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Chapter 1: The 21st Century Entrepreneur
Table of Contents
Brief Chapter Outline...............................................................................................2
Chapter Outline and Lecture notes..........................................................................4
Key Terms.............................................................................................................. 11
Suggested Text Responses.................................................................................... 12
Class Activities and Sample Assignments.............................................................15
Discussion Questions for Online/Hybrid classes....................................................17
Lecture Links......................................................................................................... 20
Lecture Link 1.1: Entrepreneurs and New Small Business Planning Goals............20
Lecture Link 1.2: The Advantages of the Small Business Administration (SBA). .. .21
Lecture Link 1.3: Entrepreneurial Business around the World...............................23
Bonus Internet Exercises....................................................................................... 25
Bonus Internet Exercise 1.1: Decline in Employees at Fortune 500 Companies....25
Bonus Internet Exercise 1.2: Entrepreneurial Success Story of Dell Computer.....27
Bonus Internet Exercise 1.3: Ethical Considerations for the New Entrepreneur....29
Critical Thinking Exercises..................................................................................... 31
Critical Thinking Exercise 1.1: Venture Capital-backed Firmsversus Entrepreneurial
Startups….…………………………………………………………………………………………….
31
Critical Thinking Exercise 1.2: Planning Goals for the New Entrepreneurial
Business................................................................................................................ 33
Critical Thinking Exercise 1.3: Stakeholders and the Entrepreneur.......................35
Bonus Cases.......................................................................................................... 37
Bonus Case 1.1: New Entrepreneurs and Unemployment Issues in the United
States.................................................................................................................... 37
Bonus Case 1.2: Bill Gates: The Microsoft Genius.................................................39
Bonus Case 1.3: MYMIC, LLC: A Dynamic Approach to Entrepreneurship..............43
Endnotes............................................................................................................... 44
IM 1-1
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1: The 21st Century Entrepreneur
Brief Chapter Outline
I. Learning Objectives
Explain the rationale behind starting an entrepreneurial business.
Discuss the history of entrepreneurship in the United States.
Identify the type of people who are entrepreneurs.
Describe the impact of entrepreneurial businesses on society.
Discuss the worldwide impact of entrepreneurial businesses.
Define an entrepreneurial business.
II. Why start a business?
Learning Objective 1-1: Explain the rationale behind starting an entrepreneurial
business
a. Enhance the American economy
b. Proven success in entrepreneurial business
c. Obtain economies of scale in industry
d. Achieve entrepreneurial status
e. Small Business Administration (SBA) assistance
III. A brief history of entrepreneurial businesses in the United States.
Learning Objective 1-2: Discuss the history of entrepreneurship in the United
States
a. Entrepreneurial business contribution to success in the United States
b. Timeline of American business
c. Entrepreneurial businesses are the backbone in the nation’s economic
success
IV. Who are entrepreneurial business owners today?
Learning Objective 1-3: Identify the type of people who are entrepreneurs.
V. How does society benefit?
Learning Objective 1-4: Describe the impact of entrepreneurial businesses on
society.
a. Entrepreneurial business development
b. Economic Gardening
c. Create new jobs
d. Tax revenues
e. Improve economic vitality
f. Positive societal change
g. Increase in women entrepreneurs
IM 1-2
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1: The 21st Century Entrepreneur
VI. Entrepreneurship around the world.
Learning Objective 1-5: Discuss the worldwide impact of entrepreneurial
businesses
a. Worldwide scope of small enterprises
b. SME promotion
c. New venture start-up programs
VII. What is an entrepreneurial business?
Learning Objective 1-6:Define an entrepreneurial business
a. Define small business
b. High-growth, high-tech ventures
c. Entrepreneurial business start-ups
d. Compare and contrast entrepreneurial business and venture
capital-backed firms
e. Business plans for entrepreneurial business and venture capital-backed
firms
VIII. For Review (text page 16)
Chapter Outline and Lecture notes
1. Learning Objectives (text page 2)
Explain the rationale behind starting an entrepreneurial business.
Discuss the history of entrepreneurship in the United States.
Identify the type of people who are small entrepreneurs.
Describe the impact of entrepreneurial businesses on society.
Discuss the worldwide impact of entrepreneurial businesses.
Define entrepreneurial business.
