Entrepreneurship Test #1

The initial analysis is a process of:

moving from three to five ideas to a single idea.

A(n) __________________that uses your education is a potential source of a business. (Enter one word in the blank.)

opportunity

People in an entrepreneur's network can help by providing ______ to a new business. budgetary control capital management personnel legitimacy

legitimacy

To fully utilize family resources, entrepreneurs should _____. (Check all that apply.) Multiple select question. list the capabilities those individuals possess that might be helpful make a list of members that they have regular contact with focus on members who are likely to provide funding for favorable terms

list the capabilities those individuals possess that might be helpful make a list of members that they have regular contact with

Compare and contrast various types of new business supports.

(1) family, (2) social networks, (3) community, and (4) financial resources. Incubators- Facilities that house new businesses, providing many critical services for these new businesses.

Discuss the importance of an entrepreneurial orientation.

1. Assessing these things will help you fine out what business opportunities to pursue (1) risk tolerance, (2) prior experience, and (3) personality orientation of the individual. 2. Bounded rationality- Rational decision making that is constrained by the background and history of the person making the decision. 3. Personality tests- -Meyers Briggs-extroversion-introversion (focus on outward world or internal); sensing-intuiting (how people gather information); thinking-feeling (how they make decisions); and judgment-perception (order vs. flexibility) - Enneagram-a person is the result of all the experiences in his or her life - Big Five Test- open-mindedness, conscientiousness, agreeableness, emotional stability, and extroversion

List some triggers that push people into starting a new business

1. Being laid off from established employment. 2. Being approached by one or more people with a new business idea. Reaching a point financially where the risk-return level of a proposed new business is tolerable. Having very little to lose financially by a failure. Receiving evidence that an idea is not only doable but that there is a concrete way to address a given problem. Being spurred to action by attending a seminar, reading a book, or talking with successful entrepreneurs. Experiencing a midlife (or early-life or even late-life) crisis. Observing the establishment of an incubator, accelerator, or business development effort within the community. Experiencing the inability to climb the corporate ladder due to circumstances beyond a person's control

Describe the impact of entrepreneurial businesses on society

1. Economic gardening 2. Entrepreneurial businesses fill gaps that large businesses can't reach 3. Military Base example 4. glass Ceiling idea that minorities don't have great advantages in big companies but may be hired, small businesses can fix this.

List the triggers that encourage new business formations

1. Being laid off from established employment. 2. Being approached by one or more people with a new business idea. 3. Reaching a point financially where the risk-return level of a proposed new business is tolerable. 43. Having very little to lose financially by a failure. 5. Receiving evidence that an idea is not only doable but that there is a concrete way to address a given problem. 6. Being spurred to action by attending a seminar, reading a book, or talking with successful entrepreneurs. 7. Experiencing a midlife (or early-life or even late-life) crisis. 8. Observing the establishment of an incubator, accelerator, or business development effort within the community. 9. Experiencing the inability to climb the corporate ladder due to circumstances beyond a person's control. 10. These might include not having graduated from the "correct" school, being female in a male-dominated business, and having a marketing background in a manufacturing business. 11. After graduating from college, you may identify new opportunities that others have not seen. Today more so than any time in the history of the United States, starting a business from college is seen as highly possible. Personal motivations come from the individuals themselves and as such are the strongest motivations. Personal motivations drive people to make career and life-altering moves irrespective of "practical" advice. Entrepreneurs driven by personal motivators will tend to be more proactive and drive relentlessly toward their goals. Personal motivations can also include the desire for more flexibility with their families, living in a region they want, better control of their lives, or improving their standard of living. Circumstantial motivators tend to result in more of a defensive positioning. The environment and environmental changes make opportunities available to potential business owners, but the motivation is substantially different. This is an opportunistic start-up whose staying power is more determined by other competing opportunities.

Discuss the history of entrepreneurship in the United States

1. History of US has always been intimately tied to entrepreneurship 2. 1880's robber barons showed up in the industrial industry -entrepreneurial businesses still thrived 3. 1930's great depression large businesses seemed to be the main focus 4. 1970's and 80's economic growth happened because of entrepreneurial firms taking the place of larger firms 5 backbone of economic success in the nation 6. help the economy adapt quickly

Analyze how to choose a business.

1. Initial analysis- The analysis and thought processes require focus, time, and usually some financial investment. If the potential entrepreneur is to be successful, then the process is to move from the three to five ideas initially generated to a single idea on which to focus. 2. (1) threats to the profit margin, (2) threats to sales generation schemes, and (3) threats to operational financing.

