Entrepreneurship Midterm Exam

The key to selecting an industry is that?

- offers good potential for making a profit - offers attractive opportunities to work with a minimum risk and competition

2007-2012 Growth Rates

- General business: 10% - Minority-owned: 27%

Standard business practice

- a business action that has been widely adopted within an industry or occupation - doing that level or better is what professionalism is all about - successful entrepreneurs usually do at least one thing much better than average

Minimum viable product

- a concept central to lean business practices where you make a minimum product, but one that can be sold. - by selling to customers and collecting feedback, an entrepreneur can develop a product at minimum cost.

Product

- anything that is offered to the market to satisfy consumer wants, needs, and demands - goods, services, people, ideas

Steps to follow when acquiring a business

1. Conduct extensive interviews with the sellers of the business. 2. Study the financial reports and other records of the business. 3. Make a personal examination of the site (or sites) of the business. 4. Interview customers and suppliers of the business. 5. Develop a detailed business plan for the acquisition. 6. Negotiate an appropriate price for the business, based upon the business plan projections. 7. Obtain sufficient capital to purchase and operate the business.

The five paths to business ownership

1. You may start a new business 2. You may buy an existing business 3. You may franchise a business 4. You may inherit a business 5. You may be the manager of a business

Almost how many firms are small family businesses?

10.8 million

What percentage represents minority owned businesses out of all businesses in the United States?

14.6%

What percentage of all businesses are equally owned by men and women?

17.5%

What percentage of all businesses are majority owned by women?

29.6%

What percentage of businesses in the United States are small family businesses?

39%

What percentage of small family businesses employ in America's workforce?

58%

What "access"

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

Causal model of entrepreneurship

One in which you wan to create a particular product or service that does not yet exist and to achieve that end, you have to cause the product or service to exist.

Value proposition

Small business owners' unique selling points ( also known as benefits) that customer can expect from your goods and/or services that will be used to differentiate their products and/or services from those of the competition.

Value proposition

Small business owners' unique selling points that will be used to differentiate their products and/or services from those of the competition.

Business life cycle

The sequence or pattern of developmental stages any business goes through during its life span.

Influencer

a customer role describing a person or group who can credible or recognized suggestions or recommendations to others regarding purchase choices

Decision maker

a customer role that describes a person in an organization who is responsible for choosing which product or service will be obtained.

Family business

a firm in which one family owns a majority stake and is involved in the daily management of the business

Focus group

a form of data gathering from a small group led by a moderator

Total Available Market (TAM)

a marketing term that refers to all of the people or organizations (in one nation, region, or the world) who might consider a product or service being offered.

Serviceable available market (SAM)

a marketing term that refers to the customers within the geographic reach of a firm.

Service Obtainable Market (SOM)

a marketing term that represents the customers that a firm expects to be interested in its particular product or service, and able to be serviced by the firm

Independent entrepreneurship

a person or group own their own for-profit business

Entrepreneur

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

Franchise

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

Creativity

a process introducing an idea or opportunity that is novel and useful, frequently derived from making connection among distinct ideas or opportunities

Industry analysis (IA)

a research process that provides the entrepreneur with key information about the industry, such as its current situation and trends

Budget cycle

a term applied to the process for setting the schedule for making purchases by an individual or an organization

Flexibility rewards

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

Significant challenge faced by women and minorities is around

access

Lean business practices

addresses the specifics of new business creation, particularly Internet-based businesses, where rapid experimentation and constant monitoring of viewers' choices are possible.

Competitive

all the firms also selling that product or service

Sustainable entrepreneurship

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

Primary research

an approach to researching based on the gathering of new information, using techniques such as interviewing, surveying, and observation

Secondary research

an approach to researching based on the use of existing information, often from government, commercial, or academic databases and research efforts

Promotion focus

an entrepreneur's attention to maximize gains and pursuing opportunities likely to lead gains

Passion

an intense positive feeling an entrepreneur has toward the business or the idea behind the business

Firm

an organization that sells to or trades with others

Imitative strategy

an overall strategic approach in which the entrepreneur does more or less what others are already doing

Industry dynamics

changes in competitors, sales and profits in an industry over time

Novelty

characterized by being different or new

Imitative

characterized by being like or copying something that already exists

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-driven 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

Good strategy leads to

greater chances for survival and higher profits

Social entrepreneurship

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

What makes a good strategy?

it fits to the goals and objectives of your business and the resources you can bring to it

Income rewards

money made by owning one's own business

Founders

people who create or start new businesses

Serial entrepreneurs

people who open multiple businesses throughout their career

Due diligence

process of investigating a business to determine its value

Innovativeness

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

Radical innovation strategy

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

Professionalism

standard business practice

Entrepreneurial alertness

the ability to notice things that have been overlooked, without actually launching a formal search for opportunities, and the motivation to look for opportunities

Feasibility

the extent to which an idea is viable and realistic and the extent to which you are aware of internal and external forces (environment) that could affect your business

Strategy

the ideas and actions that explain how a firm will make its profit

Purchasing process

the sequence of steps an individual or organization goes through in making a decision to buy a product or service.

Goods or services

the tangible things (goods) or intangible commodities (services) created for sale

Competitive advantage

the way a firm implements customer benefits that keeps the firm ahead of other firms in the industry

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

_____ businesses are one of the fastest-growing sectors of all United States businesses

women-owned

Self-employed

working for yourself

RBI screen

- "really big idea" - a fast technique for making initial assessments (called screens) of prospective business ideas based on five questions

Planning styles

- comprehensive planners - critical-point planners - opportunistic planners - reactive planners - habit-driven planners

Caveat emptor

- latin: let the buyer beware - philosophy sometimes used by businesses to put the burden for consumer protection onto the customer

The challenges of small businesses can scare off people (myths)

- 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 - ninety percent of all new businesses fail within two years

The five p's of entrepreneurial behavior

- passion - perseverance - promotion/prevention focus - planning style - professionalization

4 P's of Marketing

- product - price - placement - promotion

Secondary data

- refers to existing data or databases to gather information on the topic of interest to you - often free and quick - data may not be timely, and you don't always know why the data were gathered and whether they were gathered correctly

Opportunity recognition

- searching and capturing new ideas that lead to business opportunities - involves creating thinking that leads to discovery of new and useful ideas

Types of Organizations

- sole propreitorship - partnership - limited liability corp - c-corp and s-corp - non-profit

Perseverance

- the ability to stick with some activity even when it takes a long time, and when a successful or unsuccessful outcome is not immediately known - learned optimism

Goals: product/service ideas and industry

- the general name for the line of product or service that is being sold, or the firms in that line of business

The sources of business ideas

- work and personal experience - a similar business - chance - family and friends - education or expertise - idea sites

Starting an Entrepreneurial Small Business: Four Key Ideas

1) believe that you can do this 2) planning + action = success 3) help helps 4) do well. do good

RBI screening questions

1) people: who are you? 2) offering: what are you offering? 3) customer: whom are you offering it to? 4) value proposition: why do they care? 5) distinctive competencies: do you have any key or core science/technology or feature?

Feasibility studies consist of careful investigation of...five primary ideas

1) the overall business idea 2) the product/service 3) the industry and market 4) financial projections (profitability) 5) the plan for future action

Goals of due diligence

1) you are attempting to find any wrongdoing: (1) fraud, (2) misrepresentations of the seller and (3) missing information 2) you are trying to find any efficiencies, unnoticed opportunities, waste, and mismanagement

The small business strategy steps

1. goals 2. customers and benefits 3. industry dynamics and analysis 4. strategy selection 5. post start-up tactics

What fraction of the standard and poor's 500 are family owned and managed?

1/3

Percentage of people employed by small family-owned business in the U.S.

60%

Penetrated Market (PM)

A marketing term that describes the actual number of customers of an operating firm, divided by the size of the target market, which gives a percentage of the market the firm (or product/service) has attained so far.

Prevention focus

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

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

Purchaser

a customer role that describes an individual or institution that pays for or obtains a product or service.

End user

a customer role that describes the person who eventually makes actual use of a product or service in his or her personal or work life.

Survey

a data-collection method using a questionnaire -- in person, on phone, on paper, or on the Internet

Customer profile

a detailed description of a hypothetical potential customer for a product or service, also called a customer persona

Corporate entrepreneurship

existing businesses around new products, services, or markets

Marketing research

systematic collection and interpretation of data to support future marketing decisions

Incremental strategy

taking an idea and offering a way to do something slightly better than it is done presently

Growth rewards

what people get from facing and beating challenges