Small Business Management- Packet 1 Flashcards
- Comprise 99.7% of all firms with employees
- Employ over 50% of employees in the private sector.
- Acount for 45% of private payrolls
- Generated 60-80% of net new jobs in the past decade.
- Create more than half of the country’s GDP
- Hire 40% fo high-tech employees
- Represent 97.3% of all exporters
Small Businesses
- A person who starts and/or operates a business.
- Individuals who discover market needs and launch new firms to meet those needs.
- Risk takers who provide an impetus for change, innovation, and progress.
- All active owner-managers (founders and/or managers or small businesses).
Entreprenuers
- Business’ size smaller relative to larger competitors.
- Fewer than 100 employees
- Localized business operations (except marketing).
- Financing supplied by one person or small group.
- Has the potential to become more than a “one-person show.”
Criteria for Defining Smallness in Business
An economically attractive and timely opportunity that creates value for interested buyers or end users.
Entrepreneurial Opportunity
A person who becomes an entreprenuer as a result of some severe hardship.
Reluctant Entreprenuer
A person who becomes an entreprenuer to escape an undesirable situation.
Refugee
A person who brings a new firm into existence.
Founder (“Pure” Entreprenuer)
An entreprenuer who oversees the operations of a ongoing business.
Administrative Entreprenuer (Second-Stage)
An entreprenuer whose power is limited by the contractual relationship with a franchising organization.
Franchisee
Two or more people working together as entreprenuers.
- Becoming more common.
Entreprenuerial Team
- Founder (“Pure” Entreprenuer)
- Administrative Entreprenuer (Second-Stage)
- Franchisee
- Entrepreneurial Team
The Many Varieties of Entrepreneurship
- High potential venture (Gazelle)
- Attractive small firm
- Microbusiness
- Lifestyle business
Small Business Growth Potential and Profits
Has great prospects for growth.
High-Potential Venture (Gazelle)
Provides substantial profits to its owner.
Attractive Small Firm
Provides minimal profits to its owner.
Microbusiness
Permits the owner to follow a desired pattern of living.
Lifestyle Business
A person with primarily technical skills and little business knowledge who starts a business.
Artisan Entrepreneurs
- Take a paternalistic approach
- Are reluctant to delegate
- Use few sources of capital
- Have a traditional marketing strategy
- Focus on personal sales effort
- Have a short planning horizon
- Uneven record keeping
Characteristics of Artisan Entreprenuers
A person with both sophisticated managerial skills and technical knowledge who starts a business.
Opportunistic Entreprenuer
- Broad based education
- Scientific approach to problems
- Willing to delegate
- Broad view of strategy
- Diversified marketing approach
- Longer planning horizon
- Sophisticated accounting and financil control
Characteristics of Opportunistic Entreprenuers
- More women than men are starting new businesses.
- 40% of all businesses are now majority female-owned.
- Movement of women into nontraditional industries.
More Women Entrepreneurs
- Discriminatino and difficulties related to gender
- Lack of access to credit
- Lack of networking connections
- Balancing work and family life.
Problems Facing Female Entrepreneurs
- Have no fear of technology
- Are idealistic and optimistic
- Are more collaborative
- Build elements of community in the business
- Start companies while studying entrepreneurship
- Fail fast, learn a lot and keep going.
Millennial Entrepreneurs
- Strong committment to the business (Tenacity)
- Strong internal locus of control. (Self-reliance)
- Moderate risk takers (Financial, career, psychic risks).
Characteristics of Successful Entrepreneurs
- Overestimate what you can do
- Lack an understanding of the market
- Hire mediocre people
- Fail to be a team player- Usually a result of taking oneself too seriously
- Be a domineering manager
- Fail to share ownership in the business in an equitable way
How to fail as an Entrepreneur
A knowledgeable person who can offer guidance from their experience in a given field.
- The “go-to” team
- Know what and how to do
- Teach how to avoid mistakes
Mentors
- Beginning with the end in mind
- Winning the wrong game
- Crafting a worthy entrepreneural legacy
Success in Business and Success in Life
- Proper values and actions lead to a good exit.
- Evaluating accomplishments
Beginning with the end in mind
The nature of the entrepreneural endeavor reflects personal goals and values.
Winning the wrong game
The tangible items and intangible qualities passed on not only to heirs but also to the broader society.
Crafting a Worthy Entrepreneural Legacy
Two or more people who work together as entrepreneurs on one endeavor. (Becoming more common).
Entrepreneurial Teams
- Customer focus- firms lack bureaucracy
- Special Niche- Providing uniquely specific services can be a power competitive advantage.
- Quality Performance- quality is not limited to large firms.
- Innovation and globalization- Small businesses are the leading source.
- Integrity and responsibility
The Competitive Edge of Entrepreneurship
- Commitment and determination
- Motivation to excel
- Leadership
- Creativity, self-reliance and adaptability
- Opportunity obsession
- Tolerance of risk, ambiguity, and uncertainty- risk takers, risk minimizers, and uncertainity tolerators.
Attitudes and Behaviors of Entrepreneurs
- Founders as Managers
- Resource constraints
- Managerial Weakness
- Frim growth and managerial practices- 4 stages of growth
- Professional level management- develop as much professionalism as possible while still retaining the entrepreneurial spirit of enterprise.
Distinctive Characteristics of Small Firm Management
