Mgmt 3850 Midterm Study Guide | Verified Guide

MGMT 3850 MIDTERM STUDY GUIDE | VERIFIED GUIDE CH. 1 The world of Entrepreneur • Every year U.S. entrepreneurs launch more than 6.6 million new businesses • Entrepreneurial spirit - the most significant economic development in recent history. • Globally, nearly one in eight adults is actively engaged in launching a business • Global Entrepreneurship Monitor (GEM) study: 12.6% of the U.S. population aged 18 to 64 is engaged in entrepreneurial activity 68% of working adults around the world perceive entrepreneurs as having high status. What is an Entrepreneur? • One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them. • Diversity • Anyone – regardless of age, race, gender, color, national origin, or any other characteristic – can become an entrepreneur (although not everyone should). Characteristics of Entrepreneurs • Desire for responsibility • Preference for moderate levels of risk: risk eliminators • Self-reliance • Confidence in their ability to succeed • Determination • Desire for immediate feedback • High level of energy • Future orientation Opportunity Entrepreneur Necessity Entrepreneurs Serial Entrepreneur • Skilled at organizing • Value achievement over money Entrepreneurs tend to exhibit: • A high degree of commitment • Tolerance for ambiguity • Creativity • Flexibility • Resourcefulness • A willingness to work hard • Tenacity Pros Vs Cons PROS • Create your own destiny. • Make a difference. • Reach your full potential. • Reap impressive profits. • Contribute to society and to be recognized for your efforts. • Do what you enjoy and to have fun at it. CONS • Uncertainty of income • Risk of losing your entire investment • Long hours and hard work • Lower quality of life until the business gets established • High levels of stress • Complete responsibility • Discouragement Sources of Stress What’s Feeding the Entrepreneurial Fire • Entrepreneurs as heroes • Entrepreneurial education • Demographic and economic factors • Shift to a service economy • Technology advancements • Independent lifestyle • Outsourcing • The Internet, cloud computing, and mobile marketing • International opportunities – micromultinationals: small companies that operate globally from their inception Cultural Diversity of Entrepreneurship • Young entrepreneurs • Women entrepreneurs • Minority-owned enterprises • Immigrant entrepreneurs • Part-time entrepreneurs • Home-based businesses • Family businesses Family-owned business: includes 2 or more members of a family that have financial control • Copreneurs: couples who work together as co-owners • Corporate castoffs • Encore entrepreneurs: people who drop out of the corporate world • Retiring baby boomers Power of Small Business • Small Businesses: Make up 99.7% of the 28.8 million businesses in the United States Employ 48% of the nation’s private sector workforce Create more jobs than big businesses ▪ Created 63% of net new jobs over the last decade ▪ 5% of small companies create 67% of net new jobs in the economy • Produce 48.5% of the nation’s private GDP. • Account for 47% of business sales. • Create 16 times more patents per employees than large companies Putting Failure into Perspective • Entrepreneurs are not paralyzed by the prospect of failure. • Failure: a natural part of the creative process. • Successful entrepreneurs learn to fail intelligently. Avoiding the Pitfalls of small business failure • Know your business in depth • Build a viable business model – and test it • Use lean start-up principles • Know when to pivot • Develop a solid business plan • Understand financial statements • Manage financial resources • Learn to manage people effectively • Set your business apart from the competition