Chapter 18 Flashcards
risk-taking behavior in pursuit of business success.
Entrepreneurship
willing to pursue opportunities in situations that others view as problems or threats.
entrepreneur
someone willing to pursue opportunities in situations others view as problems or threats.
classic entrepreneur
starts and runs businesses and nonprofits over and over again, moving from one interest and opportunity to the next.
serial entrepreneur
comes from being first to exploit a niche or enter a market.
first-mover advantage
entrepreneurship is strong organizational skills and tolerance for risk.
veteran’s advantage
Personality Traits and Characteristics Shared by Many Entrepreneurs
- Internal locus of control: Entrepreneurs believe that they are in control of their own destiny; they are self-directing and like autonomy.
- High energy level: Entrepreneurs are persistent, hardworking, and willing to exert extraordinary efforts to succeed.
- High need for achievement: Entrepreneurs are motivated to accomplish challenging goals; they thrive on performance feedback.
- Tolerance for ambiguity: Entrepreneurs are risk takers; they tolerate situations with high degrees of uncertainty.
- Self-confidence: Entrepreneurs feel competent, believe in themselves, and are willing to make decisions.
- Passion and action orientation: Entrepreneurs try to act ahead of problems; they want to get things done and not waste valuable time.
- Self-reliance and desire for independence: Entrepreneurs want independence; they are self-reliant; they want to be their own bosses, not work for others.
- Flexibility: Entrepreneurs are willing to admit problems and errors, and willing to change a course of action when plans aren’t working.
Entrepreneurs believe that they are in control of their own destiny; they are self-directing and like autonomy.
Internal locus of control
Entrepreneurs are persistent, hardworking, and willing to exert extraordinary efforts to succeed.
High energy level
Entrepreneurs are motivated to accomplish challenging goals; they thrive on performance feedback.
High need for achievement
Entrepreneurs are risk takers; they tolerate situations with high degrees of uncertainty
Tolerance for ambiguity
Entrepreneurs feel competent, believe in themselves, and are willing to make decisions.
Self-confidence
Entrepreneurs try to act ahead of problems; they want to get things done and not waste valuable time.
Passion and action orientation
Entrepreneurs want independence; they are self-reliant; they want to be their own bosses, not work for others.
Self-reliance and desire for independence
Entrepreneurs are willing to admit problems and errors, and willing to change a course of action when plans aren’t working.
Flexibility:
occurs when people start new ventures because they have few or no other employment options.
Necessity-based entrepreneurship
takes risks to find new ways to solve pressing social problems.
social entrepreneur
has fewer than 500 employees, is independently owned and operated, and does not dominate its industry.
small business
when one business owner sells to another the right to operate the same business in another location.
franchise
a plan for making a profit by generating revenues that are greater than costs.
A business model
a new and temporary venture that is trying to discover a profitable business model for future success.
start-up
Birth Stage
- Establishing the firm
- Getting customers
- Finding the money
Breakthrough Stage
- Working on finances
- Becoming profitable
- Growing
Maturity Stage
- Refining the strategy
- Continuing growth
- Managing for success
owned and financially controlled by family members.
Family businesses
can lead to small business failure.
family business feud
theissue of who will run the business when the current headleaves.
succession problem
describes how the leadership transition and related financial matters will be handled.
succession plan
Reasons for small business failures
- Insufficient financing—not having enough money available to maintain operations while still building the business and gaining access to customers and markets.
- Lack of experience—not having sufficient know-how to run a business in the chosen market or geographical area.
- Lack of expertise—not having expertise in the essentials of business operations, including finance, purchasing, selling, and production.
- Lack of strategy and strategic leadership—not taking the time to craft a vision and mission, nor to formulate and properly implement a strategy.
- Poor financial control—not keeping track of the numbers, and failure to control business finances and use existing monies to best advantage.
- Growing too fast—not taking the time to consolidate a position, fine-tune the organization, and systematically meet the challenges of growth.
- Lack of commitment—not devoting enough time to the requirements of running a competitive business.
- Ethical failure—falling prey to the temptations of fraud, deception, and embezzlement.
a facility that offers services to help new businesses get established.
business incubator
offer guidance to entrepreneurs and small business owners on how to setup and manage business operations.
Small Business Development Centers
describes the direction for a new business andthe financing needed to operate it.
business plan
an individual pursuing business fora profit.
sole proprietorship
when two or more people agree to contribute resources to start and operate a business together.
partnership
owners share management and responsibility for debts and losses.
general partnership
owners shares profits, but responsibility for losses is limited to original investments.
limited partnership
a legal entity that exists separately from its owners.
corporation
a corporate form for businesses whose stated goals are to combine making a profit with benefiting society and the environment.
benefit corporation, or B-Corp,
combines the advantages of the sole proprietorship,
partnership, and corporation.
limited liability corporation (LLC)
involves borrowing money from another person, a bank, or a financial institution.
Debt financing
gives ownership shares to outsiders in return for their financial investments.
Equity financing
make large investments in new ventures in return for an equity stake in the business
Venture capitalists
an initial selling of shares of stock to the public at large.
initial public offering (IPO)
a wealthy individual willing to invest in return for equity in a new venture.
angel investor
new ventures go online to get start-up financing for their businesses from crowds of investors.
crowdfunding
