Chapter 5 - Entrepreneurship: Starting and Managing Your Own Business

entrepreneurs

People with vision, drive, and creativity who are willing to take the risk of starting and managing a business to make a profit, or greatly changing the scope and direction of an existing firm.

Hawaiian-born Jon P. Farmer is the founder of Kolopua Hawaii LLC, a company that markets Pure Hawaiian Air. Bottles of Pure Hawaiian Air contain air that smells like the floral bouquet that greets tourists as they get off the plane in Hawaii. Which of the following federal agencies should Farmer contact if he needs management assistance?

Small Business Administration

Venture capital:

is financing obtained from investment firms that specialize in financing small, high-growth companies

Small Business Investment Company (SBIC)

Privately owned and managed investment companies that are licensed by the Small Business Administration and provide long-term financing for small businesses.

small business

A business with under 500 employees that is independently managed, is owned by an individual or a small group of investors, is based locally, and is not a dominant company in its industry.

debt

A form of business financing consisting of borrowed funds that must be repaid with interest over a stated time period.

Small Business Administration (SBA)

A government agency that speaks on behalf of small business; specifically it helps people start and manage small businesses, advises them in the areas of finance and management, and helps them win federal contracts.

_____ financing is a form of business financing consisting of borrowed funds that must be repaid with interest over a stated time period

Debt

intrapreneurs

Entrepreneurs who apply their creativity, vision, and risk-taking within a large corporation, rather than starting a company of their own.

venture capital

Financing obtained from venture capitalists, investment firms that specialize in financing small, high-growth companies and receive an ownership interest and a voice in management in return for their money.

angel investors

Individual investors or groups of experienced investors who provide financing for start-up businesses by investing their own funds.

_____ is financing obtained from investment firms that specialize in financing small, high-growth companies and receive an ownership interest and a voice in management in return for their money

Venture capital

The first step in starting your own business is:

a self-assessment

A _____ is a formal written statement that describes in detail the idea for a new business and how it will be carried out

business plan

When he read Chicken Soup From the Soul, Joe Farmer was struck by how many of the stories mentioned the scent of the islands. So Farmer created bottles filled with Hawaiian air and some scented essence beads. When customers shake the bottles up and open the lids, they're transported back to paradise. While many marketing experts did not think that consumers would buy bottles of air, Farmer has earned more than half a million dollars of sale during his first year of operation. Farmer was an example of a _____ entrepreneur.

classic

Jill Hansom borrowed $40,000 from a credit union to start a company that makes and sells peach salsa. Hansom used _____ financing

debt

The two forms of business financing are _____ (borrowed funds) and _____ (ownership funds)

debt; equity

equity

A form of business financing consisting of funds raised through the sale of stock (i.e., ownership) in a business.

business plan

A formal written statement that describes in detail the idea for a new business and how it will be carried out; includes a general description of the company, the qualifications of the owner(s), a description of the product or service, an analysis of the market, and a financial plan.