Small Business Management // Chapters 1, 2, 4, 5 Exam
Resource Maturity
Most typical fourth stage of small business; 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, this stage occurs after takeoff
Efficiency-driven Economy
Nation where industrialization is becoming the major force providing jobs, revenues, and taxes, and where minimizing costs while maximizing productivity is a major goal (Ex. Russia, Brazil, China)
The Five Ps of Entrepreneurial Behavior
Passion, Perseverance, Promotion/Prevention focus, Planning style, Professionalization
Royalty
Payment to a licensor based on the number or value of licensed items sold
Second career entrepreneurs
People who begin businesses after having left, retired, or resigned from work; Can include veterans of the armed forces and civilians from a broad range of industries.; 33% are self-employed
Existence Stage
Second stage of the business life cycle marked by the business being in operation; Not yet stable in terms of markets, operations, or finances; Second riskiest stage after emergence
Business life cycle
Sequence or pattern of developmental stages any business goes through during its life span; Predictable; Issues, lessons, and actions are different for each stage; Can help owners butter understand SB
Minimalized business professionalization
Situation that occurs when entrepreneur does nearly everything in simplest way possible
Entrepreneurial alertness
Special set of skills that help entrepreneurs identify good opportunities; Ability to notice the overlooked
Opportunity competencies
Skills necessary to identify and exploit elements of business environment that can lead to a profitable and sustainable business; Hope it is hard for others to copy (Related to E in BRIE)
Entrepreneurial culture
Special case of organizational culture for start-ups; Passion for mission, team, customer, innovation, and fairness
Exporting
Taking products or services made in your home country and selling them in other countries
Goods or services
Tangible things (goods) or intangible commodities (services) created for sale
IDEO Screen
Technique for conducting a fast initial analysis of ideas for their potential; Looks at market desirability, technical feasibility, and organizational viability
Crowdsourcing
Techniques based on internet-based services to get opinions through the involvement of others
Flexibility Rewards
The ability of business owners to structure life in the way that suits their needs best
Casual Model of Entrepreneurship
1/2 ways to think about business; You want 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; May have to learn a new skill
Entrepreneur
A person who starts an organization, such as a business (Ex. Founder, buyer, heir)
Self-efficacy
A person's belief in his or her ability to achieve a goal
Stakeholder
A person, organization, or entity that has interest in particular business or decision
Organizational culture
A set of shared beliefs, assumptions, or ways of dealing with problems within a company to demonstrate how things get done
Resource competencies
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 (Related to R in BRIE)
Financing
Access problems for women and minority-owned SBs crop up most often as discrimination in...
CSI entrepreneurship
Acronym for the three forms of entrepreneurship, corporate, social, and independent
Sustainable entrepreneurship
An approach to operating a firm or a line of business that 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.
Promotion focus
An entrepreneur's attention to maximizing gains and pursuing opportunities likely to lead to gains
Certification
An examination-based acknowledgment that the firm is owned and operated as specified
Green entrepreneurship
Another term for sustainable entrepreneurship taken from the popular belief that green is the color of a healthy environment, as in forests or fields
Effectuation
Approach used to create alternatives in uncertain environments
What the BRIE model stands for
BOUNDARY: Something that sets up a firm (Ex. Business name or gov. registration) RESOURCES: Product or service being offered, financial resources, and human resources at a firm INTENTION: The desire to start a business EXCHANGE: Refers to moving goods in exchange for money and resources
Social ventures
Businesses that are organized as for-profit entities but are also solving or supporting solutions to social problems
Importing
Buying products or services from a place not your home country, and selling them to your home country
Novelty
Characterized by being different or new
Imitative
Characterized by being like or copying something that already exists
Necessity-driven Entrepreneurship
Creating a firm as an alternative to unemployment
Opportunity-driven Entrepreneurship
Creating a firm to improve one's income or a product or service
Entrepreneurial process
Feel, check, plan, do
High Performing Small Business
Firm intended to provide owner with high income through sales/profits superior to those of the traditional SB; Make $100K-1M/yr grow through multiple locations (20% SBs)
E-commerce
General term for conducting business online
Set-asides
Government contracting funds which are earmarked for particular kinds of firms, such as small businesses, minority-owned firms, women-owned firms, and the like.
Liability of newness
Set of risks faced by firms early in their life cycles that comes from lack of knowledge by owners about the business they are in and by customers about the new business.
Expert business professionalization
Situation that occurs when all the major functions of firm are conducted according to the standard business practices of its industry
Incremental Strategy
Taking an idea and offering a way to do something slightly better than presently
Funds come from others, marketing is most important, like to involve key others, focus of effectiveness, meta-strat. is novelty, grow when possible
What are some traits of a high-growth venture?
It is used to help business come together
What is the BRIE model for?
The family council keeps the family involved, the board of directors is focused on running the business and includes significant nonfamily members
What is the key difference between a family council and a board of directors?
High-growth Ventures
Firm started with intent of going public, following pattern of growth and operation of big business; Make $1M/yr and start small, intending to grow rapidly (5% SBs)
Emergence Stage
First stage of business life cycle, where entrepreneur moves from thinking about starting business to actually doing it
Feel
First step of entrepreneurial process; When entrepreneur has feeling about starting business or creating a product
Independent entrepreneur
For of entrepreneurship in which a person or group owns a for-profit business
Main Street Business
Popular term for SBs reflecting the idea that these are the firms you would expect to find on main street of an American city; Opposite of big or "Wall Street" businesses.
