58) Increased entrepreneurial activity is a phenomenon unique to the U.S.
59) One study conducted by the Global Entrepreneurship Monitor (GEM) reports that nearly one
in eight people in the United states is working to start a business..
60) Research has isolated a set of characteristics that can predict who will succeed as an
entrepreneur.
61) Serial entrepreneurs repeatedly start businesses and grow them to a sustainable size before
striking out again.
62) Surveys show that small business owners believe that, as entrepreneurs, they work harder,
earn more money, and are happier than if they worked for a large company.
63) The opportunity to reap impressive profits is the primary motivation for most entrepreneurs.
64) Social entrepreneurs use their skills to create profitable businesses and also achieve
economic, social and environmental goals for the common good.
65) Technology offers a significant advantage for entrepreneurs.
66) Entrepreneurs choose to enter their particular business fields because they have an interest in
them and enjoy those lines of work. They have often made their hobbies their business.
67) The majority of new business owners work fewer than 40 hours per week.
68) The majority of new business owners devote more than 40 hours per week to their
companies.
69) One advantage of being your own boss and owning a small business is that work hours are
very flexible and leisure time is abundant.
70) Entrepreneurs are not willing to give up a steady paycheck.
71) There is concern over the future of entrepreneurship because so few high school and college
students want to start their own companies.
72) The shift to a service economy has not had a significant impact on entrepreneurial
opportunities.
73) Cloud computing allows businesses to use a variety of applications and has reduced costs
and added flexibility.
74) Women now own 28.7 percent of all privately-held businesses in the United States.
75) Women play a minor role in the entrepreneurial arena.
76) Starting a part-time business is a popular gateway to entrepreneurship.
77) Increasing numbers of women are discovering that the best way to break the “glass ceiling”
that prevents them from rising to the top of many organizations is to start their own companies.
78) Diversity may be considered a characteristic of entrepreneurs, as they don’t fit any statistical
norm.
79) Minority-owned businesses have come a long way in the past decade, and their success rate
is climbing.
80) A major advantage of launching a business part-time is the lower risk it offers in case the
business fails.
81) Most home-based businesses are simple cottage industries such as crafts or sewing.
82) Not all family-owned businesses are small; in fact, approximately one-third of the Fortune
500 companies are family businesses.
83) Of the 25 million businesses in the U.S., about 40 percent are family owned and managed.
84) Ninety-percent of businesses in the United States are family-owned and managed and
account for 62 percent of total U.S. employment.
85) Family-owned and managed businesses account for 78 percent of all new jobs.
86) Most family businesses survive to the fourth generation.
87) Successful “copreneurs” create a division of labor based on expertise.
88) About 20 percent of downsized corporate managers have become entrepreneurs.
89) Corporate downsizing has spawned a generation of entrepreneurs known as “corporate
castoffs.”
90) Because they have college degrees, a working knowledge of business, and years of
management experience, both corporate castoffs and corporate dropouts who become
entrepreneurs will most likely increase the small business survival rate.
91) David Birch considers “gazelles” those businesses that grow at 20 percent or more per year
and gross at least $100,000 in annual sales.
92) Small companies have created at least two-thirds of the net new jobs in the U.S. economy.
93) Small businesses actually create more jobs than the number of jobs big businesses create.
94) Large companies create significantly more patents and other forms of innovations per
research and development dollars spent than small firms.
95) Because of their size and limited resources, small businesses rarely create innovations that
are important to the U.S. economy.
96) About 51 percent of new businesses fail within five years.
97) Most entrepreneurs have invested the time to develop a sound business plan.
98) An often fatal error made by many small business owners is to open their businesses on a
“shoestring,” causing them to be undercapitalized.
99) About 75 percent of the businesses in the U.S. can be considered “small” businesses.
100) The faster a small company grows, the greater its appetite for cash.
101) The primary cause of small business failure is lack of capital.
102) Entrepreneurs realize that failure is a possibility, but are not paralyzed by that fear.
103) To boost sales, small businesses, especially start-ups, should grant credit to anyone who
wants to buy their products or services.
