Sem in Small Business Quiz #1

Causal (or predictive reasoning) versus effectual

Causal: process of setting a goal and then determining the strategy and resources required to attain the goal. Decide where you want to go (the goal) and then how you will get there (the strategy). Ex: I am going to make spaghetti, I need to go to the store for the ingredients Effectual: A logical process in which one analyzes the resources available and restraints on the use of resources to create an attainable goal. Ex: Lets see what we can make with whats in the fridge now

What is opportunity recognition?

- searching and capturing new ideas that lead to business opportunities - a most basic and important entrepreneurial behavior - involves creative thinking that leads to discovery of new and useful ideas

Key question for Moving from part-time to full-time-FINANCE

-Wait until there is a solid income -Can you afford to go on your own? This means having enough to cover personal and family expenses (typically for six months), as well as business expenses. - Make use of any transition services offered by the former employer - Recognize that initially, you will spend all your time running and marketing the business

What is entrepreneurial alertness?

-a special set of observational and thinking skills that help entrepreneurs identify good opportunities -the ability to notice things that have been overlooked, without actually launching a formal search for opportunities, and the motivation to look for opportunities

Three principles of reasoning that are absolutely critical in the process of effectual reasoning

1. Affordable loss: minimum possible expenditure of capital in order to bring an entrepreneurial idea to the market 2. Strategic Partnership: formal / informal relationships with customers, vendors, or mentors to ensure the success of a venture 3. Leveraging Contingencies: practice and ability to seize upon novel opportunities that become apparent during the conduct of business

When to consider part time entrepreneurship-see figure 5.1

1. Do I understand how the business works? 2. How long will this opportunity last? 3. Do I really want to do this full time? 4. Do I have enough resources?

What are the steps in the entrepreneurial life cycle?

1. Emergence: move from thinking to doing 2. Existence: business in operation but not yet stable 3. Success: established in markets, operation, and finances 4. Resource Maturity: stable rising sales / profits over several years 5. Take Off

What are the four steps in the entrepreneurial process?

1. Feel 2. Check 3. Plan 4. Do

What are the three most popular types of reward for small business owners?

1. Growth rewards: what people get from facing and beating challenges 2. Income rewards: money made by owning one's own business 3. Flexibility rewards: ability of business owners to structure life in the way that suits their needs 4. Social rewards: the respect of others, or power over others, and family rewards, like continuing a family tradition in business

What are the five aspects of behavior that most successful entrepreneurs display?

1. Passion 2. Perseverance 3. Promotion / Prevention Focus 4. Planning Style 5. Professionalization

SHORT ANSWER: What are the five ways that people can use to get into small business management? The Five paths to business ownership are: (Ch .6)

1. Start a new business 2. Buy an existing business 3. Franchise 4. Inherit a business 5. Hired to be the professional manager of a small firm

SHORT ANSWER: Define the five Ps of entrepreneurial behavior (Ch. 2)

1.Passion: an intense positive feeling an entrepreneur has toward the business or the idea behind the business 2. Perseverance: the ability to stick with some activity even when it takes a long time, and when a successful or unsuccessful outcome is not not immediately known 3. Promotion / Prevention Focus: attention to maximizing gains, and to minimizing losses 4. Planning Style: comprehensive, critical point, opportunistic, reactive, and habit-driven planners 5. Professionalization: standard business practice

What is self-efficacy?

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

Organization's Environment figure 3.1

Internal Environment: employees, owners, and board of directors The Task Environment (External): Customers, competitors, suppliers, distributors, subcontractors, unions, lenders, governments, etc. The General Environment: Economic sector, technological sector, sociocultural sector, ecosystem/infrastructure sector, demographic sector, political legal sector, and international sector

What does the term "liability of newness" mean?

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

SCAMPER tools

a creativity tool that provides cues to trigger new ideas for your business S= Substitute C= Combine A= Adapt M= Modify / Magnify P= Put to other uses E= Eliminate R= Rearrange

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

What is radical innovation?

rejecting existing ideas, and presenting a way to do things differently