Regarding the concepts and principles you summarized for Chapters 1, 2, and 3, explain how you can apply some of them to your bus
Regarding the concepts and principles you summarized for Chapters 1, 2, and 3, explain how you can apply some of them to your business or life in 5 pages
Entrepreneurial Small Business Book Summary
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Chapter 1
The book has five parts, each part with different chapters. The first chapter discusses the ideas of entrepreneurs and the basis of small businesses. It also focusses on the varieties of small businesses and their impacts. The chapter begins with Robin, who states that his inspiration to be an entrepreneur started in the early stages. Robin had four key ideas when starting a business, which can be echoed into the lives of future entrepreneurs. The four ideas include; believing that one can make it as an entrepreneur. There is a need for entrepreneurs to believe in self-efficacy to get started as an entrepreneur. These people who are likely to succeed are those who believe in themselves. The other key idea was planning and executing an action. This idea explains that planning something and failing to accomplish it null and void the plan. The other idea is helping. This idea describes that successful entrepreneurs are those who help. The last idea was doing the job well and thus suitable. It is essential to do good when carrying out a business as it creates good partnerships all-around at long last.
This chapter also summarizes the entrepreneurial process. The process follows the feel, check, plan and do step. In the feeling stage, the entrepreneur feels like starting a business. The next step in the checking stage involves looking at the success rate of the suggested idea. The next step, which is planning, involves the creation of a business plan. The last step of doing involves the implementation of the plan in action. In the United states, around 15.5 million people own a business. This is according to U.S Census Bureau. According to the U.S Census Bureau, entrepreneurs are in occupations such as owner-manages, construction, farmers, retailers, drivers, child care workers, real estate agents, wholesalers, maintenance workers, maintenance workers, lawyers, farmers and ranchers, medical practitioners, movie projectionists, artists, entertainers and athletes, salespeople, landscape managers, photographers, service managers and furniture finishers among others. In short, entrepreneurs are everywhere. Some entrepreneurs require training, and others only require primary entries. According to a small entrepreneurial business, an entrepreneur is anyone who owns a business. This can also be self-employed people.
Entrepreneurship involves the concept of founding, where people start a business, whether for profit or not. There are three significant forms of entrepreneurship known as CIS entrepreneurship. Independent entrepreneurship is the starting of the business of self-employed people. Social entrepreneurship is the start of civic or charitable organizations. This includes organizations such as Bangladesh’s Grameen Bank, which helps the poor have financial literacy and help them manage their money well. Sustainable entrepreneurship, also known as green entrepreneurship, occurs when social entrepreneurship is focused on ecological and planet concerns. Corporate entrepreneurship occurs when people employed in companies are innovative, and the company can use their ideas to expand the business or solve problems.
The other concept discussed in the chapter is the differences between small businesses and high-growth ventures. Small businesses vary from small to moderate in the growth and innovation rate; with small businesses, the owner intends to remain small for easier control while a high growth business grows big as intended by the owner. Also, the small business owners do not intend to employ other people or add locations, unlike the high-growth ventures.
The chapter has also discussed the concepts of the myths and misconceptions associated with small businesses. Often people believe that there are inadequate funds to start a business. This is contrary to most business owners who report that finding the funds to start a business is not a significant issue. The other myth is that one has to make something such as goods. This is contrary to the fact that the majority of the businesses are based on the sale of services. Also, there is the myth of not trying again once the business has fallen. This is contrary to the experiences of many entrepreneurs who have failed several times in their journey but have not given up. Also, a particular group such as the students or mothers who cannot start a business. This is a myth as most people in this group have started businesses. The other myth is that majority of the business fail after two years.
Action keys to becoming a business owner is another principle described in this chapter. To get started with businesses, one needs the BRIE model. It encompasses boundaries, resources, intentions, and exchange. The boundary component entails the creation of a suitable location or place for the business. The resource component involves the money, knowledge, and product used to create the business. The Intention component is the desire or the motivation behind the start of the business. The exchange component is the moving of goods or services in exchange for currency. There is also a checklist of the BRIE model that an entrepreneur should check before strategic a business. The model is easy and helps entrepreneurs to implement their actions.
The other concept in chapter one entails the different ways in which small businesses help the economy and the community. Small businesses generate income used as revenues for any country. Also, they help in the creation of sources of innovation for communities. It is also a source of employment for people. There is also some prince of the critical entrepreneurial way strategies. These are seven components: persevere, scale back, a bird in the hand, pivot, take it on the road, ask for help, and plan to earn.
