Combined

39

the average age of a first-time entrepreneur

70% to 90%

percentage of new business ideas that come from entrepreneurs’ previous employment or existing business contacts

34

\_____% of U.S. founders of high-tech companies held degrees in business, finance, or accounting, 47% had STEM degrees

Self-efficacy

the belief that you can succeed, internal locus of control (confidence in your ability to come up with a solution)

Half

Only \____ of new companies survive five years, one-third survive 10

5

Two-thirds of businesses with employees survive at least 2 years, half survive \___ years

0.03%

percentage of new companies that are financed by venture capital

Savings

average amount of money used to start a business is $15,000 to $20,000, most common source is the entrepreneur’s \_______

65%

percentage of financing that is personal debt, mostly credit card debt

12

Fewer than 1 in \_____ start-ups gets investment money (equity financing) from family and friends

Bootstrapping

most young companies finance themselves through sales of early products

20

89% of firms in the United States employ less than \____ people

100

98% of firms in the United States employ less than \____ people

20

50% of net new job creation comes from firms with less than \____ employees

500

62% of American businesses make less than $\_____k/year

Closely-held

corporations that are not publicly traded; make up 80-90% of American corporations

600,000

there are an average of \_________ business closures per year (800,000 during COVID)

Family-owned businesses

64% of U.S. gross domestic product. 62% of US employment, 78% of all net new job creation, 65% of wages paid in the US, 35% of Fortune 500 companies, hire locally and less likely to lay off, higher ROI, 70-90% of all global GDP

Women

60% of all family firms have \_____ in top leadership positions

11

\____% of all employment comes from venture-backed companies, which lost fewer jobs and created more revenue than the national average between 2008-2010

Immigrants

30-40% of all venture-backed firms are created by \______; they represent 13% of the population, 25% of business owners, and 55% of all startups valued at $1B or more

Greenhouse

collaborative development process that takes a holistic multidisciplinary approach to designing its new products; researchers don’t just do researchers and designers don’t just do design

Tom Kelly

argues that observing customers using a prototype is critical to making necessary changes; there is no such thing as a stupid customer, the product can only be too complicated

Tim Brown

recommends that startups measure project progress with time to first prototype or number of consumers exposed to prototypes; teams should create a prototype within the first week of a project

Desire path

informal pathways created as people take shortcuts around designated walkways; evidence that entrepreneurs cannot predict what customers will want without frequent testing and observation during development

Causal thinking

begins with a predetermined goal and a given set of means, and seeks to identify the optimal alternative to achieve the given goal

Effectual reasoning

begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with; most useful in the early stages of a venture

Who they are, what they know, and whom they know

the three categories of means that all entrepreneurs begin with

Affordable loss

causal reasoning focuses on expected return, while effectual reasoning emphasizes \_______ \_______

Partnerships

Whereas causal reasoning depends upon competitive analyses, effectual reasoning is built upon a growing network of \_________

Affordable loss principle

using the minimum amount of resources necessary to bring a product to market

Logic of causal reasoning

to the extent that we can predict the future, we can control it

Logic of effectual reasoning

to the extent that we can control the future, we do not need to predict it

Suicide quadrant

where new products are introduced in new markets, exactly where traditional marketing techniques are ineffective

Information

the biggest advantage held by established companies over startups

Managerial

1965 to 1985 saw a shift from a \______ to an entrepreneurial American economy

Nikolai Kondratieff

executed on Stalin’s orders in the mid-1930s because his econometric model predicted that collectivization would lead to a sharp decline in farm production, which it ultimately did

Kondratieff wave

every fifty years, a long technological wave crests and there will come a time when new technologies cannot create enough jobs to offset the stagnation in the old industries

Management

according to Peter Drucker, \______ is the new technology (rather than any specific new science or invention) that is making the American economy into an entrepreneurial economy

Smokestack

in the 1980s, people believed that U.S. economic dominance was over for good as \__________ industries collapsed and were replaced by smaller firms

Capitalism

according to Joseph Schumpeter, “a form or method of economic change and not only never is but never can be stationary”

Disciplines

Schumpeter says that “competition \_____ before it attacks”; businesses know that competition will eventually threaten their market power, so they need to do everything they can to hold onto their customers

New commodity

Schumpeter says that “In capitalist reality as distinguished from its textbook picture, it is not the typical kind of competition which counts but the competition from the \_____ \________”

Necessity entrepreneurship

having to become an entrepreneur because you have no better option; has no effect on economic development

Opportunity entrepreneurship

an active choice to start a new enterprise based on the perception that an unexploited or underexploited business opportunity exists; has a significant positive effect on economic growth

Global Entrepreneurship Monitor (GEM)

an annual assessment of national levels of entrepreneurial activity around the world

Economic development

Zoltan Acs noticed that the relationship between entrepreneurship and \________ \________ is negative in low-income countries and positive in high-income countries

Phase one economy

an economy dominated by necessity entrepreneurship

Phase two economy

reduction in necessity entrepreneurship and self-employment as companies start growing and others fail, successful firms can afford to hire others, leading to an increase in wage laborers

Phase three economy

increase in opportunity entrepreneurship as people have the resources to start their own businesses

General National Framework conditions

Conditions to move from phase 1 to phase 2 economies (openness, government, financial markets, R&D, infrastructure, management, skilled and educated labor markets, rule of law (private property), healthcare)

Entrepreneurial Framework Conditions

conditions to move from phase 2 to phase 3 economies (Risk Capital, R&D Transfer, Education and Training, Internal Market, Openness. Access to physical infrastructure, