Entrepreneurship - Chapter 1 & 2

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

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

Innovation-Driven Economy

A nation there 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; (Germany, UK, US)

Efficiency-Driven Economy

A nation where industrialization is becoming the major force providing jobs, revenues, and taxes, and where minimizing costs while maximizing productivity (i.e. efficiency) is a major goal; (Morocco, South Africa, Ecuador)

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; (India, Cameroon, Senegal)

Heir

A person who becomes an owner through inheriting or being given a stake in a family business

Self-Efficacy

A person's belief in his or her ability to achieve a goal.

Cognition (C2)

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

Main Street Businesses

A popular term for small businesses reflecting the idea that these are the kinds of firms you would expect to find on the main street of a typical American city, and are the opposite of big businesses or "Wall Street" businesses

Franchise

A prepackaged business bought, rented, or leased from a company called a franchisor

Organizational Culture

A set of shared beliefs, basic assumptions, or common, accepted ways of dealing with problems and challenges within a company that demonstrate 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

Minimalized Business Professionalization

A situation that occurs when the entrepreneur does nearly everything in the simplest way possible

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

Corridor Principle

A theory in entrepreneurship and occupational theory that says that as you start pursuing one line of work or opportunity (which is like going down a corridor) you will encounter other opportunities

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

Effectuation

An approach used to create alternatives in uncertain environments

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

Passion

An intense positive feeling an entrepreneur has toward the business or the idea behind the business; displayed 3 ways: by looking at the challenges of the business in a creative way/by being persistently focused on the business/by being absorbed by the tasks and concerns of the business

Firm

An organization that sells to or trades with others

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

Stage 1: Emergence

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

Small and Medium Enterprise (SME)

The international term for small businesses

Stage 4: Resource Maturity

The resource maturity stage is the most typical fourth stage of the 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, the resource maturity stage occurs after takeoff.

Stage 2: Existence

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 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

Goods or Services

The tangible things (goods) or intangible commodities (services) created for sale

Stage 3:

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. ; Characterized by rapid growth (5-10 percent a month or more). ; When this growth levels off, the firm enters the resource maturity stage

Bootstrapping

Using low-cost or free techniques to minimize your cost of doing business

Women Entrepreneurs

Women-owned businesses are one of the fastest-growing sectors of all United States businesses; 29.6% of all businesses are majority owned by women, with 17.5% equally owned by men and women

Self-Employed

Working for yourself

Family Business

a firm in which one family owns a majority stake and is involved in the daily management of the business ; 1/3 of the Standard & Poor's 500 are family owned and managed; 39% of businesses in the US are small family businesses; almost 10.8 million firms; employ 58% of America's workforce

High-Growth Venture

a firm started with the intent of eventually going public, following the pattern of growth and operations of a big business

Small Business Administration (SBA)

a part of U.S. government which provides support and advocacy for small business

Entrpreneur

a person who owns or starts an organization, such as a business

Flexibility Rewards

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

Key Business Functions

activities common to all businesses; sales, operations, accounting, finance, and human resources

Industry-Specific Knowledge

activities, skills, and knowledge, specific to businesses in an industry

BRIE

boundary, resources, intention, and exchange

Boundary

creating a place for your business - in location and in people's minds

Mindshare

degree of attention to which your target market pays to your idea or organization

Innovation

focus which looks at a new thing or a new way of doing things

Creation

focus which looks at the making of new entities

Customer-Focus

focus which refers to being in tune with one's market

Independent Entrepreneurship

form of entrepreneurship in which a person or group own their own for-profit business

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 which takes place in existing businesses around new products, services or markets

Competencies

forms of business-related expertise

Small Business (C1)

involves 1-50 people and has its owner managing the business on a day-to-day basis

Income Rewards

money made by owning one's own business

Exchange

moving resources/products/services in exchange for money

Efficiency

ocus which refers to doing the most work with the fewest resources

Time Management

organizing process to help make the most efficient use of the day; List, 123 Prioritize, Delegate, Repeat, Strategize

Virtual Instant Global Entrepreneurship (VIGE)

process that uses the Internet to quickly create businesses with a worldwide reach; depends on using websites like eBay (for products) or Upwork (for services) to quickly establish a global presence

Rarely Mentioned Rewards

recognition, admiration, power, and family

Innovativeness

refers to how important a role new ideas, products, services, processes, or markets play in an organization

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

Crowdsourcing

techniques often based on Internet-based services to get opinions or ideas through the collective involvement of others

Resource Competencies

the ability or skill of the entrepreneur at finding expendable components necessary to the operation of the business ; Time, information, location, financing, raw materials, expertise

Perserverance

the ability to stick with some activity even when it takes a long time, and when a successful or unsuccessful outcome is not immediately known; learned optimism

Intention

the desire to start a 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; whenever possible, make decisions based on business necessities

Resources

the money, product, knowledge, etc., that make up the business

Succession

the process of intergenerational transfer of a business; Lack of clear transition plan is the death knell

Creative Destruction

the way that newly created goods, services, or firms can hurt existing goods, services, or firms

Basic Business Competency

understanding the organizational and business processes of a firm

Occasionally Mentioned Rewards

wealth and product

Growth Rewards

what people get from facing and beating challenges

Percentage of Number of Owners

1 - 48% 2 - 38% 3 - 7% 4 - 4% 5+ - 3%

Four Key Ideas

1. Believe that you can do this 2. Planning + Action = Success 3. Help Helps 4. Do well. Do Good.

The Five P's of Entrepreneurial Behavior

1.) Passion 2.) Perseverance 3.) Promotion/Prevention focus 4.) Planning style 5.) Professionalization

Challenge and the Entrepreneurial Way

1.) if you don't succeed the first time, try, try again 2.) Scale back 3.) Bird in the hand 4.) Pivot 5.) Take it on the road 6.) Ask for help 7.) Plan to earn

Myths about Small Businesses

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

Standard Business Practice

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

Independent Small Businesses

A business owned by an individual or small group

Owner-Managed Firms

A business run by the individual who owns it

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 Entrpreneurship

Creating a firm to improve one's income or a product or service

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-Driven 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

The Entrepreneurial Process

Feel - Check - Plan - Do

Crowdfunding

Funding a business online through the collective involvement of others who provide donations, loans, or investments

Entrepreneurial Teams

Majority of new businesses have a team of two or more co-owners; Most teams are family related; More than half of teams are spouses or life partners working together

Minority Entrepreneurs

Minority-owned businesses represent 14.6% of all United States businesses; 2007-2012 Growth rates: General Business - 10% / Minority-Owned - 27%

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

Founders

People who create or start new businesses

Serial Entrepreneurs

People who open multiple businesses throughout their career

Buyers

People who purchase an existing business

Slack Resources

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