Chapter 2
The second chapter discusses the characteristics and competencies of small business entrepreneurs. The chapter has several concepts. It discusses the key aspects of an entrepreneurial personality. There are five entrepreneur behaviors as described by 5Ps. These include passion, where one is an intense feeling towards the business. The other ‘P’ is perseverance, where one should not give up on the business no matter how hard its gates. The third 'P; is the promotion-prevention focus. The promotion focus aims to attain the highest possible profits, while the prevention focus aims to avoid losses. The planning style involves five planning styles. These include entrepreneurs who are comprehensive planners, critical point planers, opportunistic planners, reactive planners, and habit-based planners. Professionalization is the last ‘P’ of behavior for entrepreneurs. This involves doing better than just the average.
The other concept in this chapter is the operational competencies of the successful entrepreneur. The operational competencies are discussed in the Boundary-resources-intention-exchange model, introduced in the first chapter. Boundary competencies, also known as the fundamental business competencies, include operations, sales, human resources, finance, and accounting. The resource competencies entail the entrepreneur knowing a suitable place to find raw materials and people such as advisors, customers, suppliers, and service providers. The intention competencies, also known as the determination competencies, entail doing what it takes for the business's success. The exchange competencies or the opportunity competencies involve using the opportunity to gain a profit.
The other concept discussed in the chapter is the sociology of entrepreneurship. This takes a look at the position of women and minorities in entrepreneurship. Industries with more women than average include health care and social assistance services, educational services, administrative, personal services, retail trade, arts, entertainment, and recreation services. Entrepreneurial industries with fewer women than average include professional, scientific, technical, food and accommodation, finance and accounting, and construction. In the United States, there is a significant growth in the number of women and minorities in entrepreneurship. However, these group faces the challenge of access where there is discrimination of accessing opportunities offered by white men. These opportunities include financial assistance. This group imposes higher loans interest rates compared to the white male. To solve this challenge, there is a need to set aside dedicated contracting funds for these groups.
Furthermore, there is a need to ensure certification for everyone. Another approach in solving these issues is personal. This entails these groups effortlessly making networks.
The other groups are the veteran or the second-hand entrepreneurs. These people start a business either after retirement, retrenchment, or downsized. The major challenge facing this group in entrepreneurship is a lack of financial literacy. They use everything, including their money, too soon and try to do everything by themselves. This can be challenging as it can waste time and feelings f loss of confidence once there is a failure. To solve these challenges, veteran or second career entrepreneurs should only use their money when there is a feasible business plan. Also, these people can take time to heal to regain their confidence.
The other concept discussed in this chapter is the recognition of entrepreneurial teams. These teams include couples and non-couple teams. The most common form of teams is the couple teams. These teams should use financial flexibility and trust to succeed as entrepreneurs. The major challenge facing these teams is family issues when the couples reflect their family issues to business, separation, lack of agreements before the start of the business, and wrong handling of business endings. The same problems are likely to be experienced by non-couple teams.
The chapter has also discussed family business owners. These people face significant challenges are the lack of time management, role conflict, and succession issues. Role conflict occurs when the family member is expected to accomplish house roles and work roles simultaneously. The role-play conflict results in challenges of time management. However, the challenges can be solved by proper planning of the business. Divorce and separation may also jeopardize how a business is running. Proper planning entails listing, prioritizing, and delegating roles from time to time.
The other concept is the entrepreneurial cycle. The usual sequence for most businesses is emergence, then existence, then survival, then success, and lastly, resource maturity. The emergence stage is when a person thinks and executes a plan. The existence stage is when the business is at play and operation. This stage can be risky as many entrepreneurs lack the knowledge to maintain the business in marketing, production, and management. When the business has established its market, it moves to the success stage. The last stage is resource maturity, where there is a scaled level of success in the business's profits. Challenges characterize each stage, and the entrepreneur should seek advice from other people or strategize to move to the ultimate goal of resource maturity.
The last concept or principle described in chapter 2 is the rewards for entrepreneurs through their businesses. Most people start their business to grow, being flexible and generating income. These are the universally mentioned awards. Some occasional rewards of starting a business are wealth and product. In wealth, the entrepreneur has a chance of generating wealth and more income than expected. In the product reward, an entrepreneur can have their product developed. The rarely mentioned awards that are also social include admiration that is to earn respect from friends have power where they can lead and motivate others, be recognized as one who has achieved something and show family tradition.
