Entrepreneurship. Understanding Business Nickels and Mchugh Ch. 6 – Flashcards
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Entrepreneurship
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accepting the risk of starting and running a business
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what does it take to be an entrepreneur?
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self directed, self nurturing, action oriented, highly energetic, tolerant of uncertainty, lucky
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five steps to starting your business in school
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1. find a problem or need (marketing: satisfy that need) 2. zero in on specifics 3. do research on campus, test products with students 4. move forward with your ideas. dont wait! 5. sacrifice
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an idea is a good opportunity if
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it fills customers' needs; you have the skills and resources to start a business; you can sell the product or service at a reasonable price and still profit; you can get your product or service to customers before the window of opportunity closes; you can keep the business going.
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entrepreneurial team
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a group of experience people from different areas of a business who join to form a managerial team with the skills to develop, make and market a new product
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micropreneurs
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entrepreneurs willing to accept the risk of starting and managing a business that remains small, lets them do the work they want to do, and offers a balanced lifestyle. half of US micropreneurs are home based business owners. 60% of which are men
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home based business growth
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computer technology has leveled the playing field; corporate downsizing has led many to venture their own; social attitudes have changed; new tax laws have loosened restriction son deducting expenses for home offices; no limits; made easy with new tech
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home based business isnt easy
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getting new customers is difficult; managing your time requires self discipline; work and family tasks are sometimes not separated; government ordinances may restrict your business; homeowner's insurance may not over business related claims
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benefits of home based businesses
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ability to start your business immediately; minimal start up capital needed; no rent or excessive set up charges; comfortable working conditions; reduced wardrobe expenses; no commuting; tax benefits; elimination of office politics; low risk for trail and error
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downsides of home based businesses
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difficult to establish work habits; limited support system; isolation; work space may be limited; clients may be uncomfortable coming to your home; zoning restrictions; success is based 100% on your efforts
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affiliate marketing
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an online marketing strategy in which a business rewards individuals or other businesses for each visitor or customer the affiliate sends to its website; can make money through traffic and link affiliation
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brand
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anything that allows the consumer to identify unique characters of a certain company aside from another company
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boosting your business' online presence
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establish an identity; be easy to find; steal good ideas and make them your own; look out for opportunities; remember other forms of marketing; be friendly
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intrapreneurs
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a creative person who works as an entrepreneur within a corporation; use company's existing resources to launch new products for the company
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immigration act 1990
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created a category of "investor visas" that encourage entrepreneurs to come to the US
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enterprise zones
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specific geographic areas to which governments attract private business investment by offering lower taxes and other government support
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incubators
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offer new businesses low coast offices with basic services
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small business
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independently owned and operated, not dominant in its field of operation and meets certain standards of size; businesses are small in relation to other businesses in their industry; there are 28 million in the US; of all nonfarm businesses in the US, 97% are considered small; account for 50% of GDP; generated 65% of new jobs since 1995; about 80% os US workers first jobs were in small businesses
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advantages of small businesses
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more personal customer service; the ability to respond quickly to opportunities
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business failure are lower than the reports because
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owner closing a business to start another is reported as a failure; changing forms of ownership is reported as a failure; retirement is reported as a failure
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major business functions
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planning, financing, knowing customers, managing employees, keeping records
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business plan
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a detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and owners' qualifications; forces potential owners to be specific about what they will offer; mandatory for talking with bankers or investors
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executive summary
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catches interest and tempts potential investors to read on
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family businesses
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clarify expectations; discuss work/family boundaries; develop good communication; clarify long term intentions; have an escape hatch (plan b)
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sources of capital
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personal savings, relatives, former employers, bank & finance companies, government agencies, angel investors, venture capitalists
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venture capitalists
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individuals or companies that invest in new businesses in exchanged for partial ownership
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funding your dream
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get close to your customers, make clients pay upfront, outsource tasks on the cheap, get in front of customers quickly, become an expert, ask for help, be patient
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Community Development Financial Institutions (CDFIs)
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play a big role in the economic recovery, first formed in the early 1980's; by 2009 over 1 bil flowed into CDFIs from investment companies; only 1% of loans were not paid back in the last 30 years
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JOBS ACT
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passed in 2012, goal was to make crowdfunding more accessible
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Small Business Administration (SBA)
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a US government agency that advises and assists small businesses by providing management training and financial advice; started a microloan program in 1991that provides very small loans to small business owners; program judges worthiness based on the borrower's integrity and soundness of their business ideas
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Small business investment company (SBIC)
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a program through which private investment companies licensed by the SBA lend money to small businesses; must have a minimum of 5 million in capital and can borrow up to $2 from the SBA for each $1 of capital it has; able to identify a business' trouble spots early, giving entrepreneurs advice, and in some cases rescheduling loan payments
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small business development centers SBDC
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are funded jointly by the federal government and individual states; able to evaluate the feasibility of your idea, develop your business plan and complete your funding application for no charge
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market
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consumers with unsatisfied wants and needs who have both resources and willingness to buy; set out to fill market's needs by offering top quality an great service at a fair price; one of the great advantages of small businesses is the ability to know the market and quickly adapt to market needs
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accounting assistance
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a good accountant can help in: deciding whether to buy or lease equipment, deciding whether to own or rent a building, tax planing, financial forecasting, choosing sources of financing, writing requests for funds
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legal help
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a competent lawyer can help with: leases, contracts, partnership, agreement, protection against liabilities; owners need outside consulting advice early in the process; small and medium sized firms cannot afford to hire experts as employees.
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marketing research
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marketing research study can help in: determining where to locate, whom to select as your target market, what is an effective strategy for reaching the market; marketing decisions need to be made long before introducing a product or opening a store
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commercial loan offer
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can help by designing an acceptable business plan, giving financial advice, lending money
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insurance agent
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help with knowing the risks associated with the business, how to cover the risks with insurance, how to prevent risks with safety devices
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service corps of retired executives
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more than 13,000 volunteers from industry, trade associations, and education who counsel small business at no cost
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five mistakes business owners make
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too afraid to take the leap, hire the wrong people, dont want to give up control, become complacent, fail to see new opportunities
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small business prospects abroad
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small and medium sized businesses accounted for 99% of recent export growth; advantages of global trade for small businesses include: overseas buyers enjoy dealing with individuals, small companies can usually begin shipping much faster, they provide a wide variety of suppliers, and they can give more personal advice and attention
