Management 201 Exam 2Chapter 6: Managing Small Business Start Upso Entrepreneurship: the process of initiating a business, organizing the necessary resources, and assuming the associated risks and rewards.o An entrepreneur recognizes a viable idea for a business product or service and carries it out by finding and assembling the necessary resources—money, people, machinery, location—to undertake the business venture. Entrepreneurs also assume the risks and reap the rewards of the business. They assume the financial and legal risks of ownership and receive the business’s profitso legal structure, financing, and basic tactics, such as whether to start the business from scratch and whether to pursue international opportunities from the starto blend their own skills and experience with a need in the marketplace Idealists like the idea of working on something that is new, creative, or personally meaningful Optimizers are rewarded by the personal satisfaction of being business owners. Entrepreneurs in the Sustainers like the chance to balance work and personal life and often don’t want the business to grow too large. (Susan Polis Schutz- owner of Blue Mountain Arts) Hard workers enjoy putting in the long hours and dedication to build a larger, more profitable business. (Jeff Bezos- Amazon) Juggler includes entrepreneurs who like the chance that a small business gives them to handle everything themselves Ex: (Grubhub) Maloney and Evans were willing to take the risks, and they are now reaping the rewards of entrepreneurship. - Entrepreneurship has experienced a tremendous boost due to huge advances in technology and the rapid expansion of the middle class in countries such as China and Indiao Narayana Murthy, India- Minority population of the United States has grown, so has the number of minority-owned businesseso Sophisticated, financial services, insurance, and online businesses (Chegg)o Salvador Guzman- Women own nearly 8 million firms, or 28 percent of all businesseso Reg Stettinius, Venga- Start with a desire for autonomy—meaning the freedom to work the way they want to work under the conditions they choose for themselves—or by a desire for power or influence.o Need unflagging enthusiasm, commitment, and confidence. o typically comfortable with risk and ambiguityo place high importance on being free to achieve and maximize their potential- Autonomyo primary motivator for pursuing an entrepreneurial lifeo independent planning and decision making- Entrepreneurial Struggleo ability to persevere and stay positive after long periods of struggleo two surfing buddies endured years of financial struggle as they built a new microbrewery- Power and Influenceo Sam Walton, Walmarto power to dictate price, volume, delivery, packaging, and quality- High Energyo small business owners work more than a regular 40-houro unwavering belief in a dream, intense focus, and unconventional risk taking- Need to Achieveo person is motivated to excel and will pick situations in which success is likelyo set their own goalso J.K. Rowling- Self-Confidenceo must feel sure about their ability to win customers, handle the technical details, and keep the business movingo deal with anything in the future; complex, unanticipated problems can be handled as they arise- Tolerance for Ambiguityo The psychological characteristic that allows a person to be untroubled by disorder and uncertainty.- Social entrepreneurship:o An entrepreneurial leader who is committed to both good business and changing the world for the better.o Muhammad Yunus, who founded Grameen Bank, pioneered the concept of lending small amounts of money, called microcredit, to small businesses in poverty-stricken villages in India.o creativity, business smarts, passion, and work of the traditional entrepreneur with a social mission.- Business Plan o A document specifying the details of the businesso attract the interest of venture capitalists or other potential investors, the entrepreneur should keep the plan crisp and compelling.- Choosing a Legal Structureo Sole proprietorship An unincorporated for-profit business owned by an individual form is popular because it is easy to start and has few legal requirements easy to start total ownership and control of the company and can make all decisions without consulting anyone Unlimited liability Harder to financeo Partnership unincorporated business owned by two or more people easy to start unlimited liability usually end over disagreement o Corporation artificial entity created by the state and existing apart from its owner separate legal entity must pay taxes on its income expensive  legal papererwork- Startups Failo Poor managemento Overexpansiono Sloppy accountingo No websiteo Operational mediocrityo Fear of firing- Financingo obtain loans that must be repaid (debt financing) or whether to share ownership (equity financing).o Debt financing. Involves borrowing money, such as from friends, family, or a bank, that has to berepaid at a later date in order to start a business.o Angel financing Occurs when a wealthy individual who believes in the idea for a start-up provides personal funds and advice to help the business get started.o Equity financing Funds that are invested in exchange for ownership in the company.o Venture capital firm A group of companies or individuals that invests money in new or expanding businesses for ownership and potential profits. interested in high-tech businesses, high rate of returno Crowdfunding getting small amounts of money from a large number of investors, usually using social media or the Internet (Kickstarter)- Becoming a Small Business Ownero Start a business Outsourcingo Buy existing businesso Franchising A form of licensing in which a company provides its foreign franchisees with a complete package of materials and services. An arrangement by which the owner of a product or service allows others to purchase the right to distribute a product or service with help from the owner.o Participate in a Business Incubator Helps start-up companies by connecting them with a range of experts and mentors who nurture them, thus increasing their likelihood of success. Good for nonprofit, minority, and women Run by gov’t and universities- Online Businesso Find market niche, create web site, develop domain name, use social media- Business Growtho Start-up. In this stage,