Lecture 1 Flashcards
Entrepreneur
> Is one who organizes, manages, and assumes the risk of a business firm or venture.
Refers to founders, franchisees, second-generation members of family-owned firms, and owner-managers who buy out the founders of existing firms.
Many entrepreneurs are innovators, individuals who are often better at identifying improved ways of doing things.
Compared to the general population, entrepreneurs are noted for their willingness to take moderate risks, strong self-confidence, and a passion for business.
Some estimate that entrepreneurs are four times more likely to be millionaires than are those who work for others.
Founders / Pure Entrepreneurs
Are typically among the biggest risk takers and often the most creative.
Second-Generation operators of family-owned businesses.
Are generally those carrying on the family tradition.
Franchisees
Are restricted in freedom but have invested money and time.
Owner-managers who have bought out founders.
Are new to the business, but not too far removed from the essence of its founding.
Entrepreneurial Refugees
Persons who leave their homeland and go into business for themselves in a new country.
Second-stage Entrepreneurs
Are entrepreneurs who take over the operations of a successful ongoing business from its founder.
Excludes
Salaried managers of larger corporations (even those who lean toward innovation).
Three primary rewards of entrepreneurship.
Are thought to be profit, independence, and personal fulfillment.
Business
Is an organization that combines the inputs of raw materials, capital, labor, and management skills to produce useful outputs of goods and services to earn a profit.
Small Business
> Despite numerous efforts to define “small business” there is no generally accepted definition.
The role of the small business in the United States is critical to the health of the country.
The entrepreneurial career contributes to personal rewards and societal welfare.
The following are generally accepted guidelines:
• Financing is supplied by one individual or only a few individuals.
• Other than marketing, operations are geographically localized.
• The business is defined as small when compared to biggest competitors.
• Fewer than 100 employees.
> There is no specific number of employees or dollar sales volume that defines a small business.
A small business is a business which is independently owned and operated and is not dominant in its field of operation.
It is usually actively managed by its owner(s), highly personalized, and local in the scope of its operations.
It is dependent on internal sources of capital to finance its growth.
The local community funeral home would be considered a small business.
Funeral Home/Cemetery companies such as Service Corporation International, Alderwoods, Stewart, and
Keystone are not small businesses.
Trends in small business are dependent on the economy and the needs of the local community. In times of economic expansion (growth of the economy) there is an increase in small businesses when money seems to be abundant. In economic slowdowns when money is tight small businesses may go out of business or consolidate with other small businesses as they find it harder to financially survive.
Small businesses take on many types of business activities. Some are manufacturing businesses, some are merchandising businesses, and some are service businesses.
Small businesses rely on each other for survival, the restaurant relies on the butcher for their meat and the baker for their bread. In a capitalist economy free trade exists. Small businesses aid in stimulating economic competition whereby the demand for consumers goods and services equals the supply at a competitive price. The price of such goods and services is determined by how much the market can bare.
Manufacturing Business
Is a business that makes finished goods from raw materials by hand or machinery.
> a local community dress manufacturer that employs its own seamstresses may be considered a small manufacturing business.
Merchandising Business
Is a business that purchases finished goods for resale.
> a “99 cent store” would be an example of a merchandising business.
Service Business
Is a business that provides a service as opposed to a product such as a car wash or dry cleaner.
> A funeral home would be considered a service business as well as a merchandising business because it also sells goods and merchandise such as urns, caskets, and memorial cards.
Business Survival
The owner/entrepreneur of any small business must manage his or her business effectively. Survival of any business is determined by proper financial, managerial, operational planning, organization, motivation, direction, and control.
Planning
Is that function of determining in advance what needs must be accomplished to achieve a particular goal.
Organizing
Is to arrange or constitute in interdependent parts, each having a specific function or relation with respect to the whole; the arrangement and distribution of work among members of an organization.
Motivating
Is the function of providing incentives to supply the proper quantities of demanded products or services.
Directing (actuating)
Is regulating the activities of an organization; to guide and/or supervise the activities of an organization.
Controlling (evaluating)
Is a management function which compares organizational and individual performance with predetermined standards or expected results.
Business Plan
Every new business venture needs a written description of a new idea that projects marketing, operational, and financial aspects of a proposed business.
The Payoff
Profit, independence, freedom, and personal satisfaction.
Entrepreneurs cannot avoid: • Customer demands. • Government taxes and regulations. • Need for long hours, and hard work. • Employee expectations.
Escape a Bad Situation (Freedom)
Small firms compete against their larger rivals by focusing on customers’ needs, providing high-quality goods & services, operating with greater integrity, using innovative methods, or findings low-cost solutions. Due to their flexibility (e.g., fewer levels of bureaucracy & adaptable corporate policies), small firms have an advantage when it comes to offering superior customer service.
Business opportunities exist for any size firm, so long as they can provide products or services that customer’s desire. In service businesses, quality performance is closely linked to customer service.
Enjoy a Satisfying Life (Personal Satisfaction)
Pride of ownership, self-esteem, and a sense of achievement accompanies entrepreneurial success.
Contribution to the Community (Personal Satisfaction)
The entrepreneur has a chance to help the community in some way.
Make Money (Profit)
Profit is a strong motivator, but it is a mistake to assume that it is the only motivator. Most entrepreneurs are satisfied with what they consider to be a “reasonable profit.”
Be Your Own Boss (Independence)
Thirty-eight percent of small business owners left the “corporate world” so they could “call their own shots.”
Entrepreneurs can avoid:
- Inflexible schedules: no more time clock and 8-to-5 routine.
- Supervisory evaluation: no subjective performance review.
- Locked-in strategy: can change direction if you have a better idea.
- Established policies: can make your own policies, set vacations, etc.
Entrepreneurs cannot avoid:
- Customer demands.
- Government taxes and regulations.
- Need for long hours, and hard work.
- Employee expectations.
