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 i...
• 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
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