Chapter 3
In chapter three, the discussed areas are: Environment of a small business and its elements, ability to scan the small business environment, techniques of building legitimacy for your organization, techniques of social networking, essential skills for handling a crisis, recognize how small businesses can achieve sustainability and identification of the significant steps in making ethical decisions in small business.
For example, the entrepreneur obtains resources when forming a business using the BRIE model. These can include details on how to manage the business or who to sell to, money, office space, and raw materials to use in the production of goods or the delivery of services. When the Environment is abundant with resources, as it is during economic boom times, gathering what is required can be simple. Gathering resources might be more difficult in difficult times, like during economic recessions. When faced with a resource shortage, entrepreneurs typically learn to make do with less, replace a more readily available item, or borrow, rent, or sell for the resource. Bootstrapping is the term for these methods.
As highlighted in the book, everything outside the firm's border is considered part of the external environment. The task environment refers to the elements of the Environment that directly and constantly impact the firm since these are the components that directly connect to your firm accomplishing its essential business activities. Customers, suppliers, distributors, professional supporters such as accountants and lawyers, private contractors, allies and corporate partners, unions and lenders—as well as essential groups you may deal with less frequently but are always on your mind, such as competing brands, government, media, special interests such as trade and professional associations, consumer groups, and environmental groups—all make up this part of the Environment.
Also, the book elaborates on the Internal Environment. Those elements of the Environment have a direct and indirect impact on human health. The internal Environment is determined by closely engaged persons in the organization, whether they own or work for it. This comprises the firm's employees and its board of directors or advisory boards. Whether it's on the management board or not, your investors are a part of the internal environment. Contract professionals such as outside accountants or attorneys, as well as subcontractors and companies with that you have formal contractual arrangements, can all be regarded as part of the internal or external environment.
The book highlights how business owners must spend time scanning the Environment for tEnvironmentevelopments that may affect their operations. Even simple environmental scanning methods can yield positive results.
The book also highlights what legitimacy means. Others' view that your company is deserving of their business is referred to as legitimacy. Legitimacy can be derived from how your company interacts with its customers, the products or services it sells, and how it operates. Legitimacy is a way to establish social capital with your surroundings through social networking, crisis management, sustainability, and ethical decision-making.
The author of the book explains the various techniques of social work. Networking entails establishing ties through mutual communication and assistance. Over the Internet, you can communicate through personal networking and social networking. There are strategies to optimize your requests for assistance for personal networking. Social exchange is a skill that may be honed over time. Learning and using the social networks where your clients currently hang out is essential for social media networking.
Also, it is highlighted in the book that crises are issues that jeopardize a company's existence and necessitate rapid action. Taking a cue from big business, there is a six-step strategy for dealing with a crisis. Dealing with emergencies requires being honest and upfront. Preparation, communicating with your people, and preserving your investment are the three steps of emergency preparedness.
The book elaborates how sustainable entrepreneurship aims to conduct a firm so that it has as little adverse influence on the Environment as poEnvironmentycling is one technique to reduce impact; another is to create green products or services. Utilizing assessments and accreditation can assist the organization in becoming greener.
The book further explains how one can identify significant steps in making ethical decisions in business. Ethics is a set of ideas that people use to judge whether or not certain acts are correct. Defining the moral problem, developing alternatives, and applying the best answer are the three ethical decision-making processes. Workable solutions satisfy your moral, legal, and financial objectives. The Golden Rule, utilitarianism, universalism, and the billboard principle are four philosophies you can apply to evaluate solutions. Keep in mind that innovations can lead to potentially problematic ethical issues.
Reference
Kast, J. A., & Green II, R. P. (2011). Entreprenurial Small Business, (International Edition). https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q=entreprenurial+small+business+by+jerome+and+richard&btnG=#:~:text=Kast%2C%20J.%20A.%2C%20%26%20Green%20II%2C%20R.%20P.%20(2011).%20Entreprenurial%20Small%20Business%2C%20(International%20Edition).
,
Jerome A. Katz Saint Louis University
Richard P. Green II Texas A&M University– San Antonio
Entrepreneurial Small Business
6e
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ENTREPRENEURIAL SMALL BUSINESS, SIXTH EDITION
Published by McGraw Hill LLC, 1325 Avenue of the Americas, New York, NY 10121. Copyright ©2021 by McGraw Hill LLC. All rights reserved. Printed in the United States of America. Previous editions ©2018, 2014, and 2011. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw Hill LLC, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.
