Entrepreneurial Small Business Ch.1-4

Caveat emptor

"Let the buyer beware" used by businesses to put the burden for consumer protection onto the consumer

Myths about Small Businesses

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

4 Key ideas for starting a business

1) Believe that you can do this (self efficacy) 2) Planning + Action = Success 3) Help Helps (Learn from others) 4) Do well. Do Good. (Do for others)

Universally Motivated Rewards for Entrepreneurs

1) Flexibility - plan one's own life 2) Income - to provide oneself and family with financial security 3) Personal Growth

Rarely Mentioned Rewards for Entrepreneurs

1) Recognition 2) Admiration - to be highly respected by others 3) Power - to lead and motivate others 4) Family - to continue a family tradition

Occasionally Mentioned Rewards for Entrepreneurs

1) Wealth - to build great wealth 2) Product - to develop an idea for a product

Standard business practice

A business action that has been widely adopted within an industry

Independent small business

A business owned by an individual or small group

Owner-managed firms

A business run by the individual who owns it

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. Often generates annual sales between $25,000 and $100,000.

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. $100,000 to $1,000,000 in sales

High-growth venture

A firm started with the intent of eventually going public, following the pattern of growth and operations of a big business. over $1,000,000 in sales annually

License

A legal agreement granting you rights to use a particular piece of intellectual property

Efficieny-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 Example: China, Brazil, Russia

Factor-driven economy

A nation where the major forces for jobs, revenues, and jobs come from farming or extractive industries like forest, mining, or oil production Example: Jamaica, Iran

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 Example: United States, Germany, Korea

Small Business Administration

A part of the US gov. which provides support and advocacy for small businesses

Task environment

A part of the external environment made up of those components that the firm deals with directly such as media, interest groups

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 bought, rented, or leased from a company called a franchisor Example: Subway, DQ

Virtual instant global entrepreneurship

A process that uses the internet to quickly create businesses with a worldwide reach Ecommerce businesses depend on using websites like eBay or eLance to quickly establish a global presence

Organizational culture

A set of shared beliefs, basic assumptions, or common, accepted ways of dealing with problems and challenges within a company that demonstrate how things get done

Ethical dilemma

A situation that occurs when a person's values are in conflict, making it unclear whether a particular decision is the right thing to do

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. Often have annual sales of $25,000 or less and are often seasonal.

Ethics

A system of values that people consider in determining whether actions are right or wrong

Expert business professionalization

All major functions of a firm are conducted according to the standard business practices of its industry

Sustainable Entrepreneurship

An approach to operating a firm or line of business which identifies, creates and exploits opportunities to make a profit in a way that can minimize the depletion of natural recourses, maximize the use of a recycled material, or improve the environment

Billboard principle

An ethical model that asks whether someone would be comfortable having his/her decision and name advertised on a billboard for the public to see

Universalism

An ethical model that suggests that there is a code of right and wrong that everyone can see and follow

Utilitarianism

An ethical model that supports seeking the greatest good for the greatest number of people

Firm

An organization that sells to or trades with others

Key to becoming a small business owner

BRIE Boundary- Creating a place for your business -location/in people's brains Resources- The money, product etc. that make up the business Intention- The desire to start a business Exchange- Moving resources/products/services in exchange for money

BATNA

Best Alternative To a Negotiable Settlement in which second best outcome is identified by the parties in a negotiation to help clarify the value of achieving a successful negotiation

Specialized business professionalization

Businesses have founders/owners who are passionate about one or two of the key business functions, such as sales, operations, accounting etc.

