupos tienen el mismo tamaño), se pueden utilizar cálculos simplificados basados en las medias y varianzas de los grupos. En la práctica, por supuesto, se suelen emplear softwares en el análisis. Como en cualquier análisis, se deben usar gráficos de diversa índole junto con técnicas numéricas. ¡Mire siempre con cuidado sus datos!
Use la siguiente información para responder los próximos siete ejercicios. Cuatro equipos de baloncesto tomaron una muestra aleatoria de jugadores con respecto a la altura que cada uno de ellos puede saltar (en pulgadas). Los resultados se muestran en la .
Use la siguiente información para responder los próximos siete ejercicios. Un desarrollador de videojuegos está probando un nuevo juego en tres grupos diferentes. Cada grupo representa un mercado objetivo diferente para el juego. El desarrollador recopila las calificaciones de una muestra aleatoria de cada grupo. Los resultados se muestran en la
Use la siguiente información para responder los próximos tres ejercicios. Supongamos que un grupo está interesado en determinar si los adolescentes obtienen su licencia de conducir alrededor de la misma edad promedio en todo el país. Supongamos que se recopilan al azar los siguientes datos de cinco adolescentes de cada región del país. Los números representan la edad a la que los adolescentes obtuvieron la licencia de conducir.

Introduzca los datos en su calculadora o computadora.
Indique las decisiones y conclusiones (en oraciones completas) para los siguientes niveles preconcebidos de α.

### Tarea para la casa

Use la siguiente información para responder los próximos dos ejercicios. La  recopila el número de páginas de cuatro tipos diferentes de revistas.


# Distribución F y análisis de varianza anova de una vía

## Prueba de dos varianzas

Otro uso de la distribución F es la prueba de dos varianzas. A menudo es conveniente comparar dos varianzas en vez de dos promedios. Por ejemplo, a los administradores del instituto universitario les gustaría que dos profesores que califiquen exámenes tengan la misma variación en su calificación. Para que una tapa se adapte a un recipiente, la variación de la tapa y del recipiente debe ser la misma. Un supermercado podría estar interesado en la variabilidad de los tiempos para procesar una compra en dos de sus cajas.
Para realizar una prueba F de dos varianzas, es importante que se cumplan estas condiciones:

A diferencia de la mayoría de otras pruebas de este libro, la prueba F para la igualdad de dos varianzas es muy sensible a las desviaciones de la normalidad. Si las dos distribuciones no son normales, la prueba puede dar valores p más altos o más bajos de lo debido de forma imprevisible. Muchos textos sugieren a los estudiantes que no utilicen esta prueba en absoluto, pero en aras de la exhaustividad la incluimos aquí.
Supongamos que tomamos una muestra aleatoria de dos poblaciones normales independientes. Supongamos que
  y
  son las varianzas de la población y
  y
  sean las varianzas de la muestra. Supongamos que los tamaños de las muestras son n1 y n2. Como nos interesa comparar las dos varianzas de la muestra, utilizamos el cociente F:

F tiene la distribución F ~ F(n1 – 1, n2 – 1)
donde n1 – 1 son los grados de libertad del numerador y n2 – 1 son los grados de libertad del denominador.
Si la hipótesis nula es
 , entonces el cociente F se convierte en
 .
Si las dos poblaciones tienen varianzas iguales, entonces
  y
  tienen valores cercanos y
  está cerca de uno. Pero si las dos variantes de la población son muy diferentes,
  y
  también suelen ser muy diferentes. Al elegir
  ya que la mayor varianza de la muestra hace que el cociente
  sea mayor que uno. Si
  y
  están muy separados, entonces
  es un número grande.
Por lo tanto, si F es cercano a uno, la evidencia favorece la hipótesis nula (las dos varianzas de la población son iguales). Pero si F es mucho mayor que uno, entonces la evidencia es contraria a la hipótesis nula. Una prueba de dos varianzas puede ser de cola izquierda, derecha o de dos colas.

### Referencias

“MLB Vs. Division Standings – 2012” (MLB versus Clasificación de la División-2012) Disponible en línea en http://espn.go.com/mlb/standings/_/year/2012/type/vs-division/order/true.

### Repaso del capítulo

La prueba F para la igualdad de dos varianzas se basa en gran medida en el supuesto de distribuciones normales. La prueba no es fiable si no se cumple este supuesto. Si ambas distribuciones son normales, el cociente de las dos varianzas muestrales se distribuye como un estadístico F, con grados de libertad en el numerador y el denominador que son uno menos que los tamaños de las muestras de los dos grupos correspondientes. Una prueba de hipótesis de prueba de dos varianzas determina si dos varianzas son iguales. La distribución para la prueba de hipótesis es la distribución F con dos grados de libertad diferentes.
2. Las poblaciones de las que se extraen las dos muestras se distribuyen normalmente.
3. Las dos poblaciones son independientes entre sí.

### Revisión de la fórmula

F tiene la distribución F ~ F(n1 – 1, n2 – 1)
F =

Si σ1 = σ2, entonces F =

Use la siguiente información para responder los próximos dos ejercicios. Hay dos supuestos que deben ser ciertos para hacer una prueba F de dos varianzas.
Use la siguiente información para responder los siguientes cinco ejercicios. Dos compañeros de trabajo se desplazan desde el mismo edificio. Les interesa saber si hay alguna variación en el tiempo que tardan en ir al trabajo conduciendo un vehículo. Cada uno de ellos registra sus tiempos durante 20 trayectos. Los tiempos del primer trabajador tienen una varianza de 12,1. Los tiempos del segundo trabajador tienen una varianza de 16,9. El primer trabajador cree que es más coherente con sus tiempos de desplazamiento. Pruebe la afirmación al nivel del 10 %. Supongamos que los tiempos de desplazamiento se distribuyen normalmente.
Use la siguiente información para responder los próximos cuatro ejercicios. Dos estudiantes están interesados en saber si hay o no variación en los resultados de sus exámenes en la clase de Matemáticas. En total son 15 los exámenes de Matemáticas que han presentado hasta ahora. Las notas del primer estudiante tienen una desviación típica de 38,1. Las notas del segundo estudiante tienen una desviación típica de 22,5. El segundo estudiante cree que sus resultados son más coherentes.
Use la siguiente información para responder los próximos tres ejercicios. Dos ciclistas comparan las varianzas de sus ritmos globales en subidas. Cada ciclista registra su velocidad al subir 35 colinas. El primer ciclista tiene una varianza de 23,8 y el segundo de 32,1. Los ciclistas quieren ver si sus varianzas son iguales o diferentes. Supongamos que los tiempos de desplazamiento se distribuyen normalmente.

### Tarea para la casa


# The Entrepreneurial Perspective

## Introduction

Phil Libin, cofounder and former CEO of Evernote, once said there are “lots of bad reasons to start a company. But there’s only one good, legitimate reason . . . it’s to change the world.”Robin Wauters. “Evernote CEO Phil Libin: ‘My Advice to Aspiring Entrepreneurs? Don’t Do It.’”  Evernote is an example of an entrepreneurial startup. Its goal is to make our lives more organized and increase our personal memory abilities by storing necessary and desired information on the Evernote app. Evernote is designed to capture information through note taking (including pictures, web pages, drawings, and even audio), track and organize this material, and then save and archive the information. Evernote Corporation describes itself as “not only an organization, rather it is a family of professionals who are creative, innovative and experienced in their respective fields.”“Evernote SuccessStory.”
Around the globe, individuals, communities, and organizations advocate for and support the entrepreneurship movement. Many colleges and universities offer courses, degrees, and competitions for entrepreneurship teams. Communities provide support through services such as incubators that foster planning and startup activities. Organizations like UNESCO’s Global Action Programme on Education for Sustainable Development holds a Youth Entrepreneurship Competition annually.UNESCO. “Global Action Programme on Education for Sustainable Development.” n.d. https://en.unesco.org/gap That is where student Chloe Huang, in 2017, submitted her idea for an algae energy pavilion to the Education for Sustainable Development competition. Huang recognized the problem of lakes suffering from oversaturation of algae and saw a solution in converting the algae into a biofuel, creating green energy while alleviating an environmental problem.Chloe Huang. “Algae Energy Pavilion.”
In the examples of both Libin and Huang, the entrepreneurial products focus on the use of technology and improving life, but they also represent two vastly different approaches to entrepreneurship. Libin’s focus was on improving quality of life by allowing users to track and organize information in their business and personal lives, whereas Huang focused on a global environmental issue to sustainably improve water quality. Each idea solves a problem that many people might not even have noticed. Becoming aware of problems that need to be solved, then solving the problem to make our lives easier or better, is part of the entrepreneurial perspective.


