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Chapter Five
(Entrepreneurship) Starting and Managing My Own Business
| Question | Answer |
|---|---|
| What is an entrepreneur? | A person with vision, drive, and creativity who is willing to take the risk of starting and Managing a business to make a profit |
| Why are small businesses important to the U.S. economy? | They create jobs, pay a large share of payroll, drive innovation, and make up nearly all U.S. businesses |
| Approximately what percentage of U.S. businesses are considered small businesses? | About 99.6% |
| What percentage of businesses have fewer than 20 employees? | About 89% |
| What questions should someone ask before starting a business? | Is the idea new? Who is the target market? Is there customer demand? What will it cost? How will it be marketed? Can it grow? |
| What is a classic entrepreneur? | A risk-taker who starts a business based on an innovative idea |
| What is a micropreneur? | An entrepreneur who starts small and plans to stay small |
| What is a growth-oriented entrepreneur? | An entrepreneur who wants the business to become a major corporation |
| What is a multipreneur? | An entrepreneur who starts multiple businesses over time |
| What is an intrapreneur? | Someone who acts like an entrepreneur within a large company by developing new ideas and projects |
| What personality traits do successful entrepreneurs commonly share? | Ambitious, Independent, Self-confident, Risk-takers, Visionary, Creative, Energetic, Passionate, and Committed |
| Why are entrepreneurs considered risk-takers? | They accept moderate risks that they believe they can control |
| Why are communication skills important for entrepreneurs? | They help build relationships with employees, customers, bankers, accountants, attorneys, and suppliers |
| Are entrepreneurial personality traits alone enough for success? | No. Entrepreneurs also need business knowledge, management, and communication skills |
| Why are small businesses important? | They create jobs, stimulate economic growth, and encourage innovation |
| What organization defines a small business? | The Small Business Administration (SBA) |
| What three Kauffman Index studies measure entrepreneurship? | Startup Activity, Main Street Entrepreneurship, Growth Entrepreneurship |
| What percentage of established small businesses have only 1-4 employees? | About 53% |
| What is the first step in starting a business? | Conduct a self-assessment |
| Where do entrepreneurs get business ideas? | From work experience, hobbies, customer needs, problems, trends, and innovations |
| What are the steps in the Checklist for Starting a Business? | Identify your reasons, Self-analysis, Evaluate skills, Find a niche, Conduct market research, Write a business plan, and Secure financing |
| What is a business plan? | A formal written document describing the business, market, products, owners, and financial plans |
| Why is a business plan important? | It helps guide the business and convince lenders and investors to provide financing |
| What are the key features of a business plan? | Company description, Owner qualifications, Products/services, Market analysis, Marketing strategy, Financial plan |
| What is included in an Executive Summary? | A brief overview of the entire business plan |
| What is included in the Marketing Plan? | Target customers, competition, pricing, advertising, promotions, and distribution |
| What is included in the Financial Plan? | Revenue projections, expenses, cash flow, funding needs, and profit estimates |
| What are the two main types of business financing? | Debt financing, Equity financing |
| What is debt financing? | Borrowed money that must be repaid with interest |
| What is equity financing? | Raising money by selling ownership in the business |
| Who are angel investors? | Individuals who invest their own money ("seed capital") in startup businesses |
| What is a seed capital? | The initial money invested to start a business |
| What do angel investors look for? | Strong management, Good business idea, Knowledgeable founders, Growth potential, and Competitive advantage |
| What is venture capital? | Money invested by firms that specialize in financing high growth companies in exchanges for ownership |
| How are venture capitalists different from angel investors? | Venture capitalists invest professionally managed funds, while angel investors invest their own personal money |
| Why do small businesses hire outside consultants? | To obtain specialized expertise and save time |
| Why should business owners carefully consider hiring employees? | Employees cost more that salary because of benefits, taxes, training, recruiting, and supervision |
| What is one easy way for small businesses to enter global markets? | Exporting |
| What advantages do small businesses have? | Flexibility, Quick decision-making, Close customer relationships, and Simple organizational structure |
| What are disadvantages of owning a small business? | Long hours, Stress, Limited resources, and Personal responsibility |
| What is the Small Business Administration (SBA)? | A government agency that helps people start, manage, and grow small businesses |
| What is the SBA's mission? | To support small businesses through counseling, financing, management assistance, and federal contracting opportunities |
| What financial assistance does the SBA provide? | Loan programs, micro-loans, and assistance for underserved communities |
| What management assistance does SBA provide? | Consulting, publications, courses, and special programs for women, minorities, and veterans |
| What creates entrepreneurial opportunities? | Changes in demographics, society, and technology |
| Which group has experienced rapid growth in business ownership? | Women-owned businesses |
| Which generation is more likely to start a new business? | Baby Boomers (compared to Millennials) |
| Why do entrepreneurs often locate businesses in certain regions? | To be near venture capital funding and business resources |
| Define Entrepreneur | A person who starts and manages a business will operate and achieve success |
| Define Small Business Administration (SBA) | A U.S. government agency that supports small businesses through financing and management assistance |
| Define Angel Investor | An individual who invests personal funds in startup businesses |
| Define Venture Capital | Financing provided by investment firms to high-growth companies in exchange for ownership |
| Why do people become entrepreneurs? | Profit, Independence, Personal satisfaction, and Lifestyle |
| What skills are essential for entrepreneurial success? | Management, Communication, Leadership, Technical knowledge, and Problem-solving |
| Why is a business plan important after the business opens? | It serves as a roadmap for growth, planning, and decision-making |
| What are the advantages of small businesses? | Flexible, Efficient, Close customer relationships, Government regulations, and Heavy personal commitment |
| How does the SBA help entrepreneurs? | By providing loans, training, consulting, and management assistance |
| Why are small businesses important to the U.S. economy? | They create jobs, encourage innovation, and support economic growth |
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