2. Why Start a Business? (text pages 4 through 6)
Learning Objective 1-1:Explain the rationale behind starting an entrepreneurial
business
A. There is great potential for entrepreneurial businesses to provide positive
outcomes in the communities they serve
i. The Small Business Administration (SBA) provides assistance for
current and potential small business owners
1. New business start-up assistance
2. Continued business support
IM 1-3
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1: The 21st Century Entrepreneur
3. Business development
ii. The development of a entrepreneurial business stimulates the
United States economy
iii. Many entrepreneurial businesses have the potential to become
larger profitable businesses
1. Discuss historical companies that experienced unexpected
growth (Apple is one example for students to discuss)
2. Small businesses are the foundation for all businesses
iv. Historically, small businesses have proven success rates
1. Individuals and groups that initiate their own business have
the potential to become successful entrepreneurs
2. Conduct a survey in class to determine how many students
want to develop a small business and become future
entrepreneurs
v. Individuals become independent when they achieve entrepreneurial
status
vi. Compare and contrast the characteristics of small and large
businesses
1. Historically, small businesses experience an increase in
employment; and larger organizations experience a decline
in employment
2. Small businesses are more efficient because their production
outcomes exceed those of larger organizations
3. Small businesses experience decreased economies of scale
compared to larger organizations because the larger
organizations have lower long-range average cost as their
production continues to increase
4. Small businesses are more efficient because they respond
more quickly to market changes compared to larger
organizations
vii. Business Plan Development
1. The implementation of business plans are a combination of
art and science
2. Many new businesses fail within the first four years of
operation
3. Elements that an entrepreneur must solve for success:
a. Effective sales generation model
b. Sustainable operating profit margins.
c. Being properly financed.
IM 1-4
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1: The 21st Century Entrepreneur
3. A brief history of entrepreneurial businesses in the United States (text pages 6
and 7)
Learning Objective 1-2: Discuss the history of entrepreneurship in the United
States
A. Small businesses have existed in our society for many years
i. Prior to the 1880s the majority of businesses were small ventures
1. Individuals and groups acquired skills to produce essential
items for themselves, or they bartered and traded
innumerable goods and services
ii. The development of industry occurred after 1880 in the United
States
1. Larger industrial base
2. Robber Barons
3. Economies of scale
4. Dominate new sectors in the economy
5. New small businesses continue to blossom
iii. The Great Depression occurred in the 1930s
1. There was an increase in industrial concentration
2. Trends in businesses revealed a decline in small businesses
iv. Decline in large industries in the 1970s and 1980s
1. Economic turmoil
2. There was a decline in larger firms
3. Japan gained a competitive advantage an dominated an
economic position in the markets
4. There was a decline in large multinational firms
5. New opportunities were advantageous for entrepreneurial
businesses.
4. Who are entrepreneurial business owners today? (text page 8)
Learning objective 1-3: Identify the type of people who are entrepreneurs
A. Entrepreneurs have common motivations to initiate entrepreneurial
businesses
i. Entrepreneurs want to be their own boss
ii. Individuals experience increased personal rewards and self
fulfillment from entrepreneurship
IM 1-5
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1: The 21st Century Entrepreneur
iii. It is common for entrepreneurs to gain greater financial rewards as a
result of small business ownership
B. Stakeholders are known as individuals and groups that have a stake in the
performance outcome of an organization
i. Individuals or other organizations that impact the success of a
business
ii. They maintain business relationships with key suppliers and clients
to enhance the success of the business
iii. Examples of stakeholders include: competitors, customers,
suppliers, distributors, special interest groups, and employees
C. Entrepreneurs reap the rewards of small business ownership
i. Enhanced sense of joy and self fulfillment
ii. Flexible work schedules
iii. Increased potential to earn greater financial rewards
5. How does society benefit? (text pages 8 through 10)
Learning Objective 1-4: Describe the impact of entrepreneurial businesses on
society.
A. The formation of entrepreneurial businesses enhances the opportunity for
entrepreneurs to implement positive outcomes in the communities they
serve
B. Entrepreneurs impact society
i. The development of entrepreneurial businesses acts as a catalyst
for societal change.
ii. Entrepreneurs who initiate new businesses contribute to
employment opportunities in the community
iii. Entrepreneurs and the growth of their new small businesses
increase tax revenue
iv. Small businesses contribute to economic vitality
C. The implementation of entrepreneurial businesses assures effective
change in society
i. Entrepreneurs garner profits in depressed areas within a community
ii. Entrepreneurial business formation contributes to a healthy and
flexible lifestyle
iii. Entrepreneurs promote local community advantages
iv. Entrepreneurs provide potential employment opportunities for
minorities and women
v. Women entrepreneurs overcome the glass ceiling.
vi. Entrepreneurs have greater control on balancing their family’s
needs.