# The Entrepreneurial Perspective

## Entrepreneurship Today

### Learning Objectives

By the end of this section, you will be able to:
1. Define entrepreneur and entrepreneurship
2. Describe types of entrepreneurial careers and lifestyles
3. Understand entrepreneurs as problem solvers
4. Explain current factors driving the growth of entrepreneurship
5. Compare differences in entrepreneurial opportunities around the globe
As we delve into the study of entrepreneurship, let’s define what we mean by the word entrepreneur. An entrepreneur is someone who identifies and acts on an idea or problem that no one else has identified or acted on. This combination of recognizing an opportunity to bring something new to the world and acting on that opportunity is what distinguishes an entrepreneur from a small business owner. A small business owner is someone who owns or starts a business that already has an existing model, such as a restaurant, whereas an entrepreneur is someone who creates something new. This new creation can be a new process or product, a business that identifies a new or unique target market, or a combination of ideas that creates a new approach or method, for example.
In a broader sense, what people consider an entrepreneur can vary. Some scholars strictly differentiate between entrepreneurs and small business owners.Hamid Bouchikhi. “A Constructivist Framework for Understanding Entrepreneurship Performance.”  Others acknowledge that a small business owner may also be an entrepreneur—they are not mutually exclusive. Someone may start a venture that is not a completely new idea, but that introduces a product or service to a new region or market. Where does a franchise fall in this discussion? Again, there is not complete agreement, with some claiming that a franchisee and entrepreneur cannot be the same, and others arguing that a franchise is, indeed, an entrepreneurial venture. According to an article in Forbes, “In the for-profit world, an entrepreneur is someone who creates and runs a new business where one did not exist before. And, no, the McDonald’s franchisee didn’t create McDonald’s. But he certainly created a McDonald’s where there never was one before. Franchisees are entrepreneurs.”Paul B. Brown. “Franchisees Are Entrepreneurs (Let the Debate Begin).”  The point is that small business owners and franchisees can be considered entrepreneurs. For the purposes of this course, you will learn the key principles of entrepreneurship alongside the concepts, strategies, and tools needed to succeed as a small business owner or franchisee.
Entrepreneurs have many different talents and focus on a variety of different areas, taking advantage of many opportunities for entrepreneurial ventures. An entrepreneurial venture is the creation of any business, organization, project, or operation of interest that includes a level of risk in acting on an opportunity that has not previously been established. For some entrepreneurs, this could be a for-profit venture; for other entrepreneurs, this could be a venture focused on social needs and take the form of a nonprofit endeavor. Entrepreneurs might take a variety of approaches to their entrepreneurial venture, such as those shown in .
In this course, you will explore these myriad avenues toward entrepreneurship.

### The Entrepreneurial Lifestyle and Career

People often have thought of entrepreneurs as corporate rebels, nonconformists, or activists. Being an entrepreneur has become synonymous with being an innovator, a change agent, or a risk taker. Regardless of job titles or descriptive characteristics, entrepreneurship has a universal appeal for how people think and engage with the world.
Choosing the path of entrepreneurship requires a willingness to take on calculated risks. The difference between risk and  is due diligence, or conducting the necessary research and investigation to make informed decisions that minimize risk. Not everyone is comfortable letting go of a steady paycheck, especially when we know that there is no long-term guarantee that the paycheck will continue into the future. In one approach to minimizing personal financial risk, some startup entrepreneurs continue with their current employment while working on the side to develop their idea into a venture that eventually will generate an income. Until the venture requires near full-time work and generates income, maintaining an outside income works well for many entrepreneurial teams.
Consider the eyeglass startup Warby Parker (). Dave Gilboa and Neil Blumenthal, lead entrepreneurs for Warby Parker, were still working their normal jobs when they approached an angel investor with their idea. The angel investor asked a few questions and wasn’t impressed. This investor believed that Gilboa and Blumenthal should demonstrate their solid commitment to the venture by quitting their day jobs to dedicate more time and energy to Warby Parker. Instead of following that advice, Gilboa and Blumenthal kept their day jobs while they continued to work toward building their venture, and Warby Parker eventually became highly successful. There are many paths to becoming an entrepreneur, and many paths to creating a successful venture (see Entrepreneurial Journey and Pathways). It is important to identify the path that works best in your life—and for the venture—and that supports your goals and your unique situation and visions.
Within the entrepreneurial world, the idea of a lifestyle venture has evolved to mean a business in which the founders’ primary focus is the lifestyle they will attain through becoming entrepreneurs, rather than a primary interest in financial rewards through the selling of the business. Within the entrepreneurial world, harvesting is the typical exit strategy. The harvest is the point at which the investors and entrepreneurial team receive their return on creating and building the venture.
For a lifestyle venture, the entrepreneur is more likely to be a solo entrepreneur, someone who moves forward in starting a new venture without the support of a team or group of likeminded individuals who recognize the value or potential of an entrepreneurial idea that could potentially result in significant returns. A lifestyle venture is also more likely to be funded through family and friends, and more traditional methods such as a bank loan or a small business loan. This lifestyle includes greater freedom to decide areas of responsibilities, hours of contribution to the venture, and other decisions that support the desired lifestyle. An example of a startup lifestyle venture is The Wander Girls, a company that identified the unique concerns of women traveling alone.The Wander Girls. n.d. http://thewandergirls.com/ The Wander Girls organizes trips and events for groups of women traveling in India. A team member organizes the trip, travels with the female tourists, and handles daily interactions and transactions.
Another example of a lifestyle venture is based on how an entrepreneur aligns values, interests, and passions to create a balance between enjoying life and earning enough money to support those passions. Roxanne Quimby had a passion for living off the grid, creating her own life in the woods of Maine, and not being restricted by the rules and regulations required when working as an employee. After becoming a parent, Quimby faced the challenges presented by her lifestyle choices and started making candles to earn enough money to support her family. Eventually, Quimby’s lifestyle candle-making business expanded into the highly successful Burt’s Bees Corporation, moving her lifestyle business into a career as the CEO of Burt’s Bees (). After selling Burt’s Bees to Clorox Co., Quimby continued her passion for the north woods of Maine by donating land and money to create a wildlife sanctuary and preserve that land from development.
Quimby’s latest endeavors include creating a pasta company, My Pasta Art, focused on increasing employment opportunities for people in northern Maine,Mary Pols. “Making Pasta’s the New Focus for Roxanne Quimby.”  and building the tourist industry to encourage people to enjoy the region’s beautiful habitat and scenery. Although she is highly successful from a financial perspective, money was never the motivation for her ventures. As you can see, there are many paths to finding your career in entrepreneurship, and multiple trigger points at which you might make the decision to become an entrepreneur.