Discuss the worldwide impact of entrepreneurial business

1. Programs have been put into place to increase the creation of small businesses worldwide 2. The number is growing 3. increased GNP

Explain how entrepreneurial founders impact the business world as a whole.

1. Smaller firms can also respond quickly to changes around them 2. Small firms are able to fill niches 3. Owned and run by the same person (agency theory)

What three goals should you have in mind when creating a business plan?

1. To be a guide to managing the business in its early development. 2. To provide a self-evaluation: Putting the information down in writing allows for evaluation and honest analysis. 3. To provide potential closely held investors with the critical information necessary to evaluate the key criteria of the business: its cash flow, management team, and competitive advantage.

Discuss the elements of opportunity analysis.

1. gap Analysis -Examining trends around the region, nation, or world that may not have reached your particular geographic location. -Interview and talk about opportunities with key successful entrepreneurs in the area. -Discuss potential businesses with family members. -Look for environmental changes that create opportunities that did not exist before -Brainstorming with key entrepreneurs and family members can also be useful to the potential entrepreneur. -Take a look at the things that frustrate you and your family -If you as a potential entrepreneur have an interest and skill set based in technology, one of our personal favorites for the generation of business ideas is the examination of patent files.

Identify the type of people who are entrepreneurs

1. people who have an opportunity and responsibility to lead 2. Recognize you need stakeholders

Explain how entrepreneurial founders impact the business world as a whole -

1. small firms have greater felxibility 2. Able to cater specifically and more personally to customers needs 3. It is owned and run by the same person ( agency Theory) 4. Owner is the one of the most important parts of the whole business.

_____ is a managerial theory that believes individuals act to maximize their own benefit.

Agency Theory

What is included in the second column of the chart used in the gap analysis?

Categories of analysis

Which of the following steps are important to the development of a quality business idea? (Check all that apply.)

Compare one's ability to fill the gaps with the opportunity available. List and evaluate one's personal skill sets. Analyze the market and look for a gap or need not being met effectively.

Which of the following contribute to personal skill sets? (Check all that apply.) Family history Past work experience Current work experience Cultural background Hobbies

Current work experience Past work experience Family history Hobbies

Identify a finding of the federal General Accounting Office's (GAO's) analysis of the impact of the closure of military bases.

Economic growth went up and new businesses came about

Describe a systematic means for examining skills in order to generate new business ideas.

First, potential founders should list and evaluate their own personal skill sets. These skills may arise from hobbies, current work, past work experience, personal values that are very important to the entrepreneur, and/or family history. Second, potential founders should carefully analyze the market and look for a gap, or some need that is not being met effectively. Finally, the potential founders need to compare their ability to fill those gaps with the opportunity that seems to be available. We suggest that the best means to do this is the development of a chart (see Table 3.1) that allows for an open, systematic examination.

Which of the following groups might be included in an entrepreneur's key support network? (Check all that apply.) Pressure groups Advocacy groups Friends from school Former employers

Friends from school Former employers

Venture Capitol Start ups are formed with a ___________ _______ in place.

Harvest Plan

The Enneagram's nine personality types include which of the following? (Check all that apply.) Multiple select question. Helper Reformer Achiever Businessman

Helper Reformer Achiever

Identify the characteristics of a gap analysis for a new venture using a chart. (Check all that apply.) It is a quantitative analysis. It is a reasonably quick analysis. It determines if the business can be profitable in the long term. It requires minimal or no research.

It is a reasonably quick analysis. It requires minimal or no research.

Which of the following are pairs of variables in the Myers-Briggs test? (Check all that apply.) Judgment-perception Sensing-intuiting Risk-experience Extroversion-introversion

Judgment-perception Sensing-intuiting Extroversion-introversion

Which of the following is NOT one of the three types of specific risks? Multiple choice question. Strategic Financial Network Market retaliation

Network

Which of the following businesses could be most likely pursued by individuals who do NOT prefer to work with people? (Check all that apply.) Order fulfillment Internet-based businesses Retail business Bookkeeping

Order fulfillment Internet-based businesses Bookkeeping

Excess resources in an organization that allow for redundancy and the quick deployment of personnel in crisis are referred to as (2 words)

Organizational Slack

Which act officially organized the United States Small Business Administration (SBA) and when was it passed?

Small Business Act July 30 1953

Which of the following are advantages that small, new businesses have? (Check all that apply.) Small businesses fill niches that large firms simply cannot afford to fill. Small businesses have more resources available to them. Small businesses can respond quickly to opportunities or threats as they arise. Small businesses are owned and run by the same person(s).