Brainstorming idea other than SCAMPER
Preparation (exploring from all directions), Incubation (Think about problem unconsciously), Illumination (Bring ideas together), Verification (Test idea)
Succession
Process of intergenerational transfer of a business
Slack resources
Profits that are available to be used to satisfy the preferences of the owner in how the business is run
Radical Innovation Strategy
Rejecting existing ideas, and presenting a way to do things differently
Traditional Small Business
SB intended to provide a living income to owner, operating on a schedule consistent with other firms in the industry and market; Make $25K-100K/yr (22% of SBs)
Lifestyle/Part-time Firm
SB intended to provide partial financial support for owner's lifestyle through operations that fit their schedule and way of working; Make $25k or less/yr and often operate seasonally (53% of SBs)
What SCAMPER stands for
SUBSTITUTE COMBINE ADAPT: How to change current products MAGNIFY/MODIFY: Create memorable images and advertising for consumers PUT OTHERS TO USE: Use others to form ideas ELIMINATE: Search for opportunities that arise when you get rid of something REARRANGE/REVERSE
Check
Second step of entrepreneurial process; When entrepreneurs check likelihood for success through idea feasibility analysis
Role conflict
The kind of problem that arises when multiple responsibilities create different and conflicting demands (Ex. parent and boss)
Forms of Entrepreneurship
The settings in which the entrepreneurial effort takes place
Access
The simplest form of discrimination against minorities and women
Corridor Principle
Theory in entrepreneurship that says that as you start pursuing one line of work or opportunity, you will encounter other opportunities.
Success Stage
Third stage of the business life cycle marked by the firm being established in its market, operation, and finances
Plan
Third step of entrepreneurial process; Thinking about going from an idea to a business through testing and small-scale set ups
Takeoff
This stage occurs after the success stage for a small percentage of businesses; Characterized by rapid growth (5-10%/month+)
False: 58%
True or False: Family Businesses makes up 88% of America's total work force
Social entrepreneurship
Form of entrepreneurship involving the creation of self-sustaining charitable and civic organizations, or for-profit organizations which invest significant profits in charitable activities
Corporate entrepreneurship
Form of entrepreneurship that takes place in existing businesses around new products, services, or markets (80% of self-employed entrepreneurs/12 million Americans))
Competencies
Forms of business-related expertise (Related to B in BRIE, along with industry-speific knowledge)
Do
Fourth step of entrepreneurial process; Acting on a plan and refining it until it becomes a successful firm
Crowdfunding
Funding a business online through the collective involvement of others who provide donations, loans, or investments
Small and Medium Enterprises (SME)
International term for small business
Small Business
Involves 1-50 people and has its owner managing the business on a day-to-day basis
License
Legal agreement granting you rights to use a particular piece of intellectual property
Comprehensive planners
Those who develop long-range plans for all aspects of the business
Critical-point planners
Those who develop plans focused on the most important aspect of the business first; Not long term
Habit-based planners
Those who do not plan, preferring to let all actions be dictated by their routines; Do very poorly in business world
Opportunistic planners
Those who start with a goal instead of plan and look for opportunities to achieve it; Fairly short term
Reactive planners
Those with a passive approach to planning, who wait for cues from the environment to determine what actions to take; Entirely short term + do poorly in business world
True
True or False: SBs create 65% of jobs in the US
False, they are handled by business outside of government or big business
True or false: Corporations handle certifications
True
True or false: To qualify for set asides, you must get a certification saying the business is owned by a woman or minority
Creative destruction
Way that newly created goods, services, or firms can hurt existing goods, services, or firms
Identifying the wrong problem, Judging too fast, Stopping at first good idea, Obeying rules that don't exist, Failing to act
What are five pitfalls to avoid when trying to be innovative?
Funds come from owner, sales are most important, like to retain autonomy, focus of efficiency, meta-strat. is imitation, grow when necessary
What are some traits of a SB?
Keep family issues out of the business
What is the most effect approach for avoiding role conflict?
Growth rewards
What people get from facing and beating challenges
SCAMPER
Model used to spark creativity (making connections among distinct ideas or opportunities)
Income rewards
Money made by owning one's business.
Unicorns
Most successful high-growth ventures, those with a valuation of $1 billion or more.
Factor-driven Economy
Nation where the major forces for jobs, revenues, and taxes come from farming or extractive industries like forestry, mining, or oil production. (Ex. Jamaica, Pakistan, Venezuela)
Innovation-driven Economy
Nation where the major forces for jobs, revenues, and taxes come from high-value added production based on new ideas and technologies and from professional services based on higher education (Ex. Germany, Korea, US)
Overall growth strategy
One of four general ways to position a business based on the rate and level of growth entrepreneurs anticipate for their firm.
Firm
Organization that uses resources to produce a product, which it then sells
Time management
Organizing process to help make the most efficient use of the day
What the Five P's Stand for
PASSION: Intense positive feeling an entrepreneur has towards business or idea behind business PERSEVERENCE: Ability to stick with activity through thick and thin PROMOTION/PREVENTION FOCUS: Focus on maximizing gains and minimizing losses PLANNING STYLE: Having a planning style this is effective and suits your lifestyle PROFESSIONALIZATION: Extent to which a firm meets/exceeds the standards for its industry
Founders
People who create or start new businesses; Can be by themselves or through a franchise; Other groups include buyers and heirs
Specialized business professionalization
Situation that occurs when businesses have founders/owners who are passionate about one or two of the key business functions, such as sales, operations, accounting, finance, or human resources
Determination competencies
Skills identified with the energy and focus needed to bring a business into existence (Related to I in BRIE)