CHAPTER 1: Concept of Entrepreneurship

A comprehensive set of Q&A flashcards covering the concept of entrepreneurship, its basic aspects, roles, benefits, challenges, reminders, and the PECS framework.

entrepreneurship

The process of creating something new with value by devoting time and effort, assuming risks, and receiving rewards such as money, personal satisfaction, and independence.

Creation of something of value

Create products or services that can be offered for a price

Devotion of necessary time and effort

Entrepreneurs devote time and effort toward attaining personal goals (profits, employment, income for family, etc.).

Assumption of necessary risks

Entrepreneurs risk losing invested resources; there is a possibility to fail, but the potential for big rewards exists.

Getting rewards

Profits, business expansion, and intrinsic satisfaction.

Mobilizers of capital

Entrepreneurs may use personal savings or borrow from banks to finance ventures.

Service providers

Ventures can provide services (parlors, spas, coffee shops, etc.).

Employers

Usually hire people to help; the owner handles purchasing and serving customers.

Taxpayers

Businesses pay taxes; more business means more taxes and better government services.

Suppliers of products

Provide products and services; without entrepreneurs, there would be scarcity.

entrepreneur

A person who starts and/or operates a business.

entrepreneur

is creative and innovative and starts something new.

entrepreneur

can be male or female, young or old

entrepreneur

is a lifestyle or and attitude

Characteristics of entrepreneur

Strong desire to succeed

Risk taker

Creative

Take responsibility for activities

High level of confidence.

Which trait indicates willingness to take calculated risks?

Risk taker.

Which trait involves creativity?

Creative.

Which trait involves taking responsibility for activities?

Take responsibility for their activities.

Which trait reflects confidence in one's abilities?

High level of confidence.

Benefits of entrepreneurship: Profit

Profit, or money/cash, is a primary financial reward.

How is profit calculated?

Selling price minus cost and expenses equals profit.

Benefits of entrepreneurship

Freedom to do what he feels

Being one own’s boss

Benefits of entrepreneurship: Psychological rewards

Good feeling from being of service to others.

Problems of entrepreneurship

Long working hours

Entrepreneurship demands hard work

Cause emotional stress

Problems of entrepreneurship: Long working hours

Entrepreneurs often work long hours.

Problems of entrepreneurship: Emotional stress

Entrepreneurship may cause emotional stress.

Reminder to the New Entrepreneur: Get things done

Take action and ensure tasks are completed.

Reminder to the New Entrepreneur: Be close to the customers

Maintain proximity to customers to understand needs.

Reminder to the New Entrepreneur: Innovate; be open to new ideas

Continuously seek and adopt new ideas.

Reminder to the New Entrepreneur: Produce through people

Trust and empower others to execute tasks.

Reminder to the New Entrepreneur: Be hands-on in running your business

Be actively involved in daily operations.

Reminder to the New Entrepreneur: Be clear with your values

Know and communicate your personal and business values.

Reminder to the New Entrepreneur: Know your expertise; stick to what you know best

Leverage core strengths and avoid overextension.

Reminder to the New Entrepreneur: Keep things simple

Avoid unnecessary complexity in operations.

Reminder to the New Entrepreneur: Keep a lean staff

Maintain a small, efficient team.

Reminder to the New Entrepreneur: Balance directions but give autonomy

Provide guidance while allowing team autonomy.

PECS stands for

Personal Entrepreneurial Characteristics.

PECS clusters?

Achievement Cluster, Planning Cluster, Power Cluster.

Achievement Cluster focuses on what?

Desire to fulfill or realize goals; includes Opportunity-Seeker, Persistent, Committed, Risk-Taker, and Values Efficiency and Quality Oriented.

What is an Opportunity-Seeker?

Perceives and acts on new business opportunities; seeks financing, equipment, land, etc.

What is Persistent?

Takes repeated actions to overcome obstacles; makes sacrifices; sticks to own judgment.

What is Committed?

Accepts full responsibility for problems; helps employees; seeks to satisfy customers.

What is Risk-Taker?

Takes moderate risks; prefers situations with moderate risk.

What is Values Efficiency and Quality Oriented?

Aims to raise standards and seek better, faster, lower-cost ways.

Planning Cluster focuses on what?

Clear planning, goal setting, information gathering, and systematic planning and monitoring.

Goal-Seeker

Sets clear short-term and long-term objectives.

Information-Seeker

Personally seeks information on clients, suppliers, and competitors; uses networks.

Systematic in Planning and Monitoring

Develops logical plans, considers alternatives, and monitors progress.

Power Cluster focuses on what?

Ability to lead, persuade, and network; build confidence in others.

Be Persuasive and Good in Networking

Uses deliberate strategies to influence others and leverages contacts.

Possess Strong Self-Confidence

Believes in self and can complete difficult tasks.

Other Factors to Consider

Personal interest; knowledge/talents; training/work experience; government support programs; rate of growth; rate of return on capital.

Personal Interest

Interest that motivates entrepreneurship.

Knowledge/Talents

Skills and talents relevant to business.

Training/Work Experience

Formal training or experience supporting entrepreneurial activities.

Government Support/Assistance Programs

Availability of government programs to assist entrepreneurs.

Rate of growth of the Business

Growth rate as a consideration in entrepreneurship.

Rate of return on capital

Return on investment to evaluate entrepreneurial viability.