Entrepreneurship and Innovation Management 244
Chapter 1: Small Business: It’s Opportunities and Rewards
Starting an Entrepreneurial Small Business: Four Key Ideas
1. Believe that you can do this.
2. Planning + Action = Success.
3. Help Helps: successful entrepreneurs learn from other entrepreneurs, experts in their
chosen field and potential customers.
4. Do well. Do good.
Small business: Involves 1-50 people and has its owner managing the business on a day-today
basis.
Self-efficacy: A person’s belief in his or her ability to achieve a goal.
Entrepreneur: A person who owns or starts an organisation, such as a business.
Entrepreneurs Are Everywhere
Definitions:
Small Business Administration: A part of the U.S. government, which provides support and advocacy
for small businesses.
Goods or Services: The tangible things (goods) or intangible commodities (services) created for sale.
Firm: An organisation that sells to or trades with others.
Novelty: Characterised by being different or new.
Imitative: Characterised by being like or copying something that already exists.
Self-employed: Work for yourself.
Founders: People who create or start new businesses.
Franchise: A pre-packaged business bought, rented, or leased from a company called a franchisor.
Buyers: People who purchase an existing business.
Heir: A person who becomes an owner through inheriting or being given a stake in the family business.
The Many Types of Entrepreneurial Small Businesses
The firms are called many different things such as:
Small and Medium Enterprise (SME): The international term for small businesses.
Independent Small Businesses: A business owned by an individual or small group.
Owner-Managed Firms: A business run by the individual who owns it.
,There are also people called serial entrepreneurs: people who open multiple businesses throughout
their career. Small businesses are usually intended to remain small, at a size that is easy for the owner
to personally control. However, high-growth ventures start small but are intended to grow rapidly,
often requiring a team of partners or managers to handle the growth.
Innovativeness: How important a role, new ideas, products services, processes or markets play in an
organisation.
Entrepreneurs and Firm Growth Strategies
Overall Growth Strategy: One of four general ways to position a business based on the rate and level
of growth entrepreneurs anticipate for their firm.
The overall growth strategy describes the kind of business the owner (or owners) would like to have,
from the perspective of how fast and to what level they would like the firm to grow.
The 4 Types of Firms:
Lifestyle or part-time firms: A small business primarily intended to provide partial or subsistence
financial support for the existing lifestyle of the owner, most often through operations that fit the
owner’s schedule and way of working. The business starts and stays very small, often operating
seasonally or when the owner wants to work in the business.
Traditional small business: A firm intended to provide a living income to the owner, and operating in
a manner and on a schedule consistent with other firms in the industry and market. These are the
smallest full-time businesses, with schedules defined by customer, not owner, needs.
High-performing small businesses: A firm intended to provide the owner with a high income through
sales or profits superior to those of the traditional small business. These firms often grow through
multiple locations and higher levels of professionalization.
High-growth ventures: A firm started with the intent of eventually going public, following the pattern
of growth and operations of a big business. These firms aim to become big businesses and pursue high
levels of professionalization and external funding.
The main street businesses are a popular term for small businesses reflecting the idea that these are
the kinds of firms you would expect to find on the main street at a typical American city, and are the
opposite of big businesses.
Rewards for Starting a Small Business
The three most popular types of rewards for small business owners are growth, flexibility and income.
Growth rewards are what people get from facing and beating challenges. Income rewards refer to
the money made from owning your own business. Flexibility rewards refer to the ability of business
owners to structure their lives in the way that best suits their needs. It is possibly the most rapidly
growing type of reward.
Myths About Small Businesses
The following has been mentioned as problems by entrepreneurs:
• Not enough financing
, • You can’t start businesses during a recession
• To make profits, you need to make something
• If you fail, you can never try again
• Students don’t have the skills to start a business
Possible solutions to the problems mentioned above
1. New sources of financing include:
Crowdfunding: Funding a business online through the collective involvement of others who provide
donations, loans or investments.
Bootstrapping: Using low-cost or free techniques to minimize your cost of doing business.
2. Businesses who start during a recession start lean; no fancy offices, no bonuses. That means
they learn from the start how to do more with less, which makes them better able to handle
future times of scarcity and trouble.
3. Not all profitable businesses sell physical goods, but many actually offer valuable services to
society.
4. If you close a business and pay off your debts, then you have not failed in the business world.
If you have learned how to do better next time, then you can take better steps to opening up
another business.
