question

1. greater financial success 2. independence 3. flexibility 4. challenge 5. survival

answer

most common reasons for starting own ventures (entrepreneurship)

question

enterpreneurs

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people who risk their time, money, and other resources to start and manage a business

question

worked, earned

answer

correlation between hours __________ and dollars _____________

question

necessity entrepreneurs

answer

launch their business b/c believe it is their only economic option. includes middle-aged workers laid off from corporate jobs, new immigrants with limited English and heavy accents, those who experience discrimination in standard workplace

question

tolerance of uncertainty, tolerance of failure

answer

2 basic qualities of entrepreneurs

question

vision, self-reliance, energy, confidence, tolerance of uncertainty, tolerance of failure

answer

most entrepreneurs possess all of these qualities

question

vision

answer

encompasses how most entrepreneurs are wildly excited about their own ideas. find new solutions to old problems and develop products we didn't eve know we needed

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self-reliance

answer

refers to how entrepreneurs must do everything themselves from getting permits, to motivating employees, to keeping the books in addition to producing the product or service that made them start business in first place. comes with internal locus of control

question

internal locus of control

answer

a deep-seated sense that the individual is personally responsible for what happens in his or her life. when things go well, believe that their efforts have been validated. when things go wrong, feel that they need to do better next time. this sense of responsibility encourages positive action

question

external locus of control

answer

people with this view rely less on their own efforts, feeling buffeted by forces such as random luck and actions of others, which they believe will ultimately control their fate

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energy

answer

explains how entrepreneurs must be willing to work 6 or 7 12-hour workdays in start-up phases of running company.

question

confidence

answer

encompasses how entrepreneurs must believe in their own ability to achieve and be encouraged to act boldly. however must take care not to confuse likelihood with reality

question

cultivate urgency, elevate your influence, maximize your strengths, never trade time for money, don't worry what others think of you, produce first then consume scond

answer

6 characteristics that millionaire entrepreneurs have in common

question

tolerance of uncertainty

answer

explains that entrepreneurs more often than others see world in shades of gray. relates to risk and successful entrepreneurs tend to more willingly accept risk

question

tolerance of failure

answer

even when not successful, entrepreneurs seldom label themselves as losers and view not succeeding as a chance to learn

question

finding money to fund business

answer

top challenge for many entrepreneurs in their start-up year

question

personal resources

answer

how vast majority of new firms are funded

question

personal accounts, family, friends

answer

3 sources that 95% of entrepreneurs raise start-up funds from

question

bank loans, angel investors, capital venture firms

answer

3 alternate sources of funding for entrepreneurs in start-up besides personal resources

question

professional

answer

best manner to keep relationship when borrowing money from family or friends for business purposes

question

personal credit cards

answer

especially handy though highly risky financing resources. provides fast, flexible money but if you don't pay company back fast financing fees can take years to pay off

question

commercial loans

answer

hard to attain for a new venture b/c banks and other lenders are hesitant to fund a business that doesn't have a track record, and if they do require a lot of paperwork and long waiting period. no conventional lending source will lend 100% of teh start-up dollars for a new business and require that entrepreneur provide minimum of 25-30% of total start-up costs from personal resources

question

Small Business Administration (SBA)

answer

source for loans. doesn't give free money to start-up business (neither grants, nor interest-free loans) but partially guarantees loans from local commercial lenders. reduces risk for lenders who are more likely to lend money to new business program

question

microloan program

answer

part of Small Business Administration that lends small amount of money (avg. of $13,000) to start-up businesses through community nonprofit organizations

question

peer-to-peer lending

answer

offers another potential funding source for new business start-ups. EXs of websites: Prosper.com, LendingClub.com that bring together borrowers and investors

question

crowdfunding

answer

process of funding ventures by raising money from a large number of investors via the internet. appeared in mid-2000s and became $5+ billion funding source by 2013. many sites used to fund nonprofits. largest sites are: gofundme.com, kickstarter.com, indiegogo.com