### The Entrepreneur as a Problem Solver

What are some challenges you face in your life? Have you ever actively thought about how you could solve those problems? Or have you actively identified exactly what the problem is from an analytical perspective? We often have a tendency to jump quickly from noticing a problem to selecting a solution, with little understanding of whether we have even correctly identified the problem. Identifying the problem—and testing the potential, novelty, and feasibility of your solution—is an important part of resolving the problem. Often, when we start to explore the problem, we find that it has multiple causes. Among them are:
1. The need for something to be better, faster, or easier
2. The effects of changes in world on your industry, product, or service
3. Market trends based on geography, demographics, or the psychology of the customers
You will learn more about identifying opportunities in Identifying Entrepreneurial Opportunity and Problem Solving and Need Recognition Techniques.
One characteristic of a savvy entrepreneur is recognizing the ability to identify a problem from an opportunity-identification perspective. We might identify feeling hungry as a problem, but an entrepreneur would identify the problem using an opportunity-identifying perspective by determining how the problem could be translated into an opportunity to create a new venture—perhaps combining the problem of feeling hungry between meals into a street kiosk or a vending machine with food choices or creating a new snack that is nutritious, satisfying, and portable. People need to eat, and they get hungry, but during a busy day with no open time or convenient food, people end up hungry. Rephrasing the problem, or need, from an opportunity viewpoint opens the search for a sustainable solution beyond the simple awareness of feeling hungry. We might solve this problem by opening a snack bar with offerings that contain essential vitamins and proteins, and is easy to transport with a long shelf life. Understanding the problem from the perspective of how to solve it for one person into how to solve it for multiple people rephrases the problem into an opportunity-identification perspective.
You might also have an interest in solving food-related problems on a larger scale. People trapped in a war-torn region may not be able to leave the safety of their shelters to find food, grow food, or barter for food, or they may not have the money to buy food. How could you reach your target market within a war-torn area? Red Cross emergency response vehicles traveled 2.5 million miles to deliver food, relief supplies, and support to communities affected by disasters during 2017.American Red Cross. “2017 in Review: Red Cross Delivers More Food, Relief Items, and Shelter Stays Than Last 4 Years Combined.” December 18, 2017. https://www.redcross.org/local/georgia/about-us/news-and-events/news/2017-in-Review-Red-Cross-Delivers-More-Food-Relief-Items-and-Shelter-Stays-than-Last-4-Years-Combined.html That’s the equivalent of driving around the globe 103 times. Could your idea of creating a snack bar fit into a partnership with the Red Cross?
Although this might seem like a simple problem with a simple solution, persevering from the recognition of a problem to finding a realistic solution, then moving that solution forward into a successful venture, requires an entrepreneurial mindset. Every day, people become entrepreneurs as they identify and solve problems, or face new challenges or frustrations, and resolve them in creating products or services to address these issues.

### Factors Driving the Growth of Entrepreneurship

Do you know anyone who has lost their job? Or who has been rejected or mistreated at work? Or had their income reduced, or benefits removed? Research shows that 47 percent of all US employment is at risk through artificial intelligence and other technologies, although there will also be new opportunities for jobs that currently don’t exist.Carl Benedikt Frey and Michael A. Osborne. “The Future of Employment: How Susceptible Are Jobs to Computerization?”  These types of experiences and outlooks have provided the impetus for many people to start their own businesses. When we work for someone else, we are at the mercy of their decisions and actions, but we get paid and don’t carry the full risk of their decisions. When we work for ourselves, we get to make the decisions (not that making decisions is easy). But when we have our own business, we have greater control—in exchange, we also carry the risk for all decisions we make. This control over decision-making is one reason that some people find the world of entrepreneurship attractive.
Another contributing factor to the desire to become an entrepreneur is the excitement and fun of creating something new. Many entrepreneurs are excited at the idea of moving the concept through to the materialization of the idea.
A third factor that supports the growth in entrepreneurship is the combination of retirement and longer life expectancies. Many people enjoy working. For them, retirement consists of too much open time and not enough activities or the type of engagement with the outside world that fulfilled their needs during their working lives. Retirement also presents unique financial considerations, depending on an individual’s lifetime savings and planning. The combination of having available time and a desire for continued earnings encourages some older adults to explore their own entrepreneurial opportunities.
A fourth factor driving the growth of entrepreneurship is the expanding awareness and support of entrepreneurship as a viable career choice. In much of the twentieth century, families encouraged their children to find a stable career with a large corporation. During this era, there was a certain expectation of reciprocal loyalty between the employer and the employee based on some traditional employee-employer roles in that century. The general, informal agreement was that if employees came to work every day and fulfilled their responsibilities, they would have long-term employment with that corporation. But as competition increased and new business practices evolved, this unspoken guarantee no longer held true. The model of certainty of employment gradually disappeared. As people acquired a new perspective on their careers and income, they increasingly realized that we are all responsible for our own paths. Most studies suggest that people change their careers between three and seven times.Dawn Rosenberg McKay. “How Often Do People Change Careers?”  Note that this is not how often people change jobs, but how often they change their careers, moving from one industry to another, or moving from one type of work to a different type of work. The older model of stability through working hard for someone else has vanished. This awareness and acceptance have encouraged recent generations to consider creating their own futures through entrepreneurial ventures.
Just as individuals have become aware of the benefits of entrepreneurship, communities and organizations have also become aware of how entrepreneurial ventures add economic development and enhancements worth supporting, bolstering opportunities for those who decide on this path.

