ENTR 4113 Test 1 (Ch 1-3)

Pivot

"Go ahead and start the business in any way you can and look for better opportunities as you go along. It happens all the time. William Wrigley Jr. started out selling soap and baking powder and, to get people's attention, he gave away gum as a promotional item. Wrigley switched to selling gum when he realized how popular a product his Juicy Fruit gum was."

BRIE model

-Boundary: creating a place for your business - in location and in people's minds -Resources: the money, product, knowledge, etc., that make up the business -Intention: the desire to start a business -Exchange: moving resources/products/services in exchange for money

Four focuses of entrepreneurship

-Creation: the making of new entities -Customer-focus: being in-tune with your market -Efficiency: doing the most work with the fewest resources -Innovation: looks at a new thing or a new way of doing things

Universally mentioned rewards

-Flexibility: to have greater flexibility for my personal and family life -Income: to give myself, my spouse, and my children financial security -Growth: to continue to grow and learn as a person

Rarely mentioned rewards

-Recognition: to achieve something and get recognition for it -Admiration: to be respected by my friends -Power: to lead and motivate others -Family: to continue a family tradition

Occasionally mentioned rewards

-Wealth: to have a chance to build great wealth or a very high income -Product: to develop an idea for a product

Myths about small business

1) Not enough financing 2) You can't start a business during a recession 3) To make profits, you need to make something 4) If you fail, you can never try again 5) Students don't have the skills to start a business 6) 90% of all new businesses fail within two years

Determination Competencies

Business as primary focus, ability to manage time, ability to find/get help, ability to sustain relationships, willingness to act

Resource Competencies

Business information, business financing, space for the business, raw materials, support people

Opportunity Competencies

Found profitable idea, idea imitates with a twist or is new (but tested), idea is hard to copy

Industry Specific Knowledge

Industry expertise, industry skill, market knowledge, ability to diagnose, ability to see opportunities

Key Business Functions

Sales, operations, accounting, finance, human resources

Traditional small business

a firm intended to provide a living income to the owner, and operating in a manner and on a schedule consistent with other firms in the industry and market; 22% of businesses

High-performing small business

a firm intended to provide the owner with a high income through sales or profits superior to those of the traditional small business; 20% of businesses

High-growth venture

a firm started with the intent of eventually going public, following the pattern of growth and operations of a big business; 5% of businesses

Efficiency-driven economy

a nation where industrialization is becoming the major force providing jobs, revenues, and taxes, and where minimizing costs while maximizing productivity is a major goal

Factor-driven economy

a nation where the major forces for jobs, revenues, and taxes come from farming or extractive industries like forestry, mining, or oil production

Innovation-driven economy

a nation where the major forces for jobs, revenues, and taxes come from high-value added production based on new ideas and technologies and from professional services based on higher education

Entrepreneur

a person who owns or starts an organization, such as a business

Self-efficacy

a person's belief in his or her ability to achieve a goal

Franchise

a prepackaged business brought, rented, or leased from a company called a franchisor

Lifestyle or part-time firm

a small business primarily intended to provide partial or subsistence financial support for the existing lifestyle of the owner, most often through operations that fit the owner's schedule and way of working; 53% of businesses

Effectuation

an approach used to create alternatives in uncertain environments

Certification

an examination based acknowledgement that the firm is owned and operated as specified

Social capital

characteristics of a business, like trusts, consistency, and networks, that represent potential social obligations which are an asset of the firm or entrepreneur

Necessity-driven entrepreneurship

creating a firm as an alternative to unemployment because they do not see a workable prospect for getting employed

Small business life cycle

emergence, existence, success, resource maturity, take-off

Task environment

external; a part of the external environment made up of those components that the firm deals with directly; ex: media, interest groups, governments

General environment

external; the forces, institutions, and people outside the boundary of the firm; ex: economic, international, and political-legal sectors

Set-asides

government contracting funds which are earmarked for particular kinds of firms, such as small-businesses, minority-owned firms, women-owned firms, etc.

Promotion focus

intent on maximizing gains, which gives us a bias toward pursuing opportunities likely to lead on those gains

Prevention focus

intent on minimizing losses, with a bias toward inaction or protective action

Organizational identity

part of the BRIE model; composed of the name, description, and distinctive elements of a firm, such as trademarks, uniforms, logos, characters, and stories

Serial entrepreneur

people who open multiple businesses throughout their career

Entrepreneurial ecosystem

reflects the physical world in which we live; includes natural components (raw materials, weather, ecological forces) as well as created components (cities, roads, other infrastructure)

Legitimacy

the belief that a firm is worthy of consideration or doing business with because of the impressions or opinions of customers, suppliers, investors, or competitors

Mindshare

the degree of attention your target market pays to your idea or organization

External legitimacy

the extent to which a small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner's family

Social entrepreneurship

the form of entrepreneurship involving the creation of self-sustaining charitable and civic organizations, or for-profit organizations which invest significant profits in charitable activities

Corporate entrepreneurship

the form of entrepreneurship which takes place in existing businesses around new products, services, or markets

Role conflict

the kind of problem that arises when people have multiple responsibilities, such as parent and boss, and the different responsibilities make different demands on them

Unicorn

the most successful high-growth venture, those with a valuation of $1 billion or more

Internal environment

the people and groups within the boundary of a firm; ex: owners and employees

Corridor principle

the pivot approach is also called the ______ _______ because until you start going down the ________ (or in this case doing your business) you can't tell what opportunities you might find

Liability of newness

the set of risks faced by firms early in their life cycles that comes from a lack of knowledge by the owners about the business they are in and by customers, about the new business

Creative destruction

the way that newly created goods, services, or firms can hurt existing goods, services, or firms

Bootstrapping

using low-cost or free techniques to minimize your cost of doing business (ex: rent instead of buying equipment; taking the cheaper alternative)