Entrepreneurship, Second Edition

2.1. Critical Factors for Starting a New Enterprise

We will begin by examining the entrepreneurial process (see Figure 2.1). These are the factors—personal, sociological, organizational, and environmental—that give birth to a new enterprise and influence how it develops from an idea to a viable enterprise. A person gets an idea for a new business through either a deliberate search or a chance encounter. Whether or not he or she decides to pursue that idea depends on factors such as alternative career prospects, family, friends, role models, the state of the economy, and the availability of resources.

Origins of Home Depot Bernie Marcus was president of the now-defunct Handy Dan home improvement chain, based in California, when he and Arthur Blank were abruptly fired by new management. That day and the months that followed were the most pivotal period in his career, he says. "I was 49 years old at the time and I was pretty devastated by being fired. Still, I think it's a question of believing in yourself. Soon after, we [Blank and Marcus] started to realize that this was our opportunity to start over," says Marcus. Marcus and Blank then happened upon a 120,000-square-foot store called Homeco, operating in Long Beach, California. The two instantly realized that the concept—an oversized store packed with merchandise tagged with low prices—had a magical quality. They wanted to buy the business, but it was essentially bankrupt. Marcus and Blank talked Homeco owner Pat Farah into joining ...