### Entrepreneurship around the Globe

In the United States, entrepreneurial opportunities abound, relatively speaking. Between 1990 and 2014, the number of campus-based entrepreneurship education programs increased from 180 to over 2,000.Infographic.ly Team. “Infograpic: The Growth of Entrepreneurship around the Globe.”  Comparing globally, the United States has the greatest number of entrepreneurial ventures, with Switzerland, Canada, Sweden, Denmark, and Australia following in order, according to Global Entrepreneurship Index, a global consulting firm ().
Why is the United States leading with the greatest number of entrepreneurial ventures? What does it take to become an entrepreneur? In addition to having an entrepreneurial mindset (see The Entrepreneurial Mindset), entrepreneurs also need education and funding to support their new ventures.
You will learn more about funding in Entrepreneurial Finance and Accounting, but as an introduction, you should know there are three primary sources of outside funding: family and friends, angel investors, and venture capitalists. Some family members and friends are willing and able to invest money in helping the entrepreneurial team. An angel investor is someone who has available funds and an interest in supporting a new venture. They are often entrepreneurs who have successfully launched and harvested their own ventures, and who have an interest in helping other entrepreneurs in their startups, staying active in the entrepreneurial world, and a desire to receive a return on their investment in the venture. Angel investors often provide funding early in the life of a venture. As the venture grows, it typically requires more funding, at which time venture capitalists may invest in the venture. A venture capitalist (VC) is a group of people (or organizations) who pool resources to invest in entrepreneurial ventures, contributing larger sums of funds than are available through angel investors. In each funding round, investors receive an equity stake in the venture with expectations that at some point in the future, the venture will be sold, or harvested, at which time the investors will receive a return on their investment. Because they tend to be in larger groups, VCs typically have access to larger amounts of money and resources than individual angel investors. (You will also learn about other types of financing, such as bank loans and bootstrapping, in Entrepreneurial Finance and Accounting.)
In the United States, VCs contributed $72.3 billion in 2015 for 3,916 deals, or funding rounds. In China that same year, $49.2 billion were invested in 1,611 ventures.Infographic.ly Team. “Infographic: The Growth of Entrepreneurship around the Globe.”  European VC investment totaled $14.4 billion and 1,598 deals. Tracking these numbers over time shows steady increases in VC funding as entrepreneurial ventures have become more common ().
Other factors that can affect entrepreneurial opportunity include employment rates, government policies, and trade issues. For example, in the Middle Eastern kingdom of Saudi Arabia, a newer driver of entrepreneurship includes a high unemployment rate with a large percentage of the population in its prime earning years. In the past, employment was less of a concern because of dependency on state support from oil revenue. The population received monthly allotments to cover expenses from state-owned oil production. More recently, the population has become restless, with a desire to become productive and have greater control over their own resources. And the rulers recognize that oil production income is volatile and unsustainable. Today, with more future-oriented leaders, countries in the Middle East desire to encourage their citizens to consider starting their own businesses.Infographic.ly Team. “Infographic: The Growth of Entrepreneurship around the Globe.”  The example of entrepreneurship in the United States has spread around the globe, with other countries taking an interest in developing support systems to encourage their populations to become entrepreneurs.
As noted, the United States is a world leader in entrepreneurial innovation. Perhaps because the United States is, in large part, a nation of immigrants, with people arriving from all over the world, Americans have few prescribed traditions that encourage conformity. America’s longstanding traditions and reputation for individualism, ingenuity, and self-reliance have reinforced this mindset. However, the governments of other nations have discouraged their citizens from independent or innovative thinking. Some cultures emphasize political, cultural, and economic unity, and place a strong value on not being noticed, blending in, and following prescribed habits and traditions. Countries like Japan, France, Russia, China, and others continue to reflect these norms. Other countries have complex bureaucracies that prevent quick responses and place barriers to entrepreneurial activities. Parts of worldwide economic structures (banking, investments, and technology) are not accessible or even explicitly exclude some nations and the poor. Systems like this discourage people from coming forward with entrepreneurial ideas because the culture and bureaucracy prevent people from finding access to information necessary for the successful advancement of an idea. In contrast, other countries are noticing the benefits of encouraging their populations to become more open-minded and creative through new ventures.
Key characteristics that encourage entrepreneurship include support for freedom to create and innovate. What conditions encourage creativity and innovation? Acceptance of failure is a key characteristic for success as an entrepreneur. Many of the great inventions in the United States resulted after dozens of failures, as when Thomas Edison eventually developed a working light bulb. Edison identified a problem: Once the sun set, working hours were restricted, as were daily activities such as reading a book or washing dishes. Edison, along with many other inventors, recognized the need for an artificial light source. Consider how complex this idea was and how many failures must have occurred before creating a product that emitted light.
Another condition that encourages entrepreneurial behavior is the ability and opportunity to connect with other people to discuss ideas, problems, challenges, and solutions. This connection with other people, in an open environment that supports the exchange of ideas, is essential for encouraging creativity and innovation.
With the advent of the Internet, people around the planet are becoming increasingly aware of geopolitical and environmental situations across the globe. As more people observe these changes and situations, more people exchange ideas. These discussions can generate new opportunities for people to discover methods for solving problems. Any one of us could be living in one country but identifying a problem in another country. Given our interests and backgrounds, we could actively choose to develop a solution for that problem. What we need, as a general approach, is an efficient and transparent way to form companies and enable constructive competition, along with continued free and fair trade.
These are just some of the areas that many nations and organizations consider as they seek to encourage a transition away from group-prescribed thinking toward uniquely individual entrepreneurial ideas. Each of us encounters life from a different perspective. Although we all might recognize the restrictions presented by the sun setting every night, only a few people might question why we couldn’t change that situation by creating our own light. Similarly, someone in another country may observe our country (or vice versa) and ask why that country has a particular problem. Meanwhile, people living with that problem may have become so accustomed to it that they might not recognize the opportunity to seek solutions.
Increasing opportunities in entrepreneurial education are also driving growth. More colleges and universities are teaching entrepreneurial studies and opening entrepreneurial centers that encourage students from every discipline to become entrepreneurs.National Survey of Entrepreneurship Education. n.d. www.nationalsurvey.org,“The Princeton Review & Entrepreneur Name the Top Undergraduate & Graduate Schools for Entrepreneurship Studies for 2020.” Cision PR Network. November 12, 2019. https://www.prnewswire.com/news-releases/the-princeton-review--entrepreneur-name-the-top-undergraduate--graduate-schools-for-entrepreneurship-studies-for-2020-300955876.html As the employment and entrepreneurial landscape continue to evolve, some institutions have started offering courses to prepare students for work in the gig economy.Diane Mulcahy. “Universities Should Be Preparing Students for the Gig Economy.”  In fact, some of the best new entrepreneurial ideas come from groups of students in different majors who collaborate to create new, innovative business ideas that meet specific needs and challenges in today’s world. In some cases, students from different universities around the globe are connecting to come up with business ideas to solve global problems, such as the lack of clean drinking water and the need for medical vaccination programs. Technology and global travel have made such partnerships more common and very productive.
The world of entrepreneurship opens doors for each of us to look beyond our own self-created barriers and explore opportunities around the world. Consider the creation of Starbucks, borne from the realization of how pleasant it can be to sit at a European café and drink excellent coffee. Awareness of an idea that is commonplace in one country, but new to a different country, presents the possibility of introducing that idea to another nation. In the Starbucks example, was there a problem that needed to be solved? Not necessarily, but the founder, Howard Schultz, had a desire to bring a specific quality-of-life element from one country to another, a business idea with an entrepreneurial aspect. One of the entrepreneurial aspects of creating Starbucks was the idea of mass expansion of coffee shops. Prior to Starbucks, the idea of creating a high-quality coffee drink hadn’t been developed. Even more significant was the idea of expanding the business across the United States and then around the world.
Given the growth of coffee shops throughout the United States, we might not think that this idea is innovative, but before Starbucks, coffee typically was served at a diner, and it was served out of habit, rather than as the main attraction. With Starbucks, people changed their ideas about coffee and their coffee-drinking habits. Although businesses like Dunkin’ Donuts served coffee, their focus was on selling donuts, not coffee. As Starbucks grew through repositioning coffee as their main product, other companies like Dunkin’ Donuts and McDonalds realized the missed opportunity in not reinventing the coffee market with multiple choices of high-quality coffee. In fact, Dunkin’ Donuts has changed its name to just “Dunkin,” removing the emphasis on doughnuts.Kate Taylor. “Dunkin’ Donuts Is Officially Dropping the ‘Donuts’ from Its Name Despite Earlier Backlash.”

### Social and Environmental Issues and Opportunities

A social entrepreneur has an interest in solving a social, environmental, or economic problem. A social entrepreneur identifies a problem with a social or community focus, a concern for quality of life, or concern for our entire planet’s health (you will learn more about social entrepreneurship in The Ethical and Social Responsibilities of Entrepreneurs). One such person is Angad Daryani, a young serial inventor. Daryani left school in the ninth grade to join the Media Lab at the Massachusetts Institute of Technology (MIT), where he worked on an industrial-scale air filter to clean pollutants and carcinogens out of our planet’s air. Daryani’s home country of India is the world’s third largest emitter of carbon dioxide, according to Global Carbon Atlas, behind China and the United States ().“Fossil Fuel Emissions.” Global Carbon Atlas. 2017. http://www.globalcarbonatlas.org/en/CO2-emissions
Not only is Daryani interested in solutions for air pollution, but his product will also provide financial gains and add to his personal credibility as a serial entrepreneur, or someone who starts and harvests multiple entrepreneurial ventures. Darvani describes himself as an inventor and social entrepreneur, combining his interest in improving lives through a variety of entrepreneurial ventures including products like Sharkits (a do-it-yourself-kit company that teaches children how to build technology), the SharkBot 3D Printer (an attractive, low-cost, and reliable 3D printer), and several other projects that combine technology and human needs. As each of these products advances to commercialization, the products and technology are becoming more applicable for other uses as well. For more examples of projects that Darvani is working on, take a look at his website (http://www.angadmakes.com), which includes videos and articles, and highlights the international recognition he has received for his innovative work.