IM 1-6
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1: The 21st Century Entrepreneur
6. Entrepreneurship around the world (text page 11)
Learning Objective 1-5: Discuss the worldwide impact of entrepreneurial
business
A. SME’s (small and medium sized enterprises) are one of the strongest
factors in the growth of any nation’s GNP.
B. Entrepreneurs establish international or global businesses
C. Ask students to discuss the pros and cons associated with an
entrepreneur’s decision to establish a entrepreneurial business in the
United States or abroad
D. SME’s:
i. Small and medium sized businesses
ii. Microloan programs to encourage self-development
1. Promotes growth in GNP
a. Direct loans
i. Recipients are entrepreneurs
b. Fast funding
c. High repayment rates
d. Proceeds to poorer nations
e. Proven success in program implementation
E. New venture start-up programs (text page 11)
i. Government interest provides services and facilities
ii. Results encourage development of founding firms
iii. Recent programs encourage high-technology ventures to educated
individuals
iv. Pace of small business startups is increasing around the world.
7. What is an entrepreneurial business? (text pages 11 through 15)
Learning Objective Lesson 1-6: Define an entrepreneurial business
A. Less than 500 employees
B. In Europe, less than 50 employees
C. Small-to-medium-sized business (SMB) or (SME)
D. High-growth, high-tech ventures
i. Well funded by venture capital (angel investment)
1. Specialized investors
2. Capital required equates to $2,000,000 investment
3. Expect extraordinary returns
ii. Harvest plan to exist the business
1. Can sell the business to another firm
IM 1-7
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1: The 21st Century Entrepreneur
2. Can sell the business to investors
3. Participate in IPO’s
4. The size of the business dictates the sales parameter
iii. Rapid growth
iv. Heavily laden with debt
v. Developed organizational structure
vi. Experienced leadership is required
vii. Operations are initiated in multiple locations simultaneously
viii. High-risk operations
ix. Growth is dependent on speculative business
x. Employs many employees
E. Entrepreneurial business start-up
i. The start-up is self-funded or closely funded
ii. Oriented around a positive cash flow
iii. The management structure takes advantage of founder(s) skills
iv. Operation design in the image of the founder
v. Business is oriented toward the personal goals of the founder(s)
vi. One or less employees is typical
vii. The maximum employees are between 50 and 100
F. Compare and contrast the difference between entrepreneurial businesses
and venture capital-backed firms.
i. An entrepreneurial business has constrained resources and a
venture capital-backed firm’s resources are not constrained.
ii. In a small business a business plan is used as a guide in running
the business; and in a venture capital-backed firm, the business plan
is a promotional tool sent to investors.
G. Business Plans-Another difference in types of firms
i. Size of plan
1. Entrepreneurial business plan is usually 15-25 pages.
2. Venture capital-backed plan is usually 25-45 pages.
ii. Goal of business plan
1. Used as a guide in early development of the business.
2. Provides self- evaluation and analysis of the business.
3. Provides critical information to investors.
iii. Successful business plans have the following characteristics.
1. They do not use cookie-cutter business plan programs.
2. The plan is developed following the chapters of this text.
3. The plan should not intimidate the author by the effort to
4. Prepare a one-page pitch for the business. – example p.16
H. Review (pages 17 and 18)
IM 1-8
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1: The 21st Century Entrepreneur
Key Terms
Economies of scale: A condition that allows the long-run average cost to continue
downward as production increases. It leads (in its most extreme case) to a condition
where a single firm making 100 percent of the product is the most efficient. In reality this
condition is moderated by the ability of management to control size. (LO 1-1)
Fortune 500: Fortune 500 published annually by Fortune Magazine and documents the
500 largest corporations (by sales) in the United States. (LO 1-1)
Harvest plan: A plan to exit a business. Typically, the owners have the intention to sell
the business to another firm or take it to an IPO. (LO 1-6)
Stakeholders: Individuals or other organizations that impact the success of a business.
(LO 1-3)
United States Small Business Administration (SBA): The SBA is the agency officially
organized in 1953 as part of the Small Business Act of July 30, 1953 to “aid, counsel,
assist and protect, insofar as is possible, the interests of small business concerns.” The
agency provides a wealth of information and assistance at all levels of organizational
development and management. (LO 1-1)
Suggested Text Responses
Opening Vignette – “Bull & Beard”
Student responses will vary.
Exercise 1 – p. 8
Student responses will vary.
Ethical Challenge – p. 10
Student responses will vary.
Exercise 2 – p. 11
Student responses will vary.
Exercise 3 – p. 13
IM 1-9
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1: The 21st Century Entrepreneur
Student responses will vary
IM 1-10
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
