chapter 3

Entrepreneurship

The pursuit of opportunities and acceptance of risks in business ventures.

Definition of Small Business (SBA)

Varies by industry, with up to 1,500 employees for manufacturers.

Economic Importance of Small Businesses

85.43% of U.S. businesses have 20 or fewer employees.

First-Mover Advantage

The competitive advantage gained by being the first to enter a market.

Types of Noncorporate Business Ownership

Includes Sole Proprietorship, Partnership, and Cooperative.

Venture Capital

Funding for high-growth potential businesses where investors gain equity.

General Partnership

A type of partnership where all partners share ownership and liability.

Sole Proprietorship

One-person ownership structure that comprises 72% of U.S. businesses.

Corporate Forms of Ownership

Includes Corporation, S Corporation, LLC, and Professional Corporation.

Strategic Alliance

Cooperation between businesses without merging.

Common Sources of Financing

Includes personal funds, family, friends, banks, investors, and government loans.

Factors Contributing to Business Success

Dedication, market demand, competence, and sometimes luck.

Economic Impact of Small Businesses

Small firms produce 16 times more patents per employee than larger firms.

Franchise

Business model where franchisee operates under the brand of the franchiser.

Special Ownership Situations

Includes Joint Ventures, ESOPs, and Strategic Alliances.

Innovation in Small Firms

Small businesses contribute significantly to innovation through patents.

Challenges of Small Business Financing

Startups often rely heavily on personal funds, family, and friends.