chapter 5 questions

Describe the reasons entrepreneurs are important to the American economy.

99% of the American economy is small businesses. These small businesses are run by entrepreneurs. They are the main source of jobs.

Define entrepreneur and entrepreneurship.

An entrepreneur is a person who recognizes a business opportunity and organizes, manages, and assumes the risks of starting and operating a business. Entrepreneurship is the process of recognizing an opportunity, testing it in the market, and gathering the resources necessary to go into business.

What are some reasons the owner of a business usually puts in more hours at work than an employee?

Because they are the owner of the business, they must make sure that everything is in order. The employees are only in charge of the job they were given, whereas the business owner is in charge of managing everyone and every aspect of their business.

Describe five rewards of being an entrepreneur.

Being the boss, doing what you enjoy, having the opportunity to be creative, building an enterprise, and developing your own schedule.

Describe four challenges of being an entrepreneur.

Getting funds to start the business, being fully responsible for the business, feeling insecure about making the right decisions, and risk losing their investment if business fails.

Describe how to prepare for your own business.

In order to prepare for your own business, you must create a business plan.

Why is it important for small-business owners to keep good financial records?

It is important for small business owners to keep good financial records so that if something were to happen to their business and they needed money, they'd be able to see how much money they have and see where the problem might have occurred.

Review the 12 characteristics of successful entrepreneurs. Think about the traits that you have. Why do you think you have these traits? How could they benefit you as an entrepreneur?

Persistent, Risk-taking, Self-confident, Restless, Goal-oriented, Action-oriented, Responsible, Self-demanding, Creative, Independent, Inquisitive, Enthusiastic

Give reasons why some small businesses fail if they do not respond quickly to change. Why do you think it is difficult for small businesses to respond quickly to change?

Small businesses fail if they don't respond quickly to change, because customers always want the newest and the best products that are available. If a small business doesn't respond to this change, they will lose customers, because the customers will go to a different business that sells that product. It's difficult for small businesses to respond quickly to change, because they don't have a bunch of money to afford to make that change. If the change fails or isn't successful, the business will have trouble recovering.

Many Internet businesses have started and failed. Why do you think some virtual businesses fail?

Some virtual businesses fail, because not enough people know about the business and what it provides.

Discuss the parts of a business plan.

The business plan will consist of an executive summary, a management team plan, a company decision, a product and service plan, vision and mission statements, an industry overview, a market analysis, a competitive analysis, a marketing plan, an operational plan, an organizational plan, a financial plan, a growth plan, a contingency plan, and a cover page, title page, table of contents, and supporting documents.

The industry overview section of the business plans calls for the entrepreneur to analyze the trends of the industry in which the entrepreneurial venture falls. Why is this information an important part of the business plan?

This information is an important part of the business plan, because the entrepreneur must be able to see how their business is doing, whether that be good or bad compared to other businesses in the industry. If there's a way their business could improve, they could use methods that other businesses have used.

It is important that entrepreneurs be take-charge, self-directed people. Why do you think this is true?

Yes, it is important that entrepreneurs be take-charge, self-directed people, because they are the source of their business. There's no one there to tell them what to do or how to do it, they have to do it themselves.

Is there a difference between being self disciplined and self-motivated? Explain.

Yes, there is a difference between being self disciplined and self-motivated. Self discipline is a lot like self control. You are able to know and recognize your limits. Self motivated is more like encouraging yourself to do and achieve the best.