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Library of Congress Cataloging-in-Publication Data
Names: Katz, Jerome A., author. | Green, Richard P., author. Title: Entrepreneurial small business / Jerome Katz, Richard Green. Description: Sixth Edition. | Dubuque : McGraw-Hill Education, 2020. | Revised edition of the authors’ | Audience: Ages 18+ | Audience: Grades 10-12 Identifiers: LCCN 2020008069 (print) | LCCN 2020008070 (ebook) | ISBN 9781260260540 (hardcover) | ISBN 9781260676754 (spiral bound) | ISBN 9781260676686 (ebook) Subjects: LCSH: New business enterprises—Management. | Entrepreneurship. Classification: LCC HD62.7 .K385 2020 (print) | LCC HD62.7 (ebook) | DDC 658.02/2—dc23 LC record available at https://lccn.loc.gov/2020008069 LC ebook record available at https://lccn.loc.gov/2020008070
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To our parents, who gave us inspiration.
To our children, who gave us motivation.
To our spouses, who gave us dedication.
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ABOUT THE AUTHORS
Jerome A. Katz Jerome (Jerry) Katz is the Robert H. Brockhaus Endowed Chair in Entrepreneur- ship at the Richard A. Chaifetz School of Business, Saint Louis University. Prior to his coming to Saint Louis University he was an assistant professor of management at the Wharton School, University of Pennsylvania. Jerry holds a PhD in organiza- tional psychology from the University of Michigan, and other graduate degrees from Harvard and the University of Memphis.
Throughout the years he has worked in or advised his family’s businesses includ- ing stints working in the family’s discount department store, sporting goods whole- saling, pharmacies, auto parts jobbing, and secondary-market wholesaling of frozen food. As a professor he has served as adviser to over 500 business plans developed by students at Saint Louis University, whose Entrepreneurship Program (which Jerry leads) has been nationally ranked every year since 1994.
He was also the founder and director of Saint Louis University’s Billiken Angels Network, which was ranked by the HALO Report as one of the top angel groups in the United States. Ear- lier in his career he served as associate director for the Missouri State Small Business Develop- ment Centers. He has taught, trained, or consulted on entrepreneurship education and business development services in Germany, Spain, China, Portugal, Saudi Arabia, Korea, Sweden, Switzerland, the United Kingdom, Brazil, Singapore, Israel, Croatia, and the West Bank. His consulting firm, J. A. Katz & Associates, has a client list including the Soros, GE, Kauffman and Coleman Foundations, as well as the Korea Entrepreneurship Foundation, the Jerusalem Insti- tute for Israel Studies, Sweden’s Entrepreneurship and Small Business Research Institute, the International Labor Organization (ILO), RISEbusiness, the National Federation of Independent Business, the National Science Foundation, and the Committee of 200.
As a researcher, Jerry has done work on entrepreneurship, organizational emergence, oppor- tunity analysis, and the discipline and infrastructure of entrepreneurship education. Today 8 of his papers can be found in 11 different compendia of “classic” works in entrepreneurship and small business. He was a co-recipient of the 2013 Foundational Paper Award of the Entrepre- neurship Division of the Academy of Management, and Google Scholar reports Jerry’s papers have been cited over 11,000 times. Jerry founded and edited two book series, Advances in Entre- preneurship, Firm Emergence and Growth (published by Emerald) and Entrepreneurship and the Management of Growing Enterprises (published by Sage) and has edited over a dozen special is- sues. He sits on the editorial boards of 11 journals: Journal of Small Business Management, Entre- preneurship and Regional Development, International Journal of Entrepreneurship and Small Business, Journal of International Entrepreneurship, International Entrepreneurship and Manage- ment Journal, International Journal of Technoentrepreneurship, Experiential Entrepreneurship Exer- cises Journal, USASBE Annals of Entrepreneurship Education, Ekonomski Vjesnik Econviews, Journal of Entrepreneurship Education, and Entrepreneurship Education & Pedagogy.
Following his parents’ tradition of civic entrepreneurship, Jerry has served in a variety of roles including a governor of the Academy of Management, chair of the Entrepreneurship Divi- sion of the Academy of Management, and senior vice president for research and publications of the International Council for Small Business. He serves on a number of local, national, and in- ternational boards promoting entrepreneurship and entrepreneurship education and training for students and the general public.
