Entrepreneurship Exam 1 (Ch 1-8)

Rarely mentioned rewards

Recognition, admiration, power, family

Small Business Administration

A part of the U.S. government, which provides support and advocacy for small businesses.

Goods or services

the tangible things (goods) or intangible commodities (services) created for sale

recognition

to achieve something and get recognition for it

basic business competency

understanding the organizational and business processes of a firm

small business

involves 1-50 people and has its owner managing the business on a day-to-day basis

Founders

people who create or start new businesses

buyers

people who purchase an existing business (entry stage)

Growth rewards

what people get from facing and beating challenges

effectuation

an approach used to create alternatives in uncertain environments

Crowdfunding

funding a business online through the collective involvement of others who provide donations, loans, or investments (ex: kickstarter.com and rockethub.com)

product

to develop an idea for a product

wealth

to have a chance to build great wealth or a very high income

sustainable entrepreneurship

an approach to operating a firm or a line of business which identifies, creates and exploits opportunities to make a profit in a way that can minimize the depletion of natural resources, maximize the use of a recycled material, or improve the environment

Passion

an intense positive feeling an entrepreneur has toward the business or the idea behind the business -It comes from being actively involved in moving the business forward.

firm

an organization that sells to or trades with others

social entrepreneurship

form of entrepreneurship involving the creation of self-sustaining charitable and civic organizations, or for-profit organizations which invest significant profits in charitable activities

Corporate Entrepreneurship

form of entrepreneurship which takes place in existing businesses around new products, services or markets -typically focus on customer-focus and innovation -ex: Apple's iPhone, or GM's green energy services

Competencies

forms of business-related expertise

Income rewards

the money made by owning one's own business -For more than three-quarters of entrepreneurs, this means seeking to match or slightly better the income you had before you started your own business.

action

the visible behavior a person takes

creative destruction

the way that newly created goods, services, or firms can hurt existing goods, services, or firms

admiration

to be respected by my friends

family

to continue a family tradition

power

to lead and motivate others

Bootstrapping

using low-cost or free techniques to minimize your cost of doing business

innovation

which looks at a new thing or new way of doing thing

self-employed

working for yourself

2. Check

Smart entrepreneurs check the likelihood for success of their idea through feasibility analyses or customer development processes, repeating these until they have a winning and saleable idea.

Standard business practice

a business action that has been widely adopted within an industry or occupation -doing this level or better is what professionalization is all about

independent small businesses

a business owned by an individual or small group

Owner-managed firms

a business run by the individual who owns it

Efficiency

focus which refers to doing the most work with the fewest resources

Independent Entrepreneurship

form of entrepreneurship in which a person or group own their own for-profit business

Four elements needed to get your business started (BRIE)

-Boundary (creating a place for your business-in location and in people's minds) -Resources (the money, product, knowledge, etc., that make up the business) -Intention (the desire to start a business) -Exchange (moving resources/products/services in exchange for money)

Small Firm Life Cycle

-Emergence (entrepreneurial role) -Existence -Success (traditional part-time or lifestyle business, traditional small businesses, resource maturity for high-performing small businesses) -take off (pattern of business growth, resource maturity for high-growth ventures)

Challenge and the entrepreneurial way

-If you don't succeed the first time, try, try again -Scale back -Bird in the hand -Pivot -Take it on the road -Ask for help -Plan to earn

Myths about Small Businesses

-Not enough financing -You can't start a business during a recession -To make profits, you need to make something -If you fail, you can never try again -Students don't have the skills to start a business -Ninety percent of all new businesses fail within two years

high-growth ventures

-preferred funding source: other people's money -when the firm's in trouble: sell more -what's more important: marketing -personal control preference: involve key others -focus: effectiveness -meta-strategy: novelty -external control preference: control market -grow: when possible -human resources: professionalize -acceptance: external legitimacy -what limits growth: market response -delegation orientation: delegation is essential

perseverance

-the ability to stick with some activity even when it takes a long time, and when a successful or unsuccessful outcome is not immediately known -a type of learned optimism

Passion is displayed in 3 ways:

1. by looking at the challenges of the business in a creative way 2. by being persistently focused on the business 3. by being absorbed by the tasks and concerns of the business

main street businesses

A popular term for small businesses reflecting the idea that these are the kinds of firms you would expect to find on the main street of a typical American city, and are the opposite of big businesses or "Wall Street" businesses. -include the lifestyle firms, the traditional small businesses, and the high-performing small businesses that represent the businesses most of us start and most of us deal with on a day-to-day basis.

