Small Business Management Chapter 2

Minimized business professionalization

A situation when the entrepreneur conducts business practices in the simplest and most relaxed way

Minority-owned businesses

Both funding and networking initiatives helped minority-owned businesses grow at a fast pace; minority-owned businesses account for nearly 29.3% of all U.S. businesses; minority-owned businesses had a remarkable growth rate of 27% between 2007 and 2012

developmental stages of a business life cycle

Emergence, existence, survival, success, resource maturity

Family members contribute:

Employees; support network; capital

Micro commitment

Indicates an online action that is quick and easy to make but does not require a substantial personal or financial undertaking

123 Prioritize

Individuals rank responsibilities or tasks according to their importance and due date

Takeoff stage

It entails relearning the processes that led to success, as a growth-oriented firm often needs to do things differently; it is rare that small businesses experience this stage; business owners must understand the nature and demands of growth and get some control over it

liability of newness

It is a problem in the existence stage of the business life-cycle; a solution for it is developing an extensive social network; it is due to potential customers having little knowledge about a new business.

Certification

It is not for every women- or minority-owned small business; it provides access to opportunity and networks of businesses, which can be used to access other business sectors

Prevention focus

Its intent is on minimizing losses, with a bias toward inaction or protective action; it works well in an established or a poor industry

Problems that second career entrepreneurs face

Keeping personal finances out of the business & adjusting to the entrepreneurial life

Entrepreneurial teams

Only 15% of teams comprise unrelated business associates; a significant number of new businesses have a team of two or more co-owners; most teams (53%) are family related

Sociological characteristics

Some of groups are protected from discrimination by federal laws; they relate to the social groups to which he or she belongs such as family, gender, religion, and race; some social groups lack protection, but have powerful influence over entrepreneurs

Maturity stage

Sometimes customers and businesses take each other for granted; it usually follows the success stage, but may follow the takeoff stage; it is the typical fourth stage that small businesses face in the business life cycle

Examples of models that explain entrepreneurial mindset

The Allan Gray Orbis Foundation's Mindcette survey & BP10

Women-owned businesses

These businesses are generally in lower income generating service industries; women had a 74% growth rate between 1997 and 2015; women still account for only 4.3% of all small business revenue

Professionalization

Three are three levels of professionalization: expert, specialized, and minimalized business; businesses that are average or better are considered professionalized; professionalized businesses follow standard business practice

Reactive planner

completely passive, waiting for cues from the environment to determine what actions to take

Competencies

forms of business-related expertise

Key business processes

fundamental activities common to all businesses such as sales, operations, and human resources

Opportunistic planner

generally start with a goal and look for opportunities to achieve it

Set-asides

government contracts earmarked for particular kinds of firms, such as small businesses, minority-owned forms, or women-owned firms

Critical-point planner

plan around the most important aspect of a business first, act on it, and then consider if additional plans are needed

Slack resources

profits that are available to be used to satisfy the preferences of an owner in how the business is run

Family-owned businesses

Decision making can be easier and quicker when made by a tight-knit group of family members; they are a self-perpetuating source for future small businesses; families are a major source of funds and personnel

Time management

The organizing process to help make the most efficient use of the day It can help meet the challenges of schedule overload; strategizing, delegating, and creating lists can help manage time; it can be used to reduce role conflict

Determination competencies

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

Emergence

where an entrepreneur moves from thinking about starting a business to actually starting a business

Succession

A family council can help in the succession process; only a small number of businesses have a family member to take over the firm; succession plans deal with the people who will take over, what roles they will fill, and what supports they will receive

Rewards important to small business owners

A livable income; flexibility

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

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

Second career entrepreneurs

About 33% decide they want to become self-employed; they sometimes retire early and decide they want to work rather than retire; they start businesses due to being laid off after corporate mergers and downsizing They should treat their money just as an outside investor would; these entrepreneurs should get advice and assistance from experts from SCORE; sometimes self-confidence is an issue with this group of entrepreneurs

Family business survival

Many family business owners do not plan for their retirement; only one-third of family businesses survive beyond the first generation; family business owners tend to stay in their positions much longer than those at nonfamily companies

Organizational culture

a set of shared beliefs, basic assumptions, or common, accepted ways of dealing with problems and challenges

Resource competencies

ability or skill of an entrepreneur at finding expendable components necessary to a business such as financing, raw materials, and expertise

Industry-specific knowledge

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

Comprehensive planner

develop long-range plans for all aspects of a business

Habit-based

do not really plan, since their actions are dictated by their routines

Existence

marked by a business being in operation but not yet stable in terms of markets, operations, or finances

success

marked by a firm being established in its market, operations, and finances

two challenges typical to family businesses

succession & role conflict

Exchange deal

the actual process of exploiting the opportunity for profit through making sales

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

maturity

the most typical fourth stage of a small business and is characterized by relatively stable or slowly rising sales and profits over several years

Business life cycle

the sequence or pattern of developmental stages any firm goes through during its life span The key issues, actions, and lessons for each stage are different; there is a lot of predictability in the business growth process; knowing the life cycle stages can help better understand a small business

access

the simplest form of discrimination; women- or minority-owned firms are not offered the same opportunities as those offered to white male-owned firms