### Summary

An entrepreneur is someone who takes on an entrepreneurial venture to create something new that solves a problem; small business ownership and franchising are also entrepreneurial options. The venture could be for profit or not for profit, depending on the problem it intends to solve. Entrepreneurs can remain in a full-time job while pursuing their ideas on the side, in order to mitigate risk. On the opposite end of the spectrum, entrepreneurs can take on lifestyle ventures and become serial entrepreneurs. There are many factors driving the growth of entrepreneurship, including employment instability, motivation to create something new, financial factors and free time associated with retirement, and the greater acceptance of entrepreneurship as a career choice. The cultures of nations around the world affect the ability for entrepreneurs to start a venture, making the United States a leader in entrepreneurial innovation. Entrepreneurs often find inspiration in social, environmental, and economic issues.

### Review Questions

### Discussion Questions

### Case Questions

### Suggested Resources

https://www.entrepreneurship-campus.org
https://youtu.be/zV2vi8FilLM


# The Entrepreneurial Perspective

## Entrepreneurial Vision and Goals

### Learning Objectives

By the end of this section, you will be able to:
1. Define an entrepreneurial vision
2. Develop a vision statement
When you think of yourself as a successful entrepreneur, what types of images or feelings do you experience? Do you find yourself daydreaming about creating the next great solution to society’s problems, or do you see yourself providing a solution for the next health or environmental crisis? Maybe you can imagine yourself creating something that equally balances art, function, and ingenuity.
This section is designed to help you develop your entrepreneurial vision. Vision is an important part of everyone’s future, and this is especially true for entrepreneurs. Establishing your vision is the first of several steps toward making your venture a reality.
Many would-be entrepreneurs aspire to launch the next great business or organization that will change the world. Some know exactly what they want to create, whereas others figure it out as they go along. Although there is no secret to success, you do need to have some idea about what you envision for your entrepreneurial future. What do you see in your future? How do you want to contribute to the world?

### Entrepreneurial Vision

Every successful entrepreneur that you encounter or read about likely started with an image or idea related to something he or she felt passionate about creating. This occurs even when the person has no idea how (or if) what they desire to accomplish or create will become a reality. An entrepreneur’s vision is the start of a roadmap that will determine where he or she wants to go with their entrepreneurial efforts. Vision speaks to what the entrepreneur wants the business to look like in the future—perhaps five or ten years out. Unfortunately, many potential entrepreneurs have dreams and ideas but never develop a concrete vision. A vision statement is the picture you have for what the venture will become in the future: what it will grow into. Be aware, though, that oftentimes, the identified vision at the start of the venture changes into something different. In later chapters, we discuss how this change requires open-mindedness and a willingness to adapt. The mission statement is a formal declaration about what the venture will do, what value it will provide to the end customer, and how it will accomplish this action. In describing your mission, carefully think about the value proposition that you provide. The value proposition is a summary statement that conveys the benefits your product, service, or unique business process/model provides to customers. This relates back to the perspective of problem solving. Not only do you need to solve the problem, but you also must provide value. We might solve a problem, but if the value proposition isn’t relevant or seen as “real” by the customer, the venture will probably not be successful. Both concepts of a future vision and the mission of the venture should be formalized into statements.
In spite of your best efforts, you may have trouble putting your entrepreneurial vision on paper. This is normal, especially in the early stages of the process. You may want to start with an outline and fill in the details later. Or set aside a short time each day that you can spend on this task so you train your mind to think about the vision you are setting for yourself. If you experience a mental block, try changing your environment—go outside, try a different time of day, or go to a setting that has similarities to the business you are interested in creating. You might also consider talking with someone who has experience in the industry to give you suggestions. Or better yet, find a mentor in your chosen area of interest and keep this person apprised of your progress. Having someone to bounce ideas off is a great asset to have when imagining the possibilities of the future.
An entrepreneurial vision considers what you want your venture to become, what this venture will look like, what the driving forces are, and what values and culture should surround it. Each individual entrepreneur has a unique picture of what the venture will become. For example, Kevin F. Adler wanted to help homeless people. He created Miracle Messages, a volunteer-based nonprofit organization with a goal of helping homeless people reconnect with loved ones. The vision for this organization includes building a vast network of volunteers and partnerships to stop homelessness and bring people together. This vision is about creating community, helping each other, and strengthening communities. The business model encourages homeless people to create short Miracle Messages through video, audio, or text, with messages then uploaded to social media and other methods to find that person’s loved one.
In an entrepreneurial venture, when the vision has a shorter timeline, such as five years, it could focus on a local problem or situation, and over time evolve into a vision that is broader and includes more diverse markets or populations. Your vision should inspire the people involved in your startup to support your venture. Use your imagination to create this picture of your venture with a focus on the future of the venture. Even though entrepreneurs use their imaginations and creativity in developing this picture, they also need to understand the venture’s industry, the competition, and trends that are evolving or might evolve in the future. This information helps guide the vision for the venture and define how it is uniquely different from any other business. Ideally, the vision should be insightful, bold, inspirational, and believable, and it should be developed into a formal vision statement.
The vision statement should also be clearly stated and discussed with the startup team. Although you might not have a startup team, a mentor, or a support group developed yet, to create an entrepreneurial venture, you will need support. Your support network understands that working without pay is often the normal situation at the beginning, with the potential for financial rewards coming when the venture is harvested or sold. For some entrepreneurs, knowing the vision includes the sale of the venture to another group or corporation is difficult to accept. However, that is the point at which the venture can grow to become ever more viable. Alternatively, if your vision is to be a small business owner, such as owning a franchise, then you are buying into a business plan package that has already fine-tuned the processes and decisions to support your success as the owner/manager of that business. A small business owner starts or buys into a business idea that already exists, whereas an entrepreneur is someone who seeks to create something new through either new products, services, methodologies, or combinations of ideas that create a new venture or organization.
The lead entrepreneur should share the vision statement with employees and investors, as these groups are formalized, communicating what this vision means personally and to the success of the venture. You might also need to revisit this vision as your venture grows, making changes based on your decisions and knowledge about your industry, products, and customers’ needs. Even if your vision statement changes based on new information and decisions, creating an initial vision statement is a valuable step and will help guide your decisions.