International standards organization (ISO)

Certification for having met a standard of quality that is consistently evaluated around the world

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

Novelty

Characterized by being different or new

Imitative

Characterized by being like or copying something that already exists

Necessity driven entrepreneurship

Creating a firm as an alternative to unemployment

Opportunity driven entrepreneurship

Creating a firm to improve one's income or a product or service

External relations

Description for the processes and skills used in the management of a firm's interactions with people, organizations, and institutions outside of its boundary

Comprehensive planners

Develop long range plans for all aspects of the business

Critical point planners

Develop plans focused on the most important aspect of the business first

Habit driven planners

Do not plan, preferring to let all actions be dictated by their routines

Competencies

Forms of business related expertise

Crowdfunding

Funding a business online thorough the collective involvement of others who provide donations, loans, or investments

Baldrige Award

Given by US gov. to businesses and nonprofit organizations that have been judged outstanding in 7 measures of quality

Set asides

Gov. contacting funds which are earmarked for particular kinds of firms, such as minority owned firms, women-owned firms

Reactive planners

Have passive approach, who wait for cues from the environment to determine what actions to take

Strategies to overcome challenges

If you don't succeed the first time, try, try again Scale back Bird in the hand Pivot Take it on the road Ask for help Plan to earn

Promotion focus

Intent on maximizing gains

Small Business

Involves 1-50 people and has its owner managing the business on day-to-day basis

Time Management

List 123 Prioritize Delegate Repeat Strategize

Trade magazine

Magazines that target specific industries and professions

Overall growth strategy

One of four general ways to position a business based on the rate and level of growth entrepreneurs anticipate for their firm

Organization identity

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

General environment

Part of external environment made up of sectors of major forces that shape the people and institution of the task and internal environments

The 5 Ps of Entrepreneurial Behavior

Passion Perseverance promotion/prevention focus Planning style Professionalization

Founders

People who create or start a new businesses

Serial Entrepreneurs

People who open multiple businesses throughout their career

Buyers

People who purchase an existing business

innovativeness

Refers to how important a role new ideas, products, services, processes, or markets play in an organization

Radical innovation strategy

Rejection existing ideas, and presenting a way to do things differently

Opportunistic planners

Start with a goal instead of a plan and look for opportunities to achieve it

Green entrepreneurship

Taken from the belief that green is the color of healthy environment (another term for sustainable entrepreneurship)

Flexibility rewards

The ability of business owners to structure life in the way that suits their needs best

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

Minimalized business professionalization

The entrepreneur does nearly everything in the simplest way possible

Innovation

The entrepreneurial focus which looks at a new thing or a new way of doing things

Creation

The entrepreneurial focus which looks at the making of new entities

Customer focus

The entrepreneurial focus which refers to being in tune with one's market Example: Customer Survey

External environment

The forces, institutions and people outside the boundary of the firm (the rest of the world)

Independent entrepreneurship

The form of entrepreneurship in which a person or group own their own for-profit business

Corporate entrepreneurship

The form of entrepreneurship in which takes place in existing businesses around a new product, services, or markets Example: Creation of post-it notes

Social entrepreneurship

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

Main Street Business

The idea of a business you would expect to see on the main street of a typical American city

Small and medium Enterprise

The international term for small businesses

Income rewards

The money made by owning one's own business

Internal environment

The people and groups within the boundary of a firm, including the owners, managers, employees, and board members of the firm

Environment

The sum total of forces outside of the entrepreneur and the firm

Goods or Services

The tangible things (goods) or intangible things (services) created for sale

Creative destruction

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

CSI entrepreneurship

Three forms of entrepreneurship Corporate Social Independent

Bootstrapping

Using low cost or free techniques to minimize your cost of doing business Example: Working from home

Growth rewards

What people get from facing and beating challenges

Self-employed

Working for yourself

Family business

a firm in which one family owns a majority stake and is involved in the daily management of the business 1/3 of Standard & Poor's 500 are family owned and managed

key business function

activities common to all businesses 1) Sales 2) Operations 3) Accounting 4) Finance 5) Human Resources

industry-specific knowledge

activities, skills, and knowledge, specific to businesses in an industry

effectuation

an approach used to create alternatives in uncertain environments

efficiency

focus which refers to doing the most work with the fewest resources

Prevention focus

intent on minimizing losses

Two challenges typical to family business

role conflict succession-the process of intergenerational transfer of a business

Determination competencies

skills identified with the energy and focus needed to bring a business into existence

Opportunity competencies

skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business

Resource Competencies

the ability or skill of the entrepreneur at finding expendable components necessary to the operation of the business (Time, information, location, financing, raw materials, expertise)

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 Whenever possible, make decisions based on business necessities

Basic business competency

understanding the organizational and business processes of a firm