ENTREP PRELIM

• Business involves the buying and selling of goods
• A product is something that exists in nature, made by human beings, and is tangible, meaning it can be physically touched
• A service is labor or expertise exchanged for money, intangible and includes time, skills, and expertise
• An employee is someone who earns a living by working directly for someone else's business
• An entrepreneur is a person who recognizes an opportunity, organizes and manages a business, assuming the risk for potential return, often being both owner and employee
• Jeffry A. Timmons stated that a skillful entrepreneur can shape and create an opportunity where others see little or nothing—or see it too early or too late
• Jean-Baptiste Say described an entrepreneur as someone who unites all means of production to produce a product, shifting economic resources to areas of higher productivity and greater yield
• Economists consider scarce all resources worth money, regardless of their relative availability
• In a free-enterprise system, businesses are privately owned and operate relatively free of government interference
• Capitalism is characterized by individuals and companies competing for economic gains, ownership of private property and wealth, and price determination through free-market forces
• Capital is cash or goods invested to generate income and wealth, owned or used in business
• Voluntary exchange is a transaction between two parties who agree to trade money for a product or service
• Free enterprise discourages entrepreneurs who waste resources by driving them out of business and encourages using resources efficiently to satisfy consumer needs
• A small business has fewer than 500 employees and sells less than $5 million worth of products or services annually
• The millennial generation redefined success, focusing on factors beyond income and wealth
• Potential benefits of entrepreneurship include control over time, fulfillment, independence, creation/ownership, financial reward/control over compensation, control over working conditions, self-esteem, and contribution to society
• Potential costs of entrepreneurship include business failure, obstacles, loneliness/isolation, financial insecurity, long hours/hard work, and strain on personal relationships
• Cost/benefit analysis is a decision-making process based on emotions to evaluate pros and cons
• A mentor is a trusted advisor with whom a person forms a developmental partnership to promote personal and/or professional growth
• Social entrepreneurship aims to achieve profitability and beneficial returns for society
• Green entrepreneurship involves activities that avoid harm to the environment or help protect it
• Joseph Schumpeter expanded on Say's definition of entrepreneurs, emphasizing their value creation through various ways
• Peter Drucker highlighted that for a business to be considered entrepreneurial, it should exploit changes in the world
• An idea becomes an opportunity when it leads to the development of a valuable product or service profitable for the business
• Timmons' characteristics of a business opportunity include being attractive, working in a business environment, executable in a defined window of opportunity, and implementable with the right team
• SWOT analysis evaluates internal strengths and weaknesses, and external opportunities and threats of a business
• The five roots of opportunity include problems to solve, changes in laws/situations/trends, inventions of new products/services, competition, and technological advances
• Internal opportunities come from within, while external opportunities are conditions noticed that spark a business idea
• A strategy is a plan for how a business intends to perform and outdo its competition
• Paths to small business ownership include starting from the beginning, securing franchise rights, buying an existing business, licensing technology, and not stealing someone else's idea
• Faces of entrepreneurship include gazelles, microenterprises, lifestyle businesses, and mainstream small firms
• Profit is a positive gain from operations after subtracting all expenses, indicating that the entrepreneur is adding value
• Russel Simmons and Rick Rubin outlined seven rules for building a successful business
• Feasibility analysis helps in making the go/no-go decision based on a close examination of product/service, market, industry, and financial data
• Michael Porter's five industry forces include existing competitive rivalry, barriers to entry, threat of substitutes, supplier power, and buyer power
• A business model is a company's plan to generate revenue and make a profit from operations
• A business plan thoroughly explains a business idea and how it will be carried out, helping determine its viability before real-world mistakes
• Components of a business plan include a cover page, table of contents, and an executive summary
• An opportunity must lead to the development of a valuable product or service profitable for the business
• Timmons' characteristics of a business opportunity: attractive, works in a business environment, executable in a defined window of opportunity, and implementable with the right team