104) As an entrepreneur, you are always working for someone else-your customers.
105) Establishing prices that will generate the necessary profits means that business owners must
understand how much it costs to make, market, and deliver their products and services.
106) If an entrepreneur has a good enough product or service to sell, a business plan is not really
necessary since the product or service will sell itself.
107) Successful entrepreneurs recognize that their most valuable asset is their time, and they
learn to manage it effectively to make themselves and their companies more productive; having
passion about their businesses, products, and customers enables them to stay motivated.
108) Expanding a business usually requires no significant changes in structure or business
practices.
109) What is an entrepreneur? Give a brief profile of a typical entrepreneur. What is the primary
motivation for the typical entrepreneur?
110) Discuss the potential benefits and drawbacks of entrepreneurship.
111) Describe the factors that are driving the current entrepreneurial trend in the U.S. economy.
112) Discuss the role that the following groups are playing in leading the ongoing surge in
entrepreneurial activity:
∙ women
∙ minorities
∙ immigrants
∙ part-time entrepreneurs
∙ home-based entrepreneurs
∙ family businesses
∙ copreneurs
∙ corporate castoffs
∙ corporate dropouts
113) Discuss the impact of small businesses on the U.S. economy, including sales, GDP, job
creation, and innovation.
114) The following lists the ten deadly mistakes of entrepreneurship.
1. Management mistakes
2. Lack of experience
3. Poor financial control
4. Weak marketing efforts
5. Failure to develop a strategic plan
6. Uncontrolled growth
7. Poor location
8. Improper inventory control
9. Incorrect pricing
10. Inability to make the entrepreneurial transition
Select one of these deadly mistakes, describe what it may look like for the entrepreneur, and give
an example.
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115) Describe the small business failure rate. What are the primary causes of business failures,
and what steps can an entrepreneur take to avoid becoming a business failure statistic?
Mini Case 1-1: Hudson’s Dilemma
Bill Hudson was a real craftsman when it came to being a machinist. Bill had learned almost all
that he knew from Hugo Huffman, his first and only employer. Bill Hudson was married and had
three young children. He was 33 years old and had worked for Hugo ever since he finished his
tour in the army. In 12 years, Bill had polished his skills under the watchful and critical eye of
Hugo Huffman. Hugo was quick to recognize Bill’s talent for the trade. Bill had a positive
attitude about learning and displayed a drive for perfection that Hugo admired.
Hugo’s Machine Shop was a successful small business. Its success was based mostly on the
reputation for quality that had been established over its 42 years in operation. Hugo had come to
this country with his new wife, Hilda, when he was in his late twenties. Now the business was a
success, but Hugo remembered the early years when he and Hilda had to struggle. Hugo wanted
the business to continue to produce the highest quality craftsman products possible. On a Friday
evening, he called Bill into his office at closing time, poured him a cup of half-day-old coffee,
and began to talk with him about the future.
“Bill, Hilda and I are getting old and I want to retire. It has been 42 years of fun but these old
hands need a rest. In short, Hilda and I would like you to buy the business. We both feel that
your heart is in this craft and that you would always retain the quality that we have stood for.”
Bill was taken back by the offer. He, of course, knew Hugo was getting older, but had no idea
Hugo would retire. Bill and his wife, Anna, had only $4,200 in the bank. Most of Bill’s salary
went for the normal costs of rearing three children. Hugo knew Bill did not have the money to
buy the business in cash, but he was willing to take a portion of the profits for the next 15 years
and a modest initial investment from Bill.
Bill had, for the past four years, made most of the technical decisions in the shop. Bill knew the
customers and was well respected by the employees. He had never been involved in the business
side of the operation. He was a a high school graduate but had never taken business courses. Bill
was told by Hugo that even after deducting the percentage of the profits he would owe under the
sales agreement, he would be able to almost double his annual earnings. Bill would have to take
on all the business functions himself because Anna had no business training either.
116) Which entrepreneurial characteristics does Bill have that may be important to his success?
Which characteristic could lead to his failure?
117) What steps should Bill take to avoid the pitfalls common to a small business?