### Creative Approaches to Developing Your Vision

There are many definitions of and ways to express creativity (you will learn more about creativity in Creativity, Innovation, and Invention). Artists typically show their creative side in their art, musicians show their creativity through music, and writers express their creativity in writing. Others express technical creativity through cell phone innovations or new car technology. It is up to you to determine how you will express your creativity in your venture and in your professional life. In most cases, when people follow their passions, their creativity flows from that passion.
One approach to discovering your vision for your future is to begin with the end in mind. What picture of your desired future do you have in mind? How could this vision fit with the ideas you have of creating a successful venture? Notice that these questions are about both your personal future and the vision for your venture’s future. These two pictures should coexist. The vision for your personal future should allow for the necessary resources to support the venture’s future, just as the venture’s future will provide for your personal future. We will discuss work-life balance later in the chapter to help you identify what creates success as you describe your vision.
Another approach to developing your vision is to use a creative thinking process. This type of thinking allows people to come up with ideas that they might not have had without adopting a creative mindset. The creative thinking process (covered in more depth in Creativity, Innovation, and Invention) has four steps: preparation, incubation, illumination, and verification ().
In the preparation stage, gather information and collect ideas. As part of the process of tapping into creative ideas, you can apply divergent thinking by generating as many ideas as possible, even when those ideas do not seem logical. Create a list of conflicting ideas, or ideas that are diverse and disparate.  is the first step of the creative thinking process. The next action is to walk away from thinking about the activity: . We are programming our minds to realize that the work done in preparation is an important topic for consideration. When we walk away from consciously thinking about the activity or problem, we allow our unconscious minds to continue to think about the activity, even though our conscious minds are busy doing other things. This incubation period is essential for advancing creativity. In the incubation stage, you might go for a walk, take a nap, or just continue with your daily activities. At some point, you may have a sudden inspiration or —an aha! moment—that clearly addresses the activity or problem you want to solve. In this step, the answer often pops into our conscious minds, and we recognize how to proceed. The last step is , crafting our vision statement or message, or responding to the exercise in creative thinking. You can apply this creative thinking process to many different business situations. Once we further develop and crystallize our ideas (the Business Model Canvas discussed in Launch for Growth to Success is a good tool for this activity), we provide an opening for a creative and viable solution as we continue to think about the issue.
Design thinking, brainstorming, and mind mapping are tools that you will learn about later in the course. Although these tools may be familiar, there are specific methodologies that can optimize their success in entrepreneurial situations. Brainstorming requires that participants generate ideas around the desired topic without judgment. You can do this alone or with others, but including other people provides a greater variety of ideas, as one person’s ideas might trigger another idea from someone else. Be sure to write down your thoughts so that you can return to them later. Brainstorming is different from divergent thinking, which does not require ideas to be associated with the identified topic. For example, in brainstorming on the topic of helping the homeless population, we might come up with ideas such as finding community food and housing, or providing free medical care. Using divergent thinking, we would arrive at more diverse ideas, such as filming homeless people then uploading the videos to a social media website to connect family members with the homeless person. These tools could incorporate divergent thinking in the idea-generation step, but typically, unless people are taught how to use divergent thinking, the ideas generated are more structured and constrained, and more logical. As much as we want to encourage divergent ideas, we also want to discourage any judgment around our ideas. Once we start judging our ideas, we restrict our creativity and end up with less than ideal solutions. Approach this process with some playfulness and relaxation.
Mind mapping is another popular technique for creative thinking. Here, you create an illustration on paper or a chalk board. Write down the words that come to mind then link those words together with lines in a diagram that shows how each word relates to the others. The idea is that one word can lead to another. You can discover associations that might not have been evident before you created the mind map.
You can conduct research on entrepreneurial ideas by creating surveys and asking people questions about their experiences related to your idea. For example, let’s say you are considering creating a new non-messy health food that can be eaten while commuting to work. You could ask people about their experiences eating while commuting to work or ask questions about nutritional concerns or diets. Or you could find secondary data on when people eat, eating while commuting, popular diets, or other related topics. Or you could find case studies that focus on a few in-depth similar areas of interest or perform your own case studies by selecting a few peers to track their eating habits. Or you could create a prototype of your product and ask people to tell you about their experience using your product. You will learn more about research strategies in Identifying Entrepreneurial Opportunity, Problem Solving and Need Recognition Techniques, and Entrepreneurial Marketing and Sales.

### Achieving Balance

Entrepreneurship comes with many challenges because the entrepreneur must wear many hats. This is especially true if the entrepreneur is the only employee in the business. But regardless of the business model, all entrepreneurs must be able to achieve balance in their lives between their dedication to growing their entrepreneurial venture and their personal life. Developing a vision that includes different areas of your professional and personal life can help make this type of balance achievable.
How do you define balance in your life? What areas do you consider when you think about a balanced life? Having enough money to support your lifestyle might be one goal. Other areas might include physical activities or hobbies, social interactions and entertainment, satisfaction with how you earn money, your family and personal relationships, and other interests and values. Some entrepreneurs start lifestyle ventures to achieve this balance. But how do we achieve balance when our goal is to be a career entrepreneur?
A career entrepreneur is someone who takes on the daily management as the owner of the venture, accepting, and perhaps enjoying, the daily risks and rewards of managing and building the venture such as Roxanne Quimby. For Roxanne Quimby, growing Burt’s Bees involved making difficult decisions, such as relocating from Maine to California to meet the growth needs of the company. Even though Roxanne wanted to provide employment opportunities to people in northern Maine, she knew that her business needed the right infrastructure for success, and that infrastructure wasn’t available in Maine. If you choose to become a career entrepreneur, your focus may be primarily on advancing your entrepreneurial idea into a successful venture, like Roxanne did with Burt’s Bees; this can come at the expense of personal life goals.
Many career entrepreneurs need support from family and friends who accept that the lead entrepreneur’s attention and energy are required for the success of the venture, and many lifestyle entrepreneurs will find challenges in meeting the needs of the venture while maintaining work-life balance. Discussions with family, close connections, and the entrepreneurial team should occur in the early idea-formulation stage to gauge the support of the people whose interests might be compromised by the entrepreneur’s dedication to advancing the venture.
Clearly defining your idea of success for your life, and for your venture, is an important step in achieving balance. What are your priorities? What can you do to balance the success of your new venture, the success of your own life, and the success of your family? Considering that balancing all the roles that we have in life is a frustration point for many people, can you find an opportunity to create an entrepreneurial venture?
As you explore what success means for your venture and how your definition aligns with balance between your personal life and dedication to your venture, you should consider some of the unique challenges entrepreneurs can face. For example, there might be a learning curve in unfamiliar areas of business, such as accounting or finance. Or you might face a dilemma about whether to expand a product line, or whether or where to open a new location. Entrepreneurs often mention the physical requirements of starting up a business. Physical demands can include the sheer stamina needed to clean a new space, move in, and set up shop. Depending on your business, you also might need to adjust to being on call twenty-four/seven. Here again, developing a vision of where you want to be in the future can help you plan for the challenges you will face in the early stages of your business.
Entrepreneurship can be especially draining if you are not prepared for the tasks at hand—as can be the case with any professional or personal role. Therefore, self-care and emotional awareness can play a key role in maintaining your emotional health as an entrepreneur. Taking time for yourself is very important. This could involve creating a time management calendar. Tracking how you spend your time can keep you on schedule with tasks and prevent you from expending too much on any one area of the business or your personal life in detriment to the other. Taking time away from the business is emotionally healthy and can provide important perspective that can help you make better decisions. “Leaving work at the office” is a successful strategy that many business people use to separate their personal and professional lives. If this is not possible—for example, if you work from home—setting aside family or personal time can allow for work-life balance.
Having trusted advisors and mentors for your business and personal life can also promote emotional health. When you face a decision or challenge that you have difficulty with, it is important to have someone to talk to who knows you and knows your situation. Some entrepreneurs may find themselves in their first experience of leading others, with total responsibility for the outcomes as owner of the business. Every business person should have a personal leadership improvement plan. This plan can take the form of academic classes or professional coaching, but sometimes, it will be a personal commitment to improvement. You should identify your preferred leadership styles, as well as leadership strengths and weaknesses. It might be useful to look back on your own work experiences to identify which leadership traits you admired and which ones you didn’t. As with any other business skill set, you can learn and improve these strengths in yourself. You also can hire people with complementary skills to handle the areas that you feel unsure about.
Being aware of your own strengths and weaknesses, as well as of your preferences and dislikes, will help you achieve and maintain balance in your life. Having counselors, mentors, advisors, checklists, and timelines can keep you on track and prevent any one area of your business or personal life from taking over or being neglected.