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

Lifestyle or part-time firm

A small business primarily intended to provide partial or subsistence financial support for the existing lifestyle of the owner, most often through operations that fit the owner's schedule and way of working. -typically have sales of $25,000 a year or less

corridor principle

A theory in entrepreneurship and occupational theory that says that as you start pursuing one line of work or opportunity (which is like going down a corridor) you will encounter other opportunities.

key business functions

Activities common to all businesses such as sales, operations (also called production), accounting, finance, and human resources. -ex of operations activity: getting organized and registered which creates the boundary

green entrepreneurship

Another term for sustainable entrepreneurship taken from the popular belief that green is the color of a healthy environment, as in forests or fields

3. Help Helps

Successful entrepreneurs learn - from other entrepreneurs, from experts in their chosen field, from potential customers, or even from their professors! Those who get help succeed bigger and more often

Crowdsourcing

Techniques often based on internet-based services to get opinions or ideas through the collective involvement of others

Occasionally mentioned rewards

Wealth, product

Necessity-driven entrepreneurship

creating a firm as an alternative to unemployment

Opportunity-driven entrepreneurship

creating a firm to improve one's income or a product or service -As economies move from a factor-driven basis to an innovation-driven basis, the proportion of opportunity-driven entrepreneurship generally increases

Mindshare

degree of attention to which your target market pays to your idea or organization -innovation-driven entrepreneurs are often interested in having their idea used or known as making money

innovativeness

refers to how important a role new ideas, products, services, processes, or markets play in an organization ex: Dell led industry b/c of innovativeness and other imitated

Small business

-preferred funding source: owner's own money -when the firm's in trouble: cut costs -what's more important: sales -personal control preference: retain autonomy -focus: efficiency -meta-strategy: imitation -external control preference: control firm -grow: when necessary -human resources: personalize -acceptance: personal validation -what limits growth: loss of control -delegation orientation: delegation is difficult

4 key ideas for starting an entrepreneurial small business (paul's story-what he did right)

1. Believe that you can do this 2. Planning + Action = Success 3. Help helps 4. Do well. Do good.

Top 10 Occupations with the Highest Percentage of Entrepreneurs (percent)

1. Farmers and Ranchers 2. Medical Practitioners 3. Movie Projectionists 4. Artists 5. Entertainers and Athlete 6. Salespeople 7. Landscape Managers 8. Photographers 9. Service Managers 10. Furniture Finishers

The Entrepreneurial Process

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

Top 10 Occupations with Highest Numbers of Entrepreneurs

1. Owner-managers 2. Construction 3. Farmers 4. Retailers 5. Drivers 6. Child Care Workers 7. Real Estate Agents 8. Wholesalers 9. Maintenance Work 10. Lawyers

Traditional small business

A firm intended to provide a living income to the owner, and operating in a manner and on a schedule consistent with other firms in the industry and market. -These are the smallest full-time businesses, with schedules defined by customer, not owner, needs. Most often, these are one-site businesses with sales of between $25,000 and $100,000. Growth levels off after operations settle into a consistent, money-making pattern, generating enough income to provide a living for the owner and family.

factor-driven economy

A nation where the major forces for jobs, revenues, and taxes come from farming or extractive industries like forestry, mining, or oil production. -In these factor-driven economies such as Pakistan, Jamaica, and Venezuela, entrepreneurship is essential to helping build personal wealth and breaking the cycle of low-wage jobs, and entrepreneurship levels are very high.

2. Planning + Action = Success

A plan without action is futile. Actions without plans are usually wasted. Success comes from having the right sort of plan to get you to the right actions as quickly as possible. Like Paul, those who plan and act are the ones who most often succeed.

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.

3. Plan

Getting from the idea to the business can be done by small scale, part-time start-ups, lean startup approaches, pilot testing, business modeling, or doing a business plan.

4. Do well. Do good.

In the long run, you will depend on partners, investors, employees, customers, and neighbors. If you always remember, as Paul has, to do good for others as you try to do well in your business, you'll feel better about your business and life, and those around you will too.

overall growth strategy

One of four general ways to position a business based on the rate and level of growth entrepreneurs anticipate for their firm.