question

personal resources, loans, crowdfunding, angel investors, venture capital

answer

5 funding options for small businesses

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angel investors

answer

wealthy individuals who invest in promising start-up companies for one basic reason: to make money themselves. invest in start-up companies with high growth potential (30-40% per year) in exchange for a share of ownership

question

venture capital firms

answer

companies that fund high-potential new companies in exchange for a share of ownership. invest in start-up businesses with high growth potential in exchange for share of ownership. deals tend to be visible. usually want more of a say in business than other investors, advice and guidance that come with it can be signficant

question

market niches, personal customer service, lower overhead costs, technology

answer

4 types of small business opportunities

question

market niches

answer

a small segment of a market with fewer competitors than the market as a whole. tend to be quite attractive to smaller firms. firms uniquely positioned to exploit small, but profitable, markets. these spaces in market tend to have fewer competitors b/c aren't big enough or high profile enough for large firms. offer more than enough potential for small, specialized companies

question

personal customer service

answer

enabled by small customer base that small firms have allowing them to develop much more personal relationships with individual customers. can be especially beneficial in some foreign markets

question

lower overhead costs

answer

allowed by entrepreneurs wearing so many hats b/c they can hire fewer managers and specialized employees. smaller firms tend to work around costs w/ tactics such as establishing headquarters in owner's garage or offering employees flexible schedules instead of costly health benefits

question

technology

answer

internet has played powerful role in opening new opportunities for small businesses. companies-of-one can create, sell, publish, and manufacture goods and services more easily than ever before. internet has created international opportunities allowing small businesses to transform into global markets

question

high risk of failure, lack of knowledge and experience, too little money, bigger regulatory burden, higher health insurance costs

answer

5 threats small businesses face

question

high risk of failure

answer

involved in starting new businesses. odds improve significantly if you can make it past the first 5 years. survival rate declines more slowly (less businesses die) in years 7-10. 5-year survival rate depends heavily on industry

question

lack of knowledge and experience

answer

in-depth knowledge in specific area doesn't necessarily mean expertise in running a business although you may have launched business due to expertise in certain area. successful business owners must know everything from finance to human resources to marketing

question

too little money

answer

ongoing profits usually don't begin for a while for start-up firms, meaning entrepreneurs must plan on some lean months or years as business develops momentum. requires need to manage money wisely and to resist temptation to invest in fixed assets (fancy offices, advanced electronics, etc.) before sufficient regular income allows. requires nerve to stay course despite initial losses

question

bigger regulatory burden

answer

complying with federal regulations can be overwhelming for small businesses. however Congress continuing to examine ways to reduce growing regulatory burden on small businesses

question

higher health insurance costs

answer

much higher administrative costs for small health plans than for large businesses making it more difficult for small firms to offer coverage to employees. best employees likely to demand greater insurance plan putting small businesses at disadvantage in terms of being a competitive workforce. healthcare reform may change this as it may provide an opportunity to offer works top quality health insurance at competitive rates

question

starting business from scratch, buying an established business, buying a franchise

answer

3 launch options for entrepreneurs

question

gain experience, learn from others, educate yourself, access Small Business Administration resources, develop a business plan

answer

5 strategies to help you succeed over long-term as small business owner

question

3 years

answer

rough estimate of how much experience you should gain working for someone else in field that interests you before starting new business. can learn what doesn't fly in your industry with low personal risk and start developing. could get too comfortable if you stay longer

question

learn from others

answer

actively seek this opportunity from people who have succeeded in your field. remember industry associations, local events, other opportunities to build relationships. people who failed in field could give good insights and more willing to share their ideas if no longer struggling to develop own business

question

educate yourself

answer

more able to due to opportunities for entrepreneurial learning having exploded. colleges and universities offer entrepreneurship programs that help students develop ideas and plan and secure initial funding. seek relevant press articles, workshops, websites, and blogs

question

Small Business Administration (SBA)

answer

an agency of the federal government designed to maintain and strengthen the nation's economy by aiding, counseling, assisting, and protecting the interests of small businesses.

question

access SBA resources

answer

offers tools beyond money. website has wealth of information from industry specific statistics to general trends to updates on small business regulations.

question

Small Business Development Centers (SBDCs)

answer

SBA works hand in hand with individual states to fund these local entities which provide a range of free services for mall businesses from developing your concept, to consulting on your business plan, to helping with your loan applications. local offices affiliated with the SBA that provide comprehensive management assistance to current and prospective small business owners

question

Service Crops of Retired Executives (SCORE)

answer

supported by the SBA. an organization affiliated with the SBA that provides free comprehensive business counseling for mall business owners from qualified volunteers

question

business plan

answer

a formal document that describes a business concept, outlines core business objectives, and details strategies and timelines for achieving those objectives. provides an invaluable way to keep you and team focused on success. crucial for obtaining outside funding which is why it is written usually after using personal funding sources. can be constantly in flux if industry is rapidly changing. 25-50 pages long and takes 6 months to write

question

business plan

answer

answers: 1. what service or product does business provide and what needs does it fill? 2. who are potential customers for product or service and why will they purchase from you 3. how will you reach potential customers 4. when will you get financial resources to start your business 5. when can you expect to achieve profitability

question

executive summary, description of business, marketing, competition, operating procedures, personnel, complete financial data and plan (sources of start-up money), appendix (including research on industry)

answer

8 pieces of information final business plan document should include

question

1. all your concept, decisions, structure 2. don't have to deal with prior owner's bad decisions

answer

2 pros to starting business from scratch

question

1. a lot of pressure 2. takes time, money, sweat equity to build customer base 3. hard to get credit from lenders and suppliers without track record 4. challenging logistics from securing permit to hiring employees

answer

4 cons to starting business from scracth

question

1. concept, organizational structure, operating practices are already in place 2. relationships with customers, suppliers and other stakeholders are established 3. getting financing and crediting is less challenging

answer

3 pros to buying an established business

question

1. working with someone else's idea can be less fun 2. may inherit old mistakes from poor employee relations to pending lawsuits

answer

2 cons to buying an established business

question

1. buying your own piece of a well-known brand and proven way of doing business 2. management expertise and counseling come with franchise package 3. franchisers occasionally offer financing that can make purchase possible along with advice 4. low 5% first year failure rate

answer

4 pros to buying a franchise

question

1. less opportunity for creativity since most agreements tie you to franchise requirements 2. if something goes wrong with national brand, your business will suffer too 3. initial purchase price can be steep, not including ongoing percent-of-sales royalty feel

answer

3 cons to buying a franchise

question

500 employess

answer

max number of employees to define small business according to SBA for research purposes, however differs across industries. employees can ranger from fewer than 100 to 1,500 and average revenue from 0.75 million to 28.5 million

question

creating new jobs, fueling innovation, vitalizing inner cities

answer

2 powerful contributions small businesses make to the US economy

question

per capita income, opportunity costs, cultural/political environment

answer

3 key factors that determine differences in differing country's total early-phase entrepreneurship rate (% of adults who have been running own business from 3 months- 3.5 years)

question

lower income countries

answer

countries that qualify as this with per capita income have a high percentage of entrepreneurs start their own business b/c they have no other options. contributes heavily to high over-all entrepreneurship "necessity entrepreneurship" in areas where entrepreneurs are more likely to strike out on own in response to opportunity that they spot in marketplace

question

employment protection, employment insurance

answer

entrepreneurship rates lower in countries with higher opportunity costs b/c they provide a high level of __________ ___________ (hard to get fired), and strong _________ _________ (financial support if you do get fired). sense of urgency regarding entrepreneurship with these in place tends to fall

question

regulations

answer

if these are extensive and complex it can hinder entrepreneurship by raising daunting barriers (political environment)

question

cultural support

answer

if this is lacking it compounds the barriers that are come across in daunting political environment with high regulations

question

cowboy culture

answer

when this culture is thriving, standout individuals who break free of old ways attract attention and admiration in many of the countries with higher entrepreneurship rates

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