1. Management 11e John Schermerhorn
Chapter 6
Entrepreneurship and
New Ventures

2. Planning Ahead – Chapter 6 Study Questions
What is entrepreneurship?
What is special about small business entrepreneurship?
How do entrepreneurs start and finance new ventures?

3. Study Question 1: What is entrepreneurship?
Risk-taking behavior that results in new opportunities
Serial entrepreneur
Starts and runs business and nonprofits over and over again
First-mover advantage
First to exploit a niche or enter a market

4. Study Question 1: What is entrepreneurship?
Intrapreneurs
Display entrepreneurial behavior as employees of larger firms

5. Study Question 1: What is entrepreneurship?
Internal locus of control
High energy level
High need for achievement
Tolerance for ambiguity
Self-confidence
Passion and action orientation
Characteristics of entrepreneurs

6. Study Question 1: What is entrepreneurship?
Diversity and Entrepreneurship
Women and minority entrepreneurs are growing in numbers
Necessity-based entrepreneurship
People start a business because no other employment opportunities exist

7. Study Question 1: What is entrepreneurship?
Social entrepreneurship
Unique form of ethical entrepreneurship that seeks new ways to solve pressing social problems
Social entrepreneurs
Take risks to find new ways to solve pressing social problems such as poverty, literacy, illness, homelessness

8. Small business statistics
Study Question 2: What is special about small business entrepreneurship?
Small business statistics
Employ some 52 percent of private workers
Provide 51 percent of private-sector output
Receive 35 percent of federal government contract dollars
Provide as many as 7 out of every 10 new jobs in the economy
Small business have fewer than 500 employees

9. Starting a small business
Study Question 2: What is special about small business entrepreneurship?
Starting a small business
Startup
New and temporary venture that is trying to establish a profitable business model
Franchise
One business owner sells to another the right to operate the same business in another location
Lean startups
Use free software and web services while staying small and keeping operations simple

10. Options for starting a small business
Study Question 2: What is special about small business entrepreneurship?
Options for starting a small business
Startup
New and temporary venture that is trying to establish a profitable business model
Franchise
One business owner sells to another the right to operate the same business in another location
Lean startups
Use free software and web services while staying small and keeping operations simple

11. Internet Entrepreneurship
Study Question 2: What is special about small business entrepreneurship?
Types of internet business models
Internet Entrepreneurship
Advertising model
Subscription model
Intermediary model
Transaction model

12. Family owned businesses
Study Question 2: What is special about small business entrepreneurship?
Family owned businesses
Largest percentage of businesses worldwide
Feuds result when family members disagree over how the business is run
Possible succession problems
Who will run the business when the current head leaves?
Succession plan outlines leadership transition and financial matters

13. Why small businesses fail
Study Question 2: What is special about small business entrepreneurship?
Why small businesses fail
SBA reports as many as 60 – 80% fail

14. Small business development
Study Question 2: What is special about small business entrepreneurship?
Small business development
Business incubator
Offers space, shared services and advice to get small businesses started
Small Business Development Centers
Founded with U.S. Small Business Administration to provide advice to new and existing small businesses

15. Study Question 3: How do entrepreneurs start and finance new ventures?
Life cycles of entrepreneurial firms

16. Study Question 3: How do entrepreneurs start and finance new ventures?
Business plan
Describes goals, operating plans and financing for a new business
Banks want to see a well-developed business plan before loaning money

17. Study Question 3: How do entrepreneurs start and finance new ventures?
Forms of ownership
Sole Proprietorship
An individual or married couple pursuing business for a profit

18. Study Question 3: How do entrepreneurs start and finance new ventures?
Forms of ownership
Partnership
Two or more people agree to contribute resources to start and operate a business together
General Partnership
The owners share management responsibilities
Limited Partnership
General partner manages the business
Limited partners share profit but losses are limited to the amount of their investment

19. Study Question 3: How do entrepreneurs start and finance new ventures?
Forms of ownership
Corporation
A legal entity that exists separately from its owners
Limited Liability Company (LLC)
A combination of sole proprietorship, partnership, and corporation
Protects owners against personal loss other than what is invested in the company
Treated as a proprietorship or partnership for tax purposes

20. Study Question 3: How do entrepreneurs start and finance new ventures?
Financing
Debt Financing
involves borrowing money from another person, a bank, or a financial institution
Equity Financing
involves exchanging ownership shares for outside investment monies
Venture Capitalists
Involves making large investments in new ventures in return for an equity stake in the business

21. Study Question 3: How do entrepreneurs start and finance new ventures?
Financing
Angel Investor
A wealthy individual willing to invest in return for equity in a new venture
Initial Public Offering (IPO)
An initial selling of shares of stock to the public at large

22. Sprinkles: Leading a sweet trend
Chapter 6 Case
Sprinkles: Leading a sweet trend

23. For activities and assessments, please visit…