Ch 1. Starting and Operating a Small Business

Question 1

Entrepreneurship

Answer 1

Process in which individuals pursue opportunities without regard to resources they currently control

Question 2

Opportunity

Answer 2

Is an idea based on customer needs, or wants and are willing to buy sufficiently often at a high enough price to sustain the business

Question 3

The Entrepreneurial Process

Answer 3

1. Deciding to Become an Entrepreneur
2. Developing successful business ideas
3. Moving from an idea to an entrepreneurial firm
4. Managing and growing the firm

Question 4

Types of Entrepreneurs

Answer 4

1. Necessity Based

2. Opportunity Based

Question 5

Small Business

Answer 5

A company having < 500 employees and selling < 5 mils. worth of product

Question 6

Taking The Long View

Answer 6

Entrepreneurs must start the business with the end in mind

Question 7

Things to Consider when Taking the Long View

Answer 7

1. How long do you plan to stay active? What will you do after?
2. What will happen to the business when you retire? Who will take over?
3. Who will you sell the business to?- Govt/Private entities. Will you stay with the business after its sold?

Question 8

Benefits of Becoming an Entrepreneur

Answer 8

1. You can pay yourself through salaries, wages, dividends etc.
2. You control business values and mission

Question 9

Potential Costs of becoming an entrepreneur

Answer 9

1. Business Failure
2. Obstacles
3. Loneliness/Isolation
4. Long hours

Question 10

Cost-Benefit Analysis

Answer 10

A decision-making process in which costs of taking action are compared to the benefits

Question 11

Cost

Answer 11

The money, energy, and time you will invest, as well as opportunities forgone to start the business

Question 12

Benefit

Answer 12

The wealth you will accrue and the knowledge, skills, self-esteem and experience you will gain

Question 13

Opportunity Cost

Answer 13

The value of the next best alternative forgone

Question 14

Entrepreneurial Options

Answer 14

The various ways in which profits can be used to benefit society

Question 15

Social Entrepreneurship

Answer 15

In this concept, social impact is more important than making a profit. Profit is only used to keep the business going

Question 16

Social Business

Answer 16

A company created to achieve a social objective, while generating enough profit to increase reach, improve product and subsidize social mission.

Question 17

Venture Philanthropy

Answer 17

Where financial and human capital is invested into not-for-profit and for-profit companies for social rather than financial returns.

Question 18

Green Entrepreneurship

Answer 18

Business activities that avoid harming the environment or help to protect it in some way.

Question 19

What green entrepreneurship does

Answer 19

1. Increase energy efficiency; saving costs
2. Decrease harm to worker’s health
3. Preserve natural resources that communities and businesses depend on for business and quality of life.

Question 20

Faces of Entrepreneurship

Answer 20

Looks at the form business will take

Question 21

Microenterprises

Answer 21

Firms with <5 employees, <50,000 initial capital, regular operational involvement of the owner.

Question 22

Lifestyle businesses

Answer 22

These are micro-enterprises that allow owners to have the desired life goal.
E.g. paying off college tuition

Question 23

Mainstream Small Businesses

Answer 23

They provide/have the potential to provide substantial profit to owners.
Made to continue, permanent wealth-building, unlike micro.

Question 24

Unicorns

Answer 24

Startups with companies valued over $USD16 million. Usually software companies, special technology

Question 25

Schumpeter’s Five Basic Ways to Create a Business

Answer 25

1. Using new technology to produce a new product
2. Using existing technology to produce a new product,
3. Using existing technology to produce an old product in a new way
4. Finding a new supply of resources
5. Developing a new market for an existing product.

Question 26

Franchise

Answer 26

A business that markets a product developed by a franchisor, typically in the manner specified by that franchisor

Question 27

Acquisition

Answer 27

The purchase of a business