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GMS CH 5.docx

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Ryerson University
Global Management Studies
GMS 200
Bamidele Adekunle

GMS CH 5 – Entrepreneurship and Small Business Management The Nature of Entrepreneurship Entrepreneurship: is risk-taking behaviour that results in new opportunities An entrepreneur is a risk-taking individual who takes action to pursue opportunities others fail to recognize, or may even view as problems or threats. (Good ideas + hard work) Characteristics of Entrepreneurs Internal locus of control: entrepreneurs believe that they are in control of their own destiny; they are self- directing and like autonomy High energy level: entrepreneurs are persistent, hard-working and willing to exert extraordinary efforts to succeed High need for achievement: motivated to accomplish challenging goals; they thrive on performance feedback Tolerance for ambiguity: risk takers; they tolerate situations with high degree of uncertainty Self-confidence: they feel competent; believe in themselves, and are willing to make decisions Passion and action orientation: they try to act ahead of problems; they want to get things done and not waste valuable time Self-reliance and desire for independence: they want independence; they are self-reliant; they want to be their own bosses, not work for others Flexibility: they are willing to admit problems and errors, and are willing to change a course of action when plans aren’t working -They are often raised in families that encourage responsibility, initiative and independence- Diversity and Entrepreneurship Necessity-based entrepreneurship takes place because other employment options don’t exist; new ventures are started because they are few or no other employment and career options. (Sometimes women who suffer the glass-ceiling effect) Entrepreneurship and Small Business Asmall business has fewer than 100 employees, is independently owned and operated, and does not dominate its industry. How to get started: motivations to start a new business include 1) wanting to be your own boss and control your future, 2) going to work for a family-owned business and 3) seeking to fulfill a dream. The most common way to get started is to buy an existing one or buy and run a franchise—where one business owner sells to another the right to operate the same business in another location (Subway, Tim Hortons); in return the franchise parent receives a share of income or a flat fee from the franchise. Internet Entrepreneurship: (Starting your own website, or things like eBay; a selling/trading business) Family Businesses: Afamily business is owned and controlled by members of a family. Sometimes family business feud occurs when family members have major disagreements over how the business should be run. Another problem is the succession problem—the issues of who will run the business when the current head leaves. It is rec. to have a succession plan which describes how the leadership transition and related financial matters will be handled. Why Many Small Businesses Fail: Small businesses have a high failure rate and besides the ‘counting’issue, some reasons include: Lack of experience: not having sufficient know-how to run a business in the chosen market or area Lack of expertise: not having expertise in the essentials of business operations, including finance, purchasing, selling and production Lack of strategy and strategic leadership: not taking the time to craft a vision and mission, nor to formulate and properly implement a strategy Poor financial control: not keeping track of the numbers, and failure to control business finances Growing too fast: not taking the time to consolidate a position, fine-tune the organization, and systematically meet the challenges of growth Insufficient commitment: not devoting enough time to
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