Longenecker/Petty/Palich/Hoy

Small Business
Management, 18e

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 The Entrepreneurial Life
Chapter 1

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
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 Learning Goals:
 Explain the importance of small business
and entrepreneurship in our society
 Distinguish between the terms small
business and entrepreneurial society.
 Explain the basic characteristics of
entrepreneurs and describe different
kinds of entrepreneurship.

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 Learning Goals (cont.)
Discuss the importance of understanding
your motivations and perceptions related
to owning a small business.
 Describe the five potential advantages of
small entrepreneurial companies over
large firms.
 Explain the concept of an
entrepreneurial legacy and its challenges.

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-1 Small Size, Great Significance
 Small Businesses:
 Include 27.8 million businesses in the U.S.
 Represent 99.7% of all firms.
 Employ 49% of employees in the private
sector.
 Hire 43% of high-tech employees.
 Represent 97% of all exporters.
 Obtain college degrees.
 Provide increased business ownership
opportunities for veterans.
© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-2 What is a Small Business?
 Small in size relative to larger competitors
(fewer than 500 employees)
 Attractive small firms offer substantial
financial rewards
 Microbusinesses provide modest
returns
 Localized business operations (except
marketing)

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-2 What is a Small Business?
(cont.)
 Financing supplied by one person or small
group
 Has the potential to become more than a
“one-person show”

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-2 What is an Entrepreneurial
Opportunity?
 Entrepreneurial Opportunity
 An economically attractive and timely
opportunity that creates value for interested
buyers or end users.
 Bootstrapping
 Doing more with less in terms of resources
invested in a business, and, where possible,
controlling the resources without owning
them.

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-2 What is an Entrepreneurial
Opportunity?
 Success Stories
 Kelly’s Delights (Hewitt, TX)
 Blank Label (Boston, MA)
 Hughes Group, LLC (Tacoma, WA)

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-2 How to Fail as an
Entrepreneur
 Overestimate what you can do
 Lack an understanding of the market
 Hire mediocre people
 Fail to be a team player, which is usually
the result of taking oneself too seriously
 Be a domineering manager
 Fail to share ownership in the business in
an equitable way

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-3 Entrepreneurial Qualities

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-3 Varieties of Entrepreneurship

 Founder (“Pure” Entrepreneur)

 A person who brings a new firm into
existence
 “Second Stage” Entrepreneur
 An administrative entrepreneur who
oversees the operations of an ongoing
business

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-3 Varieties of Entrepreneurship
(cont.)
 Franchisee
 An entrepreneur whose power is limited by
the contractual relationship with a
franchising organization
 Entrepreneurial Team
 Two or more people working together as
entrepreneurs.

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-3 Varieties of Entrepreneurship
(cont.)
 Social Entrepreneurship
 An entrepreneurial activity whose goal is to
find innovative solutions to society’s most
pressing needs, problems, and opportunities.
 Social Entrepreneur
 Seeks ways to solve societal and
environmental problems that incorporate
the triple bottom line of people, profits, and
the planet.

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-3 Women Entrepreneurs

 More Women Entrepreneurs

 Nearly 9 million privately held women-
owned firms in the U.S.
 Only businesses provided a net increase in
employment between 1997-2013
 Movement of women into healthcare and
educational services

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-3 Women Entrepreneurs

 Problems Facing Women Entrepreneurs

 Lack of available mentors and advisors
 Lack of financing

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-3 Think and Act Like an Entrepreneur

 A successful entrepreneur:
 Is intentional in your goals.
 Seeks opportunities that have growth
potential.
 Is challenged personally.
 Dreams big.

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1-4 Motivations for Owning a Business

 Being an entrepreneur:
 Is extremely challenging.
 Takes undying love and passion to keep
going.
 Can be passed down within a family.
 Can help make the world a better place.
 Can make meaning in your life.

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 Is Owning a Small Business Right for
You?
 Am I passionate about my product or
service?
 What is my tolerance for risk?
 Am I effective in making decisions?
 Am I willing to take on numerous
responsibilities?
 Will I be able to avoid burnout?

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 Why People Become Entrepreneurs

 Reluctant Entrepreneur
 A person who becomes an entrepreneur as
a result of some severe hardship.
 Corporate Refugee
 A person who becomes an entrepreneur to
escape an undesirable situation.

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 1.2 Entrepreneurial Motivations

1–21
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password-protected website for classroom use.
 1.3 Understanding Your Business Paradigm

1–22
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password-protected website for classroom use.
 The Competitive Edge of
Entrepreneurs
Customer
Focus

Niche Competitive Quality

Markets Advantages of Performance
Entrepreneurial
Firms

Innovation and Integrity and

Globalization Responsibility

1–23
© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website for classroom use.
 Resources
Every small business owner should take advantage of the following
websites:
• U.S. Small Business Administration: www.sba.gov
• National Federation of Independent Business: www.nfib.com
• Global Entrepreneurship Monitor: http://gemconsortium.org/docs
• Marion Ewing Kauffman Foundation and the U.S. Commerce
Department: www.entrepreneurship.org
• SCORE, a network of more than 360 offices nationwide where veteran
small business executives offer free confidential advice and mentoring:
www.score.org

1–24
© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website for classroom use.
 Building an Entrepreneurial Legacy

 Looking Back at an Entrepreneurial Life

 Proper values and actions lead to a good
exit.
 Evaluating accomplishments.
 Winning the Wrong Game
 The nature of the entrepreneurial endeavor
reflects personal goals and values.

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 Building an Entrepreneurial Legacy

 Crafting a Worthy Entrepreneurial Legacy

 The tangible items and intangible qualities
passed to both heirs and society.
 Satisfaction and Fulfillment
 Achieving balance with what I want to do.

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom use.
 Key Terms
attractive small firm lifestyle business
bootstrapping manager personality
corporate refugee mentor
entrepreneur microbusiness
entrepreneur personality microloans
entrepreneurial legacy niche market
entrepreneurial opportunity paradigm shift
entrepreneurial team reluctant entrepreneur
founder small business
franchisee social entrepreneurship
high-potential venture technician personality
(gazelle)
1–27
© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website for classroom use.