Chapter 6: Entrepreneurship and Starting a Small Business

Self-directed, self-nurturing, action-oriented, highly energetic, and tolerant of uncertainty

A list of entrepreneurial attributes to look for in yourself

Five years

According to the SBA half of new businesses don't last ____

Personal savings; family and business associates; banks and finance institutions; angels and venture capitalists; and government agencies such as the Small Business Administration (SBA), the Farmers Home Administration, the Economic Development Authority, and the Minority Business Development Agency

An entrepreneur has several potential sources of capital:

Angel investors

Are private individuals who invest their own money in potentially hot new companies before they go public

Small Business Investment Company (SBIC) Program

Are private investment companies licensed by the SBA to lend money to small businesses

Intrapreneurs

Creative people who work as entrepreneurs within corporations

Micropreneurs

Entrepreneurs willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle

Venture capitalists

Individuals or companies that invest in new businesses in exchange for partial ownership of those businesses

Small Business Administration (SBA)

Is a U.S. government agency that advises and assists small businesses by providing management training and financial advice and loans

Business Plan

Is 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

Is 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

Entrepreneurship

Is accepting the risk of starting and running a business

Affiliate marketing

Is an online marketing strategy in which a business rewards individuals or other businesses (affiliates) for each visitor or customer the affiliate send to its website

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 dominated 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)

Opportunity, Profit, Independence, and Challenge

Reasons people are willing to take the entrepreneurial risk

Accounting

Small business owners often say the most important assistance they received in starting and managing their business was in ___

Enterprise zones

Specific geographic areas to which governments attract private business investment by offering lower taxes and other government support

Friends and family

The most common source of funding after personal savings is ____

Service Corps of Retired Executives (SCORE)

This SBA office has more than 11,000 volunteers from industry, trade associations, and education who counsel small businesses at no cost (except for expenses)

Jumpstart Out Business Startups (JOBS)

U.S. lawmakers passes this Act in 2012. The legislation is meant to make crowdfunding more accessible to small businesses that hope to attract investors

1. What the business owns 2. What it earns 3. What makes it unique

Value is based on

Foreign buyers enjoy dealing with individuals rather than large corporations because 1. Small companies provide a wider variety of suppliers and can ship products more quickly and 2. Small companies give more personal service

What are some advantages small businesses have over large businesses in global markets?

Small-business owners often have difficulty finding competent employees and grooming employees for management responsibilities

What are some of the special problems that small-business owners have in dealing with employees?

The Small Business Administration defines a small business as one that is independently owned and operated and not dominant in its field of operation, and that meets certain standards of size in terms of employees or sales (depending on the size of others in the industry)

What does the small in small business mean?

First, learn from others. Take courses and talk with some small-business owners. Second, get some experience working for other. Third, take over a successful firm. Finally, study the latest in small-business management techniques

What hints would you give someone who wants to learn about starting a small business

Help can come from many sources: accountants, lawyers, marketing researchers, lean officers, insurance agents, the SBA, SBDCs, SBICs, peer groups, and even college professors

Where can budding entrepreneurs find help in starting their businesses?

Market

Which consists of consumers with unsatisfied wants and needs who have both resources and willingness to buy

Small businesses accounts for almost 50 percent of gross domestic product (GDP). Perhaps more important to tomorrow's graduates, 80 percent of U.S. workers' first jobs are in small business

Why are small businesses important to the U.S. economy?

Many small businesses fail because of managerial incompetence and inadequate financial planning

Why do many small businesses fail?

1. Financing is often difficult to find 2. Many people don't know how to get started and do not understand the cultural differences in foreign markets 3. The bureaucratic red tape is often overwhelming

Why don't more small businesses start trading globally?

The increase in power and decrease in price of computer technology have leveled the field and made it possible for small businesses to compete against larger companies--regardless of location

Why has there been such an increase in the number of home-based and web-based businesses in the last few years?