### The Importance of Goals

Entrepreneurial vision imagines a future, whereas goals focus on a desired outcome. Although vision is key to creating the future that you want for yourself and your business, goals are important to help you realize the steps needed to make that vision a reality.
Read through your definitions of success and your vision statement. Now create a list of possible actions that will help you achieve success and accomplish your vision. Review your list and categorize the words and actions in terms of relevance and time frames.
SMART goals are well-structured and defined goals that are specific, measurable, achievable, realistic, and timely ().
1. Specific: Your goals should be precise rather than overly broad.
2. Measurable: You should be able to test in some quantifiable manner whether a goal has been met, meaning that there needs to be some method to determine if the goal has been met or not.
3. Achievable: The goal must be attainable; it cannot be so lofty that it cannot be accomplished. On the other hand, the goal should not be so easy that it can be accomplished quickly or with little effort.
4. Relevant: The goal should be well suited for what you want to accomplish; this means that the goal should be relevant to the outcome needed.
5. Timely: Each goal needs to have a defined deadline, the time when the goal must be accomplished. What time frame do you have for completing your goals? How does this timeline fit into your overall plan?
For example, if your personal definition of success and your vision for your future include financial independence—with, say, a vacation home in the mountains—what goals can you define today that will lead to this outcome? You would include financial goals tracked either monthly or yearly to save a set amount of money based on your projection of how much money it will take to own these two vacation homes. You would also set goals about finding the right locations. This process is also necessary to support the success of your business venture. Setting goals is a powerful approach that leads us to the future we want for our lives.
Here is a fictional example of an entrepreneur’s goals, which we can test against the SMART criteria to see if they are feasible. Soraya runs a small tutoring business in Dallas, Texas. Her target market is high school students. Soraya is currently the only employee in her sole proprietorship, but she hopes to hire more employees soon. She is excited about her business, and so far, she has done well in the four years that she has been operating it. On the advice of a friend in business school, Soraya has defined three business goals for the next year. They are:
1. Increase sales by 50 percent.
2. Open a new location.
3. Hire two employees.
In reviewing these goals using the SMART criteria, it is evident that goals one and three are specific because they are quantitative, but goal two is not. All three goals can be measured. With Soraya as the only employee, it is unlikely that she can achieve goals one and two, but goal three is achievable. And hiring more staff would increase the likelihood of achieving additional goals. All three goals are relevant to growing the business. And each goal could use more detail in terms of being timely. That is, in order to increase sales by 50 percent in the upcoming year, Soraya should have additional monthly or quarterly sales goals to meet her annual goal. Likewise, the opening of a new location requires more time-bound details, such as leasing or purchasing the location, and determining the business model for this location. Finally, hiring additional employees should have a time component as well, such as a timeline for recruiting, interviewing, selection, hiring, and training. Therefore, Soraya’s goals are appropriate for her small tutoring business, but they need refining so that they meet the SMART criteria. Soraya is more likely to achieve SMART goals, and they are more likely to lead to desired business outcomes.

### Summary

Establishing an entrepreneurial vision helps you describe what you want your venture to become in the future. For most entrepreneurial ventures, the vision also includes the harvesting or selling of the venture. There are creative ways, such as brainstorming and divergent thinking, as well as investigative ways to define an entrepreneurial vision. Once you have established your vision, it is important to write goals to help you realize the steps toward making your vision a reality.

### Review Questions

### Discussion Questions

### Case Questions

### Suggested Resources

The following links might provide you with more ideas about creating a vision statement.
https://website-designs.com/business/the-importance-of-a-vision-statement-for-entrepreneurs/
https://www.businessnewsdaily.com/3882-vision-statement.html
Check out this website’s ideas for developing your vision: https://www.executestrategy.net/blog/write-good-vision-statement
Eleven Free Goal Setting Software & Tools You Can Use: http://www.goal-setting-college.com/goal-setting-software/11-goal-setting-software-tools-you-can-use-for-free/
YouTube: Achieve More by Setting Smart Goals: https://www.youtube.com/watch?v=yA53yhiOe04
Twenty-four Essential Mind Mapping and Brainstorming Tools: http://mashable.com/2013/09/25/mind-mapping-tools/#jP47h7Q818qM
Read more about the challenges of work-life balance and what brings satisfaction to entrepreneurs in this article: https://www.wsj.com/articles/why-some-entrepreneurs-feel-fulfilledbut-others-dont-1432610236
Learn about applying a SWOT analysis (strengths, weaknesses, obstacles, threats) to your personal life: https://www.forbes.com/sites/lisaquast/2013/04/15/how-to-conduct-a-personal-s-w-o-t-analysis/


# The Entrepreneurial Perspective

## The Entrepreneurial Mindset

### Learning Objectives

By the end of this section, you will be able to:
1. Explain what it means to have an entrepreneurial mindset
2. Describe what is meant by entrepreneurial spirit or passion
Entrepreneurship takes many forms (see ), but entrepreneurs share a major trait in common: An entrepreneur is someone who identifies an opportunity and chooses to act on that opportunity. Most business ventures are innovative variations of an existing idea that has spread across communities, regions, and countries, such as starting a restaurant or opening a retail store. These business ventures are, in some ways, a lower-risk approach but nonetheless are entrepreneurial in some way. For example, Warby Parker, a profitable startup founded by four graduate students at Wharton, disrupted a major incumbent (Luxottica) by providing a more convenient (online initially), affordable, and stylish product line for a large segment of consumers. In this sense, their innovation is about creating something new, unique, or different from the mainstream. Yet they attracted an existing, and in some ways mature, sector of an established industry. In a different way, McDonalds, which is 90 percent owned by franchisees, introduced an “all day breakfast” menu in 2017 that was hugely successful; it also targeted a larger segment (in part younger consumers) and brought back consumers who had chosen other options. In summary, many entrepreneurs start a new venture by solving a problem that is significant, offering some value that other people would appreciate if the product or service were available to them. Other entrepreneurs, in contrast, start a venture by offering a “better mousetrap” in terms of a product, service, or both. In any case, it is vital that the entrepreneur understand the market and target segment well, articulate a key unmet need (“pain point”), and develop and deliver a solution that is both viable and feasible. In that aspect, many entrepreneurs mitigate risks before they launch the venture.
Being aware of your surroundings and the encounters in your life can reveal multiple opportunities for entrepreneurship. In our daily lives, we constantly find areas where improvements could be made. For example, you might ask, “What if we didn’t have to commute to work?” “What if we didn’t have to own a vehicle but still had access to one?” “What if we could relax while driving to work instead of being stressed out by traffic?” These types of questions inspired entrepreneurial ventures such as ride-sharing services like Uber, the self-driving vehicle industry,Matthew DeBord. “Waymo Could Be Worth as Much as $75 Billion—Here’s a Brief History of the Google Car Project.”  and short-term bicycle access in the free bike-sharing program in Pella, Iowa ().Ethan Goetz. “Bike Share Program Launched Monday.”
These ideas resulted from having an entrepreneurial mindset, an awareness and focus on identifying an opportunity through solving a problem, and a willingness to move forward to advance that idea. The entrepreneurial mindset is the lens through which the entrepreneur views the world, where everything is considered in light of the entrepreneurial business. The business is always a consideration when the entrepreneur makes a decision. In most cases, the action that the entrepreneur takes is for the benefit of the business, but sometimes, it helps the entrepreneur get ready to adopt the appropriate mindset. The mindset becomes a way of life for the entrepreneur. Entrepreneurs often are predisposed to action to achieve their goals and objectives. They are forward thinking, always planning ahead, and they are engaged in “what if” analyses. They frequently ask themselves, “What if we did this?” “What if a competitor did that?”—and consider what the business implications would be.
Most people follow habits and traditions without being aware of their surroundings or noticing the opportunities to become entrepreneurs. Because anyone can change their perspective from following established patterns to noticing the opportunities around them, anyone can become an entrepreneur. There is no restriction on age, gender, race, country of origin, or personal income. To become an entrepreneur, you need to recognize that an opportunity exists and be willing to act on it. Note, however, that the execution of the entrepreneurial mindset varies in different parts of the world. For example, in many Asian cultures, group decision-making is more common and valued as a character trait. In these regions, an entrepreneur would likely ask the advice of family members or other business associates before taking action. In contrast, individualism is highly valued in the United States and so many US entrepreneurs will decide to implement a plan for the business without consulting others.

