Chapter 1: The Foundations of
Entrepreneurship
Chapter Overview and Objectives
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Upon completion of this chapter, you will be able to:
- Define the role of the entrepreneur in business in the United States
and around the world.
- Record numbers of people have launched companies over the past decade. The
entrepreneurship boom is not limited to the United States; many nations across
the globe are seeing similar growth in their small business sectors. A variety
of competitive, economic, and demographic shifts have created a world in which
"small is beautiful."
- Capitalist societies depend on entrepreneurs to provide the drive and
risk-taking necessary for the system to supply people with the goods and
services they need.
- Describe the entrepreneurial profile and evaluate your potential as
an entrepreneur.
- Entrepreneurs have some common characteristics, including a desire for
responsibility, a preference for moderate risk, confidence in their ability to
succeed, desire for immediate feedback, a high energy level, a future
orientation, skill at organizing, and a value of achievement over money. In a
phrase, they are tenacious high achievers.
- A. Describe the benefits of entrepreneurship.
- Driven by these personal characteristics, entrepreneurs establish and manage
small businesses to gain control over their lives, make a difference in the
world, become self-fulfilled, reap unlimited profits, contribute to society, and
do what they enjoy doing.
B. Describe the drawbacks of entrepreneurship.
- Entrepreneurs also face certain disadvantages, including: uncertainty of
income, the risk of losing their investments (and more), long hours and hard
work, a lower quality of life until the business gets established, high stress
levels, and complete decision-making responsibility.
- Explain the forces that are driving the growth of entrepreneurship.
- Several factors are driving the boom in entrepreneurship, including:
entrepreneurs portrayed as heroes, better entrepreneurial education, economic
and demographic factors, a shift to a service economy, technological
advancements, more independent lifestyles, and increased international
opportunities.
- Explain the cultural diversity of entrepreneurship.
- Several groups are leading the nation's drive toward entrepreneurship:
women, minorities, immigrants, part-timers, home-based business owners, family
business owners, copreneurs, corporate castoffs, and corporate dropouts.
- Describe the important role small businesses play in our nation's
economy.
- The small business sector's contributions are many. They make up 99 percent
of all businesses, employ 53 percent of the private sector workforce, have
created 85 percent of the jobs since the early 1990s, produce 51 percent of the
country's private gross domestic product (GDP), and account for 47 percent of
all business sales.
- Describe the nine deadly mistakes of entrepreneurship.
- There are no guarantees that the business will make a profit or even
survive. SBA statistics show that 63 percent of new businesses will fail within
6 years. The nine deadly mistakes of entrepreneurship include incompetent
management, lack of experience, poor financial control, failure to develop a
strategic plan, uncontrolled growth, poor location, lack of inventory control,
incorrect pricing, and inability to make the "entrepreneurial transition."
- Put failure into the proper perspective.
- Entrepreneurs recognize that failure is a natural part of the creative
process. Successful entrepreneurs have the attitude that failures are simply
stepping stones along the path to success, and they refuse to be paralyzed by a
fear of failure.
- Explain how entrepreneurs can avoid becoming another business failure
statistic.
- Entrepreneurs can employ several general tactics to avoid these pitfalls.
Entrepreneurs should know their businesses in depth, prepare a solid business
plan, manage financial resources effectively, understand financial statements,
learn to manage people, and try to stay healthy.
Chapter 1: The Foundations of
Entrepreneurship
Small Business
Assignments |
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In your own words (not those from above!) please answer 5 of the following:
- Define the role of the entrepreneur in business in the United States and
around the world.
- Describe the entrepreneurial profile and evaluate your potential as an
entrepreneur.
- Describe the benefits and drawbacks of entrepreneurship.
- Explain the forces that are driving the growth of entrepreneurship.
- Explain the cultural diversity of entrepreneurship.
- Describe the important role small businesses play in our nation's economy.
- Describe the nine deadly mistakes of entrepreneurship.
- Put failure into proper perspective.
- Explain how entrepreneurs can avoid becoming another failure statistic.
- What is an entrepreneur? Give a brief description of the
entrepreneurial profile.
- What are the major benefits of business ownership?
- Briefly describe the role of the following groups in entrepreneurship:
women, minorities, immigrants, part-timers, home-based business owners, family
business owners, copreneurs, corporate castoffs, and corporate dropouts.
- What contributions do small businesses make to our economy?
- Describe the small business failure rate
- Outline the causes of business failure. Which problems cause most
business failures?
- How can the small business owner avoid the common pitfalls that often lead
to business failures?
- Are you interested in one day launching a small business? If so, when,
What kind of business? Describe it. What can you do to ensure its
success.
Appendix A
Chapter 1: The Foundations of
Entrepreneurship
Small Business Links
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Entrepreneurship
Home-Based Businesses