Getting Started Now: Entry Competencies
In order to start a business, four elements need to come together, namely: boundary, resources,
intention and exchange.
The BRIE Model
Boundary Resources
Creating a place for your business in The money, product, knowledge etc., that
location and in people’s minds make up the business
Your Small business
Intention Exchange
The desire to start a business Moving resources/products/services in
exchange for money
, Boundary: Something that sets up a firm and sets it off from the buying or selling or bartering we all
do occasionally. A boundary can be something as simple as a business name or government
registration, a specific location of the firm in a home, commercial space or even on the internet.
Resources: Include the product or service to be offered, informational services on markets and
running a business, financial resources and human resources such as your own time to devote to the
business.
Intention: The desire to start a business and is the most frequently occurring element of the BRIE
model.
Exchange: Moving resources, goods or services to others in exchange for money or other resources.
The BRIE model outlines the activities that need to take place to get a firm going. One of the biggest
problems is inaction, as people tend to procrastinate.
Small Business and the Economy
Small business is important for individuals because of income, growth and flexibility rewards that it
offers. Small businesses also play a vital role in contributing new jobs and innovations to the
economy.
• New Jobs
Small businesses have created 65% new jobs since 1994. Small businesses are more willing to offer
jobs to people with atypical work histories or needs.
• Innovations
It offers a special environment in which the new can come into being, namely creative destruction.
This refers to the way that newly created goods or services or firms can hurt existing goods, services
or firms.
• New opportunities
Small businesses offer communities the opportunity to enjoy goods and services. They also support
large businesses by offering supporting services and subcontracting.
Two Aspects of Global Entrepreneurship
Factor-driven economy: A nation where the major forces for jobs, revenues and taxes come from
farming or extractive industries like forestry, mining or oil production. Entrepreneurship is essential
to breaking the cycle of low wage-jobs and helping to build personal wealth.
Efficiency-driven economy: A nation where industrialisation is becoming the major force providing
jobs, revenues and taxes and where minimizing costs while maximising productivity is a major goal.
Entrepreneurship is a key way to build the middle class and a growing retail and wholesale sector
grows alongside businesses, serving the needs of large industrial concerns.
Innovation-driven economy: A nation where the major forces for jobs, revenues and taxes come from
high-value added production based on new ideas and technologies and from professional services
based on higher education.
Chapter 1: Small Business: It’s Opportunities and Rewards
Starting an Entrepreneurial Small Business: Four Key Ideas
1. Believe that you can do this.
2. Planning + Action = Success.
3. Help Helps: successful entrepreneurs learn from other entrepreneurs, experts in their
chosen field and potential customers.
4. Do well. Do good.
Small business: Involves 1-50 people and has its owner managing the business on a day-today
basis.
Self-efficacy: A person’s belief in his or her ability to achieve a goal.
Entrepreneur: A person who owns or starts an organisation, such as a business.
Entrepreneurs Are Everywhere
Definitions:
Small Business Administration: A part of the U.S. government, which provides support and advocacy
for small businesses.
Goods or Services: The tangible things (goods) or intangible commodities (services) created for sale.
Firm: An organisation that sells to or trades with others.
Novelty: Characterised by being different or new.
Imitative: Characterised by being like or copying something that already exists.
Self-employed: Work for yourself.
Founders: People who create or start new businesses.
Franchise: A pre-packaged business bought, rented, or leased from a company called a franchisor.
Buyers: People who purchase an existing business.
Heir: A person who becomes an owner through inheriting or being given a stake in the family business.
The Many Types of Entrepreneurial Small Businesses
The firms are called many different things such as:
Small and Medium Enterprise (SME): The international term for small businesses.
Independent Small Businesses: A business owned by an individual or small group.
Owner-Managed Firms: A business run by the individual who owns it.
,There are also people called serial entrepreneurs: people who open multiple businesses throughout
their career. Small businesses are usually intended to remain small, at a size that is easy for the owner
to personally control. However, high-growth ventures start small but are intended to grow rapidly,
often requiring a team of partners or managers to handle the growth.
Innovativeness: How important a role, new ideas, products services, processes or markets play in an
organisation.
Entrepreneurs and Firm Growth Strategies
Overall Growth Strategy: One of four general ways to position a business based on the rate and level
of growth entrepreneurs anticipate for their firm.
The overall growth strategy describes the kind of business the owner (or owners) would like to have,
from the perspective of how fast and to what level they would like the firm to grow.
