chapter 6- Entrepreneurship and small business ownership

Question 1

define small buisness

Answer 1

• independent firm
• fewer than 500 employees
• not dominant in the market

Question 2

economic roles of small buisnesses

Answer 2

1. provide jobs
2. introduce new products +fulfill unmet market needs
3. meet needs of larger organizations
4. more risk takers than large businesses
5. provide economic opportunities for many people

Question 3

characteristics of small buisnesses

Answer 3

• sometimes called lifestyle businesses as they are built around the personal and financial needs of an individual/family.
• narrow focus
• offer few goods and services
• start with limited resources
• more freedom to innovate

Question 4

define entrepreneurial spirit

Answer 4

• positive ,forward thinking desire to create profitable and sustainable buisness enterprises.

Question 5

why do people start their own buisness

Answer 5

1. can´t find a corporate job
2. more control over their future
3. tired of working for someone else

Question 6

qualities shared by succesful entrepreneurs

Answer 6

1. confidence–> control their destriny
2. passion–> love what they do
3. drive–> not discouraged by failure

Question 7

state the buisness start-up options

Answer 7

1. create a new independent buisness: the most difficult option
2. buy an existing independent buisness: less work and less risk, inherit the buisness problems
3. buy into a franchise system: independent buisness ownerhip and support of being in a larger organization.

Question 8

define buisness plan

Answer 8

• document that summarizes a proposed buisness venture, goals and plans for achieving those goals.

Question 9

what to include in a buisness plan

Answer 9

1. summary: buisness concept summary+ buisness model summary
2. mission and objectives: purpose of buisness
3. company review
4. describe products and services
5. management and key personaell
6. target market
7. marketing startegy
8. design and development plans
9. operations plan
   10.start up schedule
10. risk factors
11. financial projections
12. exit strategy

Question 10

state some lean buisnesses planning

Answer 10

• buisness model canvas
• lean canvas

Question 11

define pivoting

Answer 11

• adjusting a firms buisness model when a better opportunity comes along

Question 12

why do new buisnesses fail

Answer 12

strategic issues:
1. little or no demand
2. lack of strategic planning
3. failure to pivot
4. overpowering competition

leadership issues:
1. managerial incompetence
2. lack of experience
3. low motivation

marketing & sales issue
1. ineffective marketing
2. poor location
3. customer neglect

financial issues:
1.poor funding
2. poor cash management

Question 13

who gives advice and supports to buisness owners

Answer 13

• government agencies and not-for-profit organizations. (eg SCORE, service corps of retired executives)
• buisness partners such as branks, credit card companies
• mentors
• advisory board–> team of people with subject area expertise that can help buisness owners
• networks and support groups
• buisness incubators and accelerators

Question 14

define buisness incubators

Answer 14

• help early stage entrepreunial teams develop ideas into buisness models

Question 15

define buisness accelerators

Answer 15

• work with existing companies to make them more attractive to investors

Question 16

define seed money

Answer 16

• first infusion of capital used to get the buisness started

Question 17

types of private funding

Answer 17

1. microlenders: not-for profit organizations that lend small amounts of money to buisness owners that don´t qualify for bank loans.
2. venture capitalists: investors that provide money to new businesses in exchange of a piece of ownership.
3. angel investors: private individuals investing in start-ups, (earlier in buisness life cycle) smaller amounts than VCs.
4. corporate sponsors
5. credit cards an personal lines of credit
6. small buisness administration assistance: financing programs

Question 18

types of public financing

Answer 18

• initial public offering (IPO): corporations first offering of shares to public
• crowdfunding: soliciting project funds, buisness investments or loans from members of the public.

Question 19

define a franchise

Answer 19

• grants the buyer the rights to use various components of an established business.

Question 20

define franchisee

Answer 20

• buisness owner who pays for rights to sell the products ans ise business system of franchisor

Question 21

franchsisor

Answer 21

company that licenses elements of its buisness system to other companies

Question 22

types of franchises

Answer 22

1. buisness-format franchise: franchisee grains right to to use entire buisness system
2. product-distribution franchise: franchisee the right to sell products as part of franchisors distribution system

Question 23

types of costs in franchising

Answer 23

• initial franchising–>
  –> franchise fee: one-time payment
• costs associated with buying, building and equipping a facility
• ongoing-franchising costs
  –> royalty fees: paid at regular intervals

Question 24

advantages and disadvantages of franchising

Answer 24

adv:
- be your own boss
- hire own employees
- benefir from your hard work

dvt:
- little control over decisions franchisor makes that affects entire system
- if franchise system fails–> no option of changing buisness in response

Question 25

define machine learning

Answer 25

• general capability of computers to learn and adapt without receiving human instructions

Question 26

define deep learning

Answer 26

• machine learning that uses layers of neural networks to attack problems
• mirrors the brains neural connections