chapter 6- Entrepreneurship and small business ownership Flashcards
define small buisness
- independent firm
- fewer than 500 employees
- not dominant in the market
economic roles of small buisnesses
- provide jobs
- introduce new products +fulfill unmet market needs
- meet needs of larger organizations
- more risk takers than large businesses
- provide economic opportunities for many people
characteristics of small buisnesses
- 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
define entrepreneurial spirit
- positive ,forward thinking desire to create profitable and sustainable buisness enterprises.
why do people start their own buisness
- can´t find a corporate job
- more control over their future
- tired of working for someone else
qualities shared by succesful entrepreneurs
- confidence–> control their destriny
- passion–> love what they do
- drive–> not discouraged by failure
state the buisness start-up options
- create a new independent buisness: the most difficult option
- buy an existing independent buisness: less work and less risk, inherit the buisness problems
- buy into a franchise system: independent buisness ownerhip and support of being in a larger organization.
define buisness plan
- document that summarizes a proposed buisness venture, goals and plans for achieving those goals.
what to include in a buisness plan
- summary: buisness concept summary+ buisness model summary
- mission and objectives: purpose of buisness
- company review
- describe products and services
- management and key personaell
- target market
- marketing startegy
- design and development plans
- operations plan
10.start up schedule - risk factors
- financial projections
- exit strategy
state some lean buisnesses planning
- buisness model canvas
- lean canvas
define pivoting
- adjusting a firms buisness model when a better opportunity comes along
why do new buisnesses fail
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
who gives advice and supports to buisness owners
- 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
define buisness incubators
- help early stage entrepreunial teams develop ideas into buisness models
define buisness accelerators
- work with existing companies to make them more attractive to investors
define seed money
- first infusion of capital used to get the buisness started
types of private funding
- microlenders: not-for profit organizations that lend small amounts of money to buisness owners that don´t qualify for bank loans.
- venture capitalists: investors that provide money to new businesses in exchange of a piece of ownership.
- angel investors: private individuals investing in start-ups, (earlier in buisness life cycle) smaller amounts than VCs.
- corporate sponsors
- credit cards an personal lines of credit
- small buisness administration assistance: financing programs
types of public financing
- initial public offering (IPO): corporations first offering of shares to public
- crowdfunding: soliciting project funds, buisness investments or loans from members of the public.
define a franchise
- grants the buyer the rights to use various components of an established business.
define franchisee
- buisness owner who pays for rights to sell the products ans ise business system of franchisor
franchsisor
company that licenses elements of its buisness system to other companies
types of franchises
- buisness-format franchise: franchisee grains right to to use entire buisness system
- product-distribution franchise: franchisee the right to sell products as part of franchisors distribution system
types of costs in franchising
- 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
advantages and disadvantages of franchising
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
define machine learning
- general capability of computers to learn and adapt without receiving human instructions
define deep learning
- machine learning that uses layers of neural networks to attack problems
- mirrors the brains neural connections