The 4 Types of Firms:
Lifestyle or part-time firms: A small business primarily intended to provide partial or subsistence
financial support for the existing lifestyle of the owner, most often through operations that fit the
owner’s schedule and way of working. The business starts and stays very small, often operating
seasonally or when the owner wants to work in the business.
Traditional small business: A firm intended to provide a living income to the owner, and operating in
a manner and on a schedule consistent with other firms in the industry and market. These are the
smallest full-time businesses, with schedules defined by customer, not owner, needs.
High-performing small businesses: A firm intended to provide the owner with a high income through
sales or profits superior to those of the traditional small business. These firms often grow through
multiple locations and higher levels of professionalization.
High-growth ventures: A firm started with the intent of eventually going public, following the pattern
of growth and operations of a big business. These firms aim to become big businesses and pursue high
levels of professionalization and external funding.
The main street businesses are a popular term for small businesses reflecting the idea that these are
the kinds of firms you would expect to find on the main street at a typical American city, and are the
opposite of big businesses.
Rewards for Starting a Small Business
The three most popular types of rewards for small business owners are growth, flexibility and income.
Growth rewards are what people get from facing and beating challenges. Income rewards refer to
the money made from owning your own business. Flexibility rewards refer to the ability of business
owners to structure their lives in the way that best suits their needs. It is possibly the most rapidly
growing type of reward.
Myths About Small Businesses
The following has been mentioned as problems by entrepreneurs:
• Not enough financing
, • You can’t start businesses during a recession
• To make profits, you need to make something
• If you fail, you can never try again
• Students don’t have the skills to start a business
Possible solutions to the problems mentioned above
1. New sources of financing include:
Crowdfunding: Funding a business online through the collective involvement of others who provide
donations, loans or investments.
Bootstrapping: Using low-cost or free techniques to minimize your cost of doing business.
2. Businesses who start during a recession start lean; no fancy offices, no bonuses. That means
they learn from the start how to do more with less, which makes them better able to handle
future times of scarcity and trouble.
3. Not all profitable businesses sell physical goods, but many actually offer valuable services to
society.
4. If you close a business and pay off your debts, then you have not failed in the business world.
If you have learned how to do better next time, then you can take better steps to opening up
another business.
Getting Started Now: Entry Competencies
In order to start a business, four elements need to come together, namely: boundary, resources,
intention and exchange.
The BRIE Model
Boundary Resources
Creating a place for your business in The money, product, knowledge etc., that
location and in people’s minds make up the business
Your Small business
Intention Exchange
The desire to start a business Moving resources/products/services in
exchange for money
, Boundary: Something that sets up a firm and sets it off from the buying or selling or bartering we all
do occasionally. A boundary can be something as simple as a business name or government
registration, a specific location of the firm in a home, commercial space or even on the internet.
Resources: Include the product or service to be offered, informational services on markets and
running a business, financial resources and human resources such as your own time to devote to the
business.
Intention: The desire to start a business and is the most frequently occurring element of the BRIE
model.
Exchange: Moving resources, goods or services to others in exchange for money or other resources.
The BRIE model outlines the activities that need to take place to get a firm going. One of the biggest
problems is inaction, as people tend to procrastinate.
Small Business and the Economy
Small business is important for individuals because of income, growth and flexibility rewards that it
offers. Small businesses also play a vital role in contributing new jobs and innovations to the
economy.
• New Jobs
Small businesses have created 65% new jobs since 1994. Small businesses are more willing to offer
jobs to people with atypical work histories or needs.
• Innovations
It offers a special environment in which the new can come into being, namely creative destruction.
This refers to the way that newly created goods or services or firms can hurt existing goods, services
or firms.
• New opportunities
Small businesses offer communities the opportunity to enjoy goods and services. They also support
large businesses by offering supporting services and subcontracting.
Two Aspects of Global Entrepreneurship
Factor-driven economy: A nation where the major forces for jobs, revenues and taxes come from
farming or extractive industries like forestry, mining or oil production. Entrepreneurship is essential
to breaking the cycle of low wage-jobs and helping to build personal wealth.
Efficiency-driven economy: A nation where industrialisation is becoming the major force providing
jobs, revenues and taxes and where minimizing costs while maximising productivity is a major goal.
Entrepreneurship is a key way to build the middle class and a growing retail and wholesale sector
grows alongside businesses, serving the needs of large industrial concerns.
Innovation-driven economy: A nation where the major forces for jobs, revenues and taxes come from
high-value added production based on new ideas and technologies and from professional services
based on higher education.
