ba 101 - chapter six: entrepreneurship and starting a small business

what is the order of the sources of equity financing?

1. personal savings 2. friends and family 3. angels 4. partners 5. corporations 6. public stock sale

what are the functions of business in a small-business setting?

1. planning your business 2. financing your business 3. knowing your customers (marketing) 4. managing your employees (human resource development) 5. keeping records (accounting) 6. looking for help

intrapreneurs

creative people who work as entrepreneurs within corporations

estimated earnings

forecasted income statements

systematic innovation

purposeful and organized search for changes and systematic analysis of the opportunities such changes might offer the economic or social innovation

what are the two areas of focus for the opportunity analysis?

1. determine how attractive an industry is overall as a "home" for a new business 2. identify possible niches a new entrant can occupy profitably

what is the entrepreneurship process?

1. entrepreneurial mindset (characteristics) 2. idea (innovation) 3. opportunity analysis 4. feasibility analysis (can it be done) 5. business plan 6. funding

what are the two functions of a business plan?

1. guiding company by charting its future course and defining its strategy 2. attracting lenders and investors who will provide capital (also venture capitalists)

business plan

a detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and qualifications of the owner(s)

entrepreneurial team

a group of experienced people from different areas of business who join to form a managerial team with the skills to develop, make and market a new product

what are the three parts to the financial feasibility analysis?

a. capital requirements b. estimated earnings c. return on investment

challenges of small business going global?

a. financing is often difficult to find b. would-be exporters don't know how to get started and do not understand the cultural differences between markets c. the bureaucratic paperwork can threaten to bury a small business

entrepreneurship

accepting the risk of starting and running a business, about problem solving

financial forecasts

an important part of the business plan, and includes the projected financial statements (monthly for one year & quarterly for next two years), income statement, balance sheet, cash flow & capital expenditures

crowdfunding

asking a group of people, most often online, to donate money and be financially involved in a new venture

return on investment

combining capital requirement and estimated earnings to determine how much investors can expect their investments to return, increase in return = increase in risk

micropreneur

desire to remain small and balance lifestyle with work

feasibility analysis

determines the degree to which product/service idea appeals to potential, asks "should we proceed with this business idea?"

capital requirement

estimate of start-up capital required to launch

initial public offering (ipo)

firm raises capital by selling stock shares to public for first time

micropreneurs

home-based business owners

opportunity analysis

look for where the opportunities might be

innovation

making a meaningful contribution through new value, different value & combining resources in a more productive way, "new dots"

venture capitalists

may finance your project-for a price, they may ask for a hefty stake in your company (as much as 60 percent) in exchange for the cash to start your business

incubators

offer new businesses in the critical stage of early development low-cost offices with basic services such as accounting, legal advice, and secretarial help

small business

one that is independently owned and operated, is not dominant in its field of operation, and meets certain standards of size in terms of employees or annual receipts (such as under $2.5 million a year for service businesses)

angel investors

private investors in emerging start-ups in exchange for equity stakes

what are some entrepreneurial attributes?

self-directed, self-nurturing, action-oriented, highly energetic, perseverance, competitive, skilled at organizing, and tolerant of uncertainty

crowdsourcing

the practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people and especially from the online community, rather than traditional employees or suppliers

causes of small business failure

underpricing or overpricing goods or services, starting with too little capital, going into business without first learning something about the industry or market, and underestimating how much time it will take to build a market