The 5 Ps of Entrepreneurial Behavior

Passion, Perseverance, Promotion/Prevention focus, Planning style, Professionalization

1. Believe that you can do this

Paul's belief in himself and what needed to be done to make a better sheath powered his efforts. -self-efficacy

serial entrepreneurs

People who open multiple businesses throughout their career

4. Do

Regardless of the type of planning approach you choose to implement your business activity, you will find that you need to refine your approach until you have a successful firm, including additional rounds of refinement and revising.

1. Feel

This is where the entrepreneur has a feeling - about maybe starting a business or maybe creating a particular product or service. This is what starts the founding process.

High-performing small business

a firm intended to provide the owner with a high income through sales or profits superior to those of the traditional small business -These tend to level off after success defined by sales of between $100,000 and $1,000,000, depending on the industry. These firms grow at rates more like 5 to 15 percent a year, adding employees, and often growing through multiple locations and higher levels of professionalization, in order to maximize their profitability over a long term, while reaching a plateau that lets them remain manageably small.

high-growth venture

a firm started with the intent of eventually going public, following the pattern of growth and operations of a big business -These aim to achieve growth rates of 25 percent or more a year, with sales of more than $1 million. These firms aim to become big businesses and pursue high levels of professionalization and external funding.

Efficiency-driven economy

a nation where industrialization is becoming the major force providing jobs, revenues, and taxes, and where minimizing costs while maximizing productivity (i.e. efficiency) is a major goal -ex: Russia, Brazil, China -entrepreneurship becomes a key way to build the middle class, and a growing retail and wholesale sector grows alongside businesses serving the needs of large industrial concerns.

Innovation-driven economy

a nation where the major forces for jobs, revenues, and taxes come from high-value added production based on new ideas and technologies and from professional services based on higher education -marked by a very large service sector, providing high-end services to not only the resident population, but also for export. Examples of such countries include Germany, the Republic of Korea, and the United States.

heir

a person who becomes an owner through inheriting or being given a stake in a family business (entry stage)

entrepreneur

a person who owns or starts an organization, such as a business

self-efficacy

a person's belief in his or her ability to achieve a goal -those who believe in themselves and in the passion of their beliefs are more likely to keep at it until they succeed

cognition

a person's way of perceiving and thinking about his or her experience

Franchise

a prepackaged business bought, rented, or leased from a company called a franchisor

Virtual Instant Global Entrepreneurship (VIGE)

a process that uses the internet to quickly create businesses with a worldwide reach -depends on using websites like eBay (for products) or Upwork (for services) to quickly establish a global presence. -Many of these VIGE sites offer procedures, services, and Web page templates which incorporate best practices for global trading.

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, skills, and knowledge, specific to businesses in an industry -A restaurant really is different from a mechanic's shop or a computer store or a portrait studio. Each requires you to understand a particular industry and market, and each requires a very particular kind of skill.

novelty

characterized by being different or new

imitative

characterized by being like or copying something that already exists

comprehensive planners

entrepreneurs who develop long-range plans for all aspects of the business -long-term view -comfortable with planning -act based on plans they've developed

Critical-point planners

entrepreneurs who develop plans focused on the most important aspect of the business first -act on it -then consider if additional plans are needed -not very long-term approach to planning

Habit-driven planners

entrepreneurs who do not plan, preferring to let all actions be dictated by their routines -do today what did yesterday -don't even tend to react to changes in environment

opportunistic planners

entrepreneurs who start with a goal instead of a plan and look for opportunities to achieve it -Once they find a good opportunity, even if it isn't the one related to their original goal, they act on it, so it is very short term in orientation.

Reactive planners

entrepreneurs with a passive approach, who wait for cues from the environment to determine what actions to take -focus is entirely short-term, and there is little in the way of goals driving their efforts -they can make the most of a situation because there is no other plan competing for their attention

Universally mentioned rewards

flexibility, income, growth

creation

focus which looks at the making of new entities

customer-focus

focus which refers to being in tune with one's market

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 -hard for others to copy

flexibility rewards

the ability of business owners to structure life in the way that suits their needs best -perhaps the most rapidly growing type of reward

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

small and medium enterprise (SMEs)

the international term for small businesses