ENTR 4113 Test 1 (Ch 1-3)
Pivot
"Go ahead and start the business in any way you can and look for better opportunities as you go along. It happens all the time. William Wrigley Jr. started out selling soap and baking powder and, to get people's attention, he gave away gum as a promotional item. Wrigley switched to selling gum when he realized how popular a product his Juicy Fruit gum was."
BRIE model
-Boundary: creating a place for your business - in location and in people's minds -Resources: the money, product, knowledge, etc., that make up the business -Intention: the desire to start a business -Exchange: moving resources/products/services in exchange for money
Four focuses of entrepreneurship
-Creation: the making of new entities -Customer-focus: being in-tune with your market -Efficiency: doing the most work with the fewest resources -Innovation: looks at a new thing or a new way of doing things
Universally mentioned rewards
-Flexibility: to have greater flexibility for my personal and family life -Income: to give myself, my spouse, and my children financial security -Growth: to continue to grow and learn as a person
Rarely mentioned rewards
-Recognition: to achieve something and get recognition for it -Admiration: to be respected by my friends -Power: to lead and motivate others -Family: to continue a family tradition
Occasionally mentioned rewards
-Wealth: to have a chance to build great wealth or a very high income -Product: to develop an idea for a product
Myths about small business
1) Not enough financing 2) You can't start a business during a recession 3) To make profits, you need to make something 4) If you fail, you can never try again 5) Students don't have the skills to start a business 6) 90% of all new businesses fail within two years
Determination Competencies
Business as primary focus, ability to manage time, ability to find/get help, ability to sustain relationships, willingness to act
Resource Competencies
Business information, business financing, space for the business, raw materials, support people
Opportunity Competencies
Found profitable idea, idea imitates with a twist or is new (but tested), idea is hard to copy
Industry Specific Knowledge
Industry expertise, industry skill, market knowledge, ability to diagnose, ability to see opportunities
Key Business Functions
Sales, operations, accounting, finance, human resources
Traditional small business
a firm intended to provide a living income to the owner, and operating in a manner and on a schedule consistent with other firms in the industry and market; 22% of businesses
High-performing small business
a firm intended to provide the owner with a high income through sales or profits superior to those of the traditional small business; 20% of businesses
High-growth venture
a firm started with the intent of eventually going public, following the pattern of growth and operations of a big business; 5% of businesses
Efficiency-driven economy
a nation where industrialization is becoming the major force providing jobs, revenues, and taxes, and where minimizing costs while maximizing productivity is a major goal
Factor-driven economy
a nation where the major forces for jobs, revenues, and taxes come from farming or extractive industries like forestry, mining, or oil production
Innovation-driven economy
a 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
Entrepreneur
a person who owns or starts an organization, such as a business
Self-efficacy
a person's belief in his or her ability to achieve a goal
Franchise
a prepackaged business brought, rented, or leased from a company called a franchisor
Lifestyle or part-time firm
a small business primarily intended to provide partial or subsistence financial support for the existing lifestyle of the owner, most often through operations that fit the owner's schedule and way of working; 53% of businesses
Effectuation
an approach used to create alternatives in uncertain environments
Certification
an examination based acknowledgement that the firm is owned and operated as specified
Social capital
characteristics of a business, like trusts, consistency, and networks, that represent potential social obligations which are an asset of the firm or entrepreneur
Necessity-driven entrepreneurship
creating a firm as an alternative to unemployment because they do not see a workable prospect for getting employed
Small business life cycle
emergence, existence, success, resource maturity, take-off
Task environment
external; a part of the external environment made up of those components that the firm deals with directly; ex: media, interest groups, governments
General environment
external; the forces, institutions, and people outside the boundary of the firm; ex: economic, international, and political-legal sectors
Set-asides
government contracting funds which are earmarked for particular kinds of firms, such as small-businesses, minority-owned firms, women-owned firms, etc.
Promotion focus
intent on maximizing gains, which gives us a bias toward pursuing opportunities likely to lead on those gains
Prevention focus
intent on minimizing losses, with a bias toward inaction or protective action
Organizational identity
part of the BRIE model; composed of the name, description, and distinctive elements of a firm, such as trademarks, uniforms, logos, characters, and stories
Serial entrepreneur
people who open multiple businesses throughout their career
Entrepreneurial ecosystem
reflects the physical world in which we live; includes natural components (raw materials, weather, ecological forces) as well as created components (cities, roads, other infrastructure)
Legitimacy
the belief that a firm is worthy of consideration or doing business with because of the impressions or opinions of customers, suppliers, investors, or competitors
Mindshare
the degree of attention your target market pays to your idea or organization
External legitimacy
the extent to which a small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner's family
Social entrepreneurship
the 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
the form of entrepreneurship which takes place in existing businesses around new products, services, or markets
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
Unicorn
the most successful high-growth venture, those with a valuation of $1 billion or more
Internal environment
the people and groups within the boundary of a firm; ex: owners and employees
Corridor principle
the pivot approach is also called the ______ _______ because until you start going down the ________ (or in this case doing your business) you can't tell what opportunities you might find
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
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 (ex: rent instead of buying equipment; taking the cheaper alternative)