Schermerhorn Chapter 5- Entrepreneurship and Small Business Management

Question 1

Name 3 reasons women or members of minorities might become entrepreneurs

Answer 1

• Necessity
• Gain economic independence
• Provide pathway to success that may be blocked otherwise

Question 2

Name a few typical characteristics of entrepreneurs

Answer 2

Internal locus of control: believe themselves in control
High energy level
High need for achievement: highly motivated to achieve goals
Tolerance for ambiguity: able to deal with uncertainty
Self-confidence
Passion and action-orientation
Self-reliance and desire for independence
Flexibility

Question 3

What is social entrepreneurship?

Answer 3

A business mode seeking novel ways to solve pressing social problems

Question 4

How should one define ‘small business’

Answer 4

• One with 100 or fewer employees.

- Independently owned and operated

Question 5

Name 5 different web-based business models

Answer 5

• Advertising model
• Brokerage model
• Community model
• Freemium model
• Infomediary model
• Merchant model
• Referral model
• Subscription model

Question 6

Name 5 reasons for small business failure

Answer 6

• Lack of experience
• Lack of expertise
• Lack of strategy/strategic leadership
• Poor financial control
• Growing too fast
• Insufficient commitment
• Ethical Failure

Family business:

• Succession problem
• Family feud

Question 7

Name 3 stages in the life cycle of an entrepreneurial firm

Answer 7

Birth
   -Establishing the firm
   -Getting customers
   -Finding the money
Breakthrough
   -Working on finances
   -Becoming profitable
   -Growing
Maturity
   -Refining the strategy
   -Continuing growth
   -Managing for success

Each stage requires a different management style, poses different challenges

Question 8

Name some basic items that should be included in a business plan

Answer 8

• Industry analysis
• Company description
• Product and services description
• Market description
• Marketing strategy
• Operations description
• Staffing description
• Financial projection
• Capital needs
• Milestones

Question 9

Name 4 different forms of legal ownership

Answer 9

-Sole proprietorship
-Partnership
/General Parternship
/Limited partnership
/Limited liability partnershio
-Corporation
-Limited Liability Corporation

Question 10

Name 5 forms of financing a new business

Answer 10

• Debt financing
• Equity financing
  - Venture capitalists
  - Initial public offerings
  - Angel investors