### Entrepreneurial Spirit and Passion

An entrepreneurial spirit allows entrepreneurs to carry a manner of thinking with them each day that allows them to overcome obstacles and to meet challenges with a can-do attitude. What does it mean to have an entrepreneurial spirit? For the purposes of this discussion, it could mean being passionate, purposeful, positive, bold, curious, or persistent.
The founders of Airbnb have a passion for supporting individual rights to rent out unused space. Why should the established model of hotels prevail? Why shouldn’t an individual homeowner have the freedom to rent out unused space and leverage that space into an income? Airbnb has succeeded in creating more flexible and affordable options in the space of the rapidly growing "sharing" economy. At the same time, some states and municipalities have raised issues about the regulations monitoring ventures like this. While entrepreneurial spirit is partly about fighting for individual rights and freedoms, there should be a balance between economic freedom and consumer protection. The entrepreneurial spirit involves a passion for presenting an idea that is worthwhile and valuable, and a willingness to think beyond established patterns and processes, while still keeping in mind local laws and regulations, in the quest to change those established patterns, or at least to offer alternatives to those established patterns.
Passion is a critical component of the entrepreneurial process. Without it, an entrepreneur can lose the drive to run the business. Passion can keep an entrepreneur going when the outside world sends negative messages or less-than-positive feedback. For example, if you are truly passionate about starting an animal shelter because of your love of animals, you will find a way to make it happen. Your internal drive to help animals in need will spur you on to do whatever it takes to make the shelter become a reality. The same is true of other types of startups and owners with similar passions. However, passion needs to be informed by the entrepreneur’s vision and mission—passion of the sake of passion is not enough. A clear mission statement—which details why the business exists and the entrepreneur’s objectives for achieving that mission—will guide an entrepreneur’s passion and keep the business on track. Passion, vision, and mission can reinforce each other and keep the entrepreneur on the right track with next steps for the business.
Some ideas might seem small or insignificant, but in the field of entrepreneurship, it’s important to recognize that for every new startup, someone else may recognize a spin-off idea that expands upon the original idea. The opportunities for identifying new possibilities are endless. Review your work in creating spinoff ideas for Angad Darvani’s projects, or Kevin F. Adler’s Miracle Messages venture. Or consider possible spin-off ideas around the technology used in agriculture. Creating spin-off ideas fits well with our discussion of divergent thinking and brainstorming. Through these processes, we can discover new uses for existing technology, just as Ring did by using video technology to add security by allowing customers to see who is at the door without opening it.

### An Entrepreneurial Mindset in Your Discipline or Field

Within your industry of interest or area of study, what are the challenges that create frustration? How can these be turned into opportunities? Earlier in this chapter, we discussed Evernote, a company that focuses on expanding our memories by storing and organizing information. Let’s look at some other examples of entrepreneurial endeavors in specific industries to help you plan your own venture in your own industry.
In the agriculture industry, insects, weeds, weather conditions, and the challenges of harvesting crops are all ripe for entrepreneurial activities. The move toward organic produce has also affected this industry. From an entrepreneurial perspective, what products could you invent to support both organic farming and the problems of insects that damage or destroy crops? The old method was to use chemical sprays to kill the insects, but today, the growing demand for organic foods and increased awareness of the impact of chemical sprays on our environment are changing this scenario. One new idea to solve this problem combines a vacuum cleaner with an agriculture product.
A bug vacuum is an example of how using divergent thinking contributed to the solution of removing bugs from crops without using chemicals. In the group activity of creating divergent ideas, this idea may not have been received well. However, in the incubation stage, the idea must have come forward as a viable solution. Entrepreneurs frequently face the challenge of pressure to conform to established habits and patterns within industries.
Often, the entrepreneurial mindset includes futuristic ideas that shake up the normal, conventional processes that are grounded in experience over time. Tried-and-tested processes and products that have a proven history of success can be a formidable obstacle to new ideas. A new idea may even appear as impossible or outlandish, perhaps even an embarrassment to the steady and predictable practices established within an industry. This can create a dilemma: Do we try something new and unproven that lacks documented research? Sometimes, we must disregard our past successes and research to be open to new possibilities for success and failure. An entrepreneurial mindset includes creativity, problem-solving skills, and a propensity to innovation.Emma Fleck. “Needed: Entrepreneurial Mindset.”  Open-mindedness is one characteristic that supports creativity, problem solving, and innovation. Taking the time to explore new ideas, dream, reflect, and view situations from a new perspective contribute to the entrepreneurial mindset. Some innovations can lead to disruptions within the industry, or even create a new industry.
The innovator’s dilemma was presented by Clayton Christensen to explain disruptive technology, which are technologies that, once introduced, displace established patterns, processes, and systems previously accepted as normal or accepted. One example of a disruptive technology is Airbnb, a company that threatens the established hotel industry by connecting personal resources to people who desire those resources. If you have a spare bedroom that you aren’t using, why not sell that space to someone who wants and needs the space?
Airbnb has become a significant threat to the established hotel industry’s business model of building large hotels and renting rooms within those hotels to their customers. Airbnb has reconfigured that model, and since its 2008 launch, 150 million travelers have taken advantage of 3 million Airbnb listings in more than 191 countries. Airbnb has raised more than $3 billion (plus a $1 billion credit line) and is considering selling stocks to support significant expansion. The value of Airbnb is approximately $30 billion. Compare this market value to Hilton’s market capitalization of $19 billion and Marriott’s of $35 billion. If you were the CEO of Hilton or Marriott, would you be worried? The hotel industry recognized Airbnb as a threat, and in 2016, began a campaign to create legislation to rein in Airbnb’s growth and popularity. From the hotel industry’s perspective, Airbnb is not playing by the same rules. This is the definition of disruptive technology, the focus on creating a new idea or process that negates or challenges established process or products.Katie Benner. “Inside the Hotel Industry’s Plan to Combat Airbnb.”
Sometimes disruptive technologies result from not listening to customers. Customers don’t always know what they want. Customer groups might need to be redefined by the entrepreneurial team on the basis of better models, knowing when to invest in developing lower-performance products that promise lower margins while still satisfying the need, and knowing when to pursue small markets at the expense of larger or established markets. Basically, disruptive technologies occur through identifying new and valuable processes and products.
The founders of Airbnb recognized that some people have unused resources, bedrooms, that other people need. We can apply this idea to other unused resources such as vehicles and motor homes. We see this model reproduced in short-term car rental and bike-sharing programs.

### Summary

Identifying new possibilities, solving problems, and improving the quality of life on our planet are all important aspects of entrepreneurship. The entrepreneurial mindset allows an entrepreneur to view the world as full of possibilities. Entrepreneurial passion and spirit help entrepreneurs overcome obstacles to achieve their goals. Disruptive technologies involve using existing technology in new ways and can provide new opportunities as well as new challenges. Entrepreneurship is transforming some industries and potentially creating others, though many entrepreneurs create value by starting small businesses, buying franchises, or introducing new services in mature industries. The key thing to remember is that anyone can be an entrepreneur and that new technologies are making the cost of starting a new business less costly, but still risky at some level.

### Review Questions

### Discussion Questions

### Case Questions

### Suggested Resources

M. M. Baluku, J. F. Kikooma, and K. Otto, “Positive mindset and entrepreneurial outcomes: The magical contributions of psychological resources and autonomy.” Journal of Small Business & Entrepreneurship 30, no. 6 (2018): 473–498.
E. Fleck, “Needed: Entrepreneurial mindset.” Central Penn Business Journal 34, no. 12 (2018): 10.
M. Israr and M. Saleem, “Entrepreneurial intentions among university students in Italy.” Journal of Global Entrepreneurship Research 8, no. 1 (2018): 1.
https://www.christenseninstitute.org/results/?_sft_topics=disruptive-innovation


# The Entrepreneurial Journey and Pathways

## Introduction

What do you plan to do with your life after graduating from school? This is one of the most common—and admittedly most terrifying—questions that students are asked on a regular basis. There are literally thousands of career choices and just as many pathways or options to reach them. How do you decide which career pathway is best for you? You might select a new career based on your major, a favorite high school subject, the advice of a family member or friend, or an inspirational summer or internship experience.
What if none of those options reflect the future that you see for yourself? It may mean that you are destined to create your own career path by becoming an entrepreneur. Regardless of the career pathway that you follow, your entrepreneurial journey begins with a single step.