Chapter 2: Small Business Entrepreneurs

Cognition

A person's way of perceiving and thinking about his or her experience

specialized business professionalization

A situation that occurs when businesses have founders or owners who are passionate about one or two of the key business functions, such as sales, operations, accounting, finance, or human resources

key business functions

Activities common to all businesses such as sales, operations (also called production), accounting, finance, and human resources.

5 P's of Entrepreneurship

Passion Perseverance Promotion-Prevention Focus Planning style Professionalization

Existence

The second stage of the business life cycle marked by the business being in operation but not yet stable in terms of markets, operations, or finances

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.

Success

The third stage of the business life cycle marked by the firm being established in its market, operation, and finances

Expert business professionalization

a situation that occurs when all the major functions of a firm are conducted according to the standard business practices of its industry

Minimalized business professionalization

a situation that occurs when the entrepreneur does nearly everything in the simplest way possible

Industry specific knowledge

activities, knowledge, and skills specific to businesses in a particular industry

Comprehensive planners

entrepreneurs who develop long-range plans for all aspects of the business

Critical-point planners

entrepreneurs who develop plans focused on the most important aspect of the business first

habit-based planners

entrepreneurs who do not plan, preferring to let all actions be dictated by their routines

Opportunistic planners

entrepreneurs who start with a goal instead of a plan and look for opportunities to achieve it

Reactive planners

entrepreneurs with a passive approach, who wait for cues from the environment to determine what actions to take

Competencies

forms of business-related expertise

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 such as time, information, location, financing, raw materials, and expertise

Promotion Focus

An entrepreneur's attention to maximizing gains and pursuing opportunities likely to lead to gains

Prevention focus

An entrepreneur's attention to minimizing losses, with a bias toward inaction or protective action to prevent loss.

Passion

An intense positive feeling an entrepreneur has toward the business or the idea behind the business Displayed in 3 ways: 1. Looking at business challenges in a creative way 2. Persistently focused on the business 3. Being absorbed by the tasks and concerns of the business

Stages in the entrepreneurial business life cycle

Emergence Existence Success Resource maturity Takeoff

Second career entrepreneurs

People who begin their businesses after having left, retired, or resigned from work. These can include veterans of the armed forces and civilians from a broad range of industries.

Perseverance

The ability to stick with some activity even when it takes a long time and it's outcome is not immediately know.

Professonalization

The extent to which a firm meets or exceeds the standard practices for its industry

Emergence

The first stage of the small business life cycle, where the entrepreneur moves from thinking about starting the business to actually starting the business

Resource Maturity

The fourth stage of the business life cycle. It is characterized by relatively stable or slowly rising sales and profits over several years. In adorn that a takeoff stage following the success stage, the resource maturity stage occurs after takeoff

Time management

The organizing process to help make the most efficient use of the day

Action

The visible behavior a person takes

Standard business practice

a business action that has been widely adopted within an industry or occupation

Takeoff

Occurs after the success stage. It is characterized by rapid growth (5-10% a month or more). When this growth levels off, the firm enters the resource maturity stage.

Set asides

Government contracting funds which are earmarked for particular kinds of firms, such as small businesses, minority-owned firms, women-owned firms, and the like.