Small businesses fill niches that large firms simply cannot afford to fill. Small businesses can respond quickly to opportunities or threats as they arise. Small businesses are owned and run by the same person(s).

Research suggests that successful new business ideas are NOT determined by your: (Check all that apply.)

gender. parents. religion. race.

What is the connection between the entrepreneur's skills, understanding of an industry, and the ability to create a competitive advantage such that the sum of the parts of the new business is greater than the individual parts alone?

Synergy

Starting a business is often the result of an event or condition within an individual's environment called a(n)

Trigger

True or false: An entrepreneur's prior experience places boundaries on what he or she will consider when making decisions.

True

True or false: Family experiences are an often overlooked source of skills for a new venture.

True

Identify a characteristic of venture capital start-ups. They are inherently risky operations whose growth is dependent on the exploitation of unknowns in the market. They are self-funded or closely funded. They are formed without a harvest plan in place. They are usually organized to grow slowly and take time to achieve positive net cash flow.

They are inherently risky operations whose growth is dependent on the exploitation of unknowns in the market.

True or false: Unlike entrepreneurial businesses, large organizations will regularly pursue smaller markets even if they do not believe the results will generate profits.

This is false. Large organizations will regularly ignore business opportunities if they do not believe the results will generate profits. Entrepreneurial businesses are more flexible and willing to pursue a wider range of opportunities.

New business owners need to be sure that the level of risk is consistent with their ______, ______, and ______. (Check all that apply.) values family situation background break-even point

Values Family Situation Background

Identify the questions that should be considered by an entrepreneur when analyzing the nonfinancial resources category of a gap analysis for a new business. (Check all that apply.) What level of risk to personal reputation is the entrepreneur willing to live with? What peculiar capabilities offer the entrepreneur a competitive advantage? What are the limiting factors in the growth of the new business? What unique skills will be needed to run the business?

What peculiar capabilities offer the entrepreneur a competitive advantage? What unique skills will be needed to run the business?

Which source of skills typically has direct applicability to the pursuit of a new business?

Work Experience

The nature of the effort required for an entrepreneur to carry out an effective due diligence analysis necessitates _____.

a focus on a single business idea

Large firms can sometimes do things more efficiently because of their ability to operate on a larger scale than can a small firm. This implies that large firms obtain ______ in some industries.

economies of scale

A founder or founding team must have synergy, which is a combination of: (Check all that apply.)

skill set competitive advantage understanding of an industry

Entrepreneurs' prior experience plays a role in new business creation through _____. Multiple choice question. their view of the world their financial contribution from the past business's profits their risk tolerance their traits and tendencies

their view of the world

What are the three critical elements that an entrepreneur must solve for success?

1. Effective sales generation model 2. Sustainable profit margin 3. Being properly financed

Explain the rationale behind starting an entrepreneurial business

1. The idea for a business can happen because of a trigger 2. Small entrepreneurial businesses are key for economic success 3. They are growing rapidly 4. Every fortune 500 company started out as a new venture 5. Success occurs because they are simply more focused than large businesses 6. Growing an entrepreneurial business is an art and a science -This text lays out a process for the "science" of forming and managing a new entrepreneurial business in a clear, sequential manner that is rich in its practical application as well as well grounded in research. The "art" is a matter of practice, example, and the skill of the founder or founders of the new business.

The underlying philosophy of the ______ test is that people are a result of all the experiences of their life. Enneagram Myers-Briggs Big Five Jung-Freud

Enneagram

Define an entrepreneurial business

1. Venture capitol backed firms -The businesses are well-funded by venture capital or angel investment -These businesses are formed with a harvest plan in place -Organized to grow as quickly as possible often laden with debt even when sold -They have a developed organizational structure -They often hire an experienced president to grow the company -They tend to develop operations in multiple locations very shortly after the initial investment. -inherently risky, unknown's in the market -These businesses either start or grow quickly to employ a relatively large number of employees 2. entrepreneurial firms -The start-up is self-funded or funded by those close to them. -The development plan is oriented around positive cash flow. -The management structure is designed to take advantage of the skills of the founder or founders. The operation is designed in the image of the founder(s). -The business is oriented toward the personal goals of the founder(s). -The number of employees may be zero or as few as one and typically would not be expected to grow to more than 50 to 100. 3. venture capital-backed firm generally develops a business plan as a promotional tool to be sent to potential investors, the entrepreneurial business develops a business plan as a guide for the running of the business.