Chapter 2: Small Business Entrepreneurs
Cognition
A person's way of perceiving and thinking about his or her experience
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
key business functions
Activities common to all businesses such as sales, operations (also called production), accounting, finance, and human resources.
5 P's of Entrepreneurship
Passion Perseverance Promotion-Prevention Focus Planning style Professionalization
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
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.
Success
The third stage of the business life cycle marked by the firm being established in its market, operation, and finances
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
Minimalized business professionalization
a situation that occurs when the entrepreneur does nearly everything in the simplest way possible
Industry specific knowledge
activities, knowledge, and skills specific to businesses in a particular industry
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-based 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
Competencies
forms of business-related expertise
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
resource competencies
the ability or skill of the entrepreneur at finding expendable components necessary to the operation of the business such as time, information, location, financing, raw materials, and expertise
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 in 3 ways: 1. Looking at business challenges in a creative way 2. Persistently focused on the business 3. Being absorbed by the tasks and concerns of the business
Stages in the entrepreneurial business life cycle
Emergence Existence Success Resource maturity Takeoff
Second career entrepreneurs
People who begin their businesses after having left, retired, or resigned from work. These can include veterans of the armed forces and civilians from a broad range of industries.
Perseverance
The ability to stick with some activity even when it takes a long time and it's outcome is not immediately know.
Professonalization
The extent to which a firm meets or exceeds the standard practices for its industry
Emergence
The first stage of the small business life cycle, where the entrepreneur moves from thinking about starting the business to actually starting the business
Resource Maturity
The fourth stage of the business life cycle. It is characterized by relatively stable or slowly rising sales and profits over several years. In adorn that a takeoff stage following the success stage, the resource maturity stage occurs after takeoff
Time management
The organizing process to help make the most efficient use of the day
Action
The visible behavior a person takes
Standard business practice
a business action that has been widely adopted within an industry or occupation
Takeoff
Occurs after the success stage. It is characterized by rapid growth (5-10% a month or more). When this growth levels off, the firm enters the resource maturity stage.
Set asides
Government contracting funds which are earmarked for particular kinds of firms, such as small businesses, minority-owned firms, women-owned firms, and the like.