For these efforts, he has been a recipient of more than a dozen major professional awards including Babson’s Appel Prize for Entrepreneurship Education, the Family Firm Institute’s LeVan Award for Interdisciplinary Contributions to Family Business, the Outstanding Lifetime Achievement Award given by the Academy of Management’s Entrepreneurship Division, as well as Mentorship Awards from the Entrepreneurship Division of the Academy of Management, and from Saint Louis University’s Graduate Student Association, and Saint Louis University’s Chaifetz School of Business Alumni Award for Outstanding Educator. He was elected the fiftieth fellow of the U.S. Association for Small Business and Entrepreneurship.
Courtesy of Jerome Katz
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Richard P. Green II Richard Green is a successful serial entrepreneur who has started, built, and sold several busi- nesses across an extraordinarily wide range of industries. His first business was an electrical sign repair company, which he began while an undergraduate student. Since then, Richard has started two other sign companies, a structural steel business, a manufacturer of stainless steel products, a real estate brokerage, a tax return preparation service, and a bed-and-breakfast. During the “go-go banking” years he held controlling interest in a state-chartered bank. More recently, Richard, with his long-time associate Richard Carter, con- ducted the start-up of Lineas Aereas Azteca (Azteca Airlines); served as co-owner with his spouse of a San Antonio bed-and-breakfast, the Adams House; and served as chief financial officer for a high-tech start-up, Celldyne Biopharma LLC. As a corporate entrepreneur, Richard has worked on expansion plans for companies as diverse as the Mexican airline Aerolineas Internacionales, Minneapolis-based Land O’Lakes, Inc., and the Venezuelan dairy Criozuca, S.A.
Richard brings a similarly diverse set of skills to ESB, ranging from a pilot’s li- cense (he was a professional pilot, instructor, and check airman for TWA) to a CPA. A late-life PhD (from Saint Louis University), he has been an assistant and associate professor of accounting at the University of the Incarnate Word and Webster University, and is currently coordinator of the accounting program at Texas A&M University–San Antonio. His academic achievements are similarly impressive, with papers in the proceedings of North American Case Research Association (NACRA), American Accounting Association Midwest, the American Association for Accounting and Finance, and the Interna- tional Council for Small Business, as well as journals such as the Atlantic Economic Journal and Simulation & Gaming. Richard also authored more than three dozen articles in popular maga- zines on topics ranging from personal computers to financial decision making. Richard is co- developer (with Jerry) of the measures for financial sophistication in the Panel Study of Entrepreneurial Dynamics, and is senior author of Investigating Entrepreneurial Opportunities: A Practical Guide for Due Diligence (Sage). He has received research grants from Pharmacia Corpo- ration and the Kauffman Foundation.
Always active in professional and civic roles, Richard’s contributions have ranged from serv- ing as chair of the Airline Pilots Association’s grievance committee to serving on the City of San Antonio’s Air Transportation Advisory Committee. He is a member of the American Accounting Association, Academy of Management, United States Association for Small Business and Entrepreneurship, North American Case Writers Association, and the World Association for Case Method Research and Application.
About the Authors v
Courtesy of Richard P. Green II
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PREFACE
This book got its start with a simple question from my mother, “What is the difference between what you teach and what your father did for a living?”
We were sitting shiva (which is the ancient Jewish tradition of mourning), in this case after the death of my father, a Polish immigrant to the United States who had been a small business owner for almost 50 years at the time of his death in 2003. When sitting shiva the immediate family mostly sits and reflects and prays for a week, so my mother, sister, and I had plenty of time to talk. And talking as we did, the question came up.
I gathered my thoughts for a minute. First off, I realized that throughout his life my father had picked up on my comments about the very rare high-growth, high-tech businesses that came through my class. Somehow he thought that was who I had as my run-of-the-mill student. That was funny to me, because in teaching entrepreneurship for nearly 20 years, fewer than a dozen of the several hundred business plans I worked on involved high-growth, high-tech firms.
But thinking about what my father heard, I realized that I talk about two sets of rules, one for when I have a potentially high-growth business and another for the more conventional businesses that most of my students start and that my own father had mastered three times in his life. The answer to my mother came out this way:
Conventional Small Businesses High-Growth Ventures
Imitation Novelty
Autonomy Involve key others
Control as goal Growth as goal
Financial independence Wealth
Fund with your own money Fund with other people’s money
Cash flow as key Profits as key
Cash crunch? Tighten belt Cash crunch? Sell more
The list goes on, and you will have a chance to see it in Chapter 1. You will discover that the list exemplifies the prevention versus promotion focus discussed in Chapter 2, but this list gives you an idea of the difference. I told my mother that when I am teaching to students who have really big dreams, I try to get them to create businesses that would be innovative, using
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