1
Introduction to Business
Chapter 5: Starting and Managing Your Own Business
5.1 Entrepreneurship Today
Entrepreneurs are innovators who take the risk of starting and managing a business to make a
profit. Most want to develop a company that will grow into a major corporation. People
become entrepreneurs for four main reasons: the opportunity for profit, independence,
personal satisfaction, and lifestyle. Classic entrepreneurs may be micropreneurs, who plan to
keep their businesses small, or growth-oriented entrepreneurs. Multipreneurs start multiple
companies, while intrapreneurs work within large corporations.
Statistics
The number of Hispanic-owned businesses almost tripled between 1997 (1.2 million)
and 2012 (3.3 million).
The percentage of U.S. businesses with 1 to 50 employees owned by African Americans
increased by 50% between 1996 and 2015.
Almost a million firms with employees are minority owned: 53% are Asian American
owned, 11% are African American owned, and almost a third are Hispanic owned.
19% of all companies with employees are owned by women.
5.1 Review Questions
1. Define the following terms:
a. Entrepreneur
b. Small Business Owner
c. Classic Entrepreneur
d. Multipreneur
e. Intrapreneur
2. Why are entrepreneurs and small-business owners important to the economy?
3. Why do people become entrepreneurs?
a. What groups are becoming business owners at a higher rate?
b. Why do you think that is?
4. How do you know if you are the entrepreneurial type?
5. Are all small-business owners considered entrepreneurs?
a. How can you tell the difference between an entrepreneur and a small-business
owner?
6. What are the characteristics of classic entrepreneurs?
7. How do micropreneurs and growth-oriented entrepreneurs differ?
For more free, peer-reviewed, openly licensed resources visit OpenStax.org.
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8. How are classic entrepreneurs and multipreneurs different?
9. How do intrapreneurs differ from classic entrepreneurs?
10. Why do people want to become entrepreneurs?
11. Do most entrepreneurs feel going into business is worth it?
○ What motivators influenced their decision to become an entrepreneur?
5.2 Characteristics of Successful Entrepreneurs
Successful entrepreneurs are ambitious, independent, self-confident, creative, energetic,
passionate, and committed. They have a high need for achievement and a willingness to take
moderate risks. Good managerial, interpersonal, and communication skills, as well as technical
knowledge are important for entrepreneurial success.
5.2 Review Questions
1. What do they mean when they say, “Entrepreneurs are the company”?
2. Describe the key traits that make up the entrepreneurial personality.
3. Why is it important that entrepreneurs have good interpersonal and communication
skills?
4. Why do entrepreneurs need technical knowledge?
5.3 Small Business: Driving America’s Growth
Small businesses play an important role in the economy. They account for over 99 percent of all
employer firms and produce about half of U.S. economic output. Most new private-sector jobs
created in the United States over the past decade were in small firms. The Small Business
Administration defines a small business as independently owned and operated, with a local
base of operations, and not dominant in its field. It also defines small business by size,
according to its industry. Small businesses are found in every field, but they dominate the
service, construction, wholesale, and retail categories.
Statistics
Start-up activity has risen sharply over the last three years, from an all-time low of
minus 0.87% in 2013 to positive 0.48% in 2016.
Between 1996 and 2011, the rate of business ownership dropped for both men and
women; however, business ownership has increased every year since 2014.
The Kauffman Index of Startup Activity, an early indicator of new entrepreneurship in
the United States, rose again slightly in 2016 following sharp increases two years in a
row.
New entrepreneurs who started businesses to pursue opportunity rather than from
necessity reached 86.3%, more than 12 percentage points higher than in 2009 at the
height of the Great Recession.
For more free, peer-reviewed, openly licensed resources visit OpenStax.org.
Introduction to Business
Chapter 5: Starting and Managing Your Own Business
5.1 Entrepreneurship Today
Entrepreneurs are innovators who take the risk of starting and managing a business to make a
profit. Most want to develop a company that will grow into a major corporation. People
become entrepreneurs for four main reasons: the opportunity for profit, independence,
personal satisfaction, and lifestyle. Classic entrepreneurs may be micropreneurs, who plan to
keep their businesses small, or growth-oriented entrepreneurs. Multipreneurs start multiple
companies, while intrapreneurs work within large corporations.
Statistics
The number of Hispanic-owned businesses almost tripled between 1997 (1.2 million)
and 2012 (3.3 million).
The percentage of U.S. businesses with 1 to 50 employees owned by African Americans
increased by 50% between 1996 and 2015.
Almost a million firms with employees are minority owned: 53% are Asian American
owned, 11% are African American owned, and almost a third are Hispanic owned.
19% of all companies with employees are owned by women.
5.1 Review Questions
1. Define the following terms:
a. Entrepreneur
b. Small Business Owner
c. Classic Entrepreneur
d. Multipreneur
e. Intrapreneur
2. Why are entrepreneurs and small-business owners important to the economy?
3. Why do people become entrepreneurs?
a. What groups are becoming business owners at a higher rate?
b. Why do you think that is?
4. How do you know if you are the entrepreneurial type?
5. Are all small-business owners considered entrepreneurs?
a. How can you tell the difference between an entrepreneur and a small-business
owner?
6. What are the characteristics of classic entrepreneurs?
7. How do micropreneurs and growth-oriented entrepreneurs differ?
For more free, peer-reviewed, openly licensed resources visit OpenStax.org.
, 2
8. How are classic entrepreneurs and multipreneurs different?
9. How do intrapreneurs differ from classic entrepreneurs?
10. Why do people want to become entrepreneurs?
11. Do most entrepreneurs feel going into business is worth it?
○ What motivators influenced their decision to become an entrepreneur?
5.2 Characteristics of Successful Entrepreneurs
Successful entrepreneurs are ambitious, independent, self-confident, creative, energetic,
passionate, and committed. They have a high need for achievement and a willingness to take
moderate risks. Good managerial, interpersonal, and communication skills, as well as technical
knowledge are important for entrepreneurial success.
5.2 Review Questions
1. What do they mean when they say, “Entrepreneurs are the company”?
2. Describe the key traits that make up the entrepreneurial personality.
3. Why is it important that entrepreneurs have good interpersonal and communication
skills?
4. Why do entrepreneurs need technical knowledge?
5.3 Small Business: Driving America’s Growth
Small businesses play an important role in the economy. They account for over 99 percent of all
employer firms and produce about half of U.S. economic output. Most new private-sector jobs
created in the United States over the past decade were in small firms. The Small Business
Administration defines a small business as independently owned and operated, with a local
base of operations, and not dominant in its field. It also defines small business by size,
according to its industry. Small businesses are found in every field, but they dominate the
service, construction, wholesale, and retail categories.
Statistics
Start-up activity has risen sharply over the last three years, from an all-time low of
minus 0.87% in 2013 to positive 0.48% in 2016.
Between 1996 and 2011, the rate of business ownership dropped for both men and
women; however, business ownership has increased every year since 2014.
The Kauffman Index of Startup Activity, an early indicator of new entrepreneurship in
the United States, rose again slightly in 2016 following sharp increases two years in a
row.
New entrepreneurs who started businesses to pursue opportunity rather than from
necessity reached 86.3%, more than 12 percentage points higher than in 2009 at the
height of the Great Recession.
For more free, peer-reviewed, openly licensed resources visit OpenStax.org.
