Chapter 2 Terms

standard business practice

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

family business

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

cognition

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

stakeholder

A person, organization, or entity that has an interest or concern in a particular business or decision.

organizational culture

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

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, and pursues those functions in a professional manner.

minimalized business professionalization

A situation that occurs when the entrepreneur does nearly everything in the simplest way possible, rather than in a professional way.

key business functions

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

industry-specific knowledge

Activities, knowledge, and skills specific to businesses in a particular industry.

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.

certification

An examination-based acknowledgement that the firm is owned and operated as specified.

passion

An intense positive feeling the entrepreneur has toward the business or idea behind the business.

micro-commitment

An online action that is quick and easy to make and connects you to the message, but does not require a substantial personal or financial commitment, such as liking or favoriting a post or reposting it to your own social media account.

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.

set-asides

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

veteran entrepreneur

Individual who was formerly in military service who decides to become self-employed as a subsequent career. (Not to be confused with serial entrepreneur.)

second career entrepreneur

Person who begins a business after having left, retired, or resigned from work. Can include veterans from the armed forces and civilians from a broad range of industries.

slack resources

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

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.

flexibility rewards

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

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.

perseverance

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

professionalization

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

emergence stage

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

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.

income rewards

The money made by owning one's own business.

entrepreneurial mindset

The motivations, cognitions, attitudes, aptitudes, and behaviors that lead to a propensity to create solutions to problems or seek opportunities to do something new or better.

time management

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

succession

The process of intergenerational transfer of a business.

resource maturity

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

existence stage

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.

business life cycle

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

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 stage

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

action

The visible behavior a person takes.

takeoff

This stage occurs after the success stage for a small percentage of businesses. It is characterized by rapid growth (5-10 percent a month or more). When this growth levels off, the firm enters the resource maturity stage.

growth rewards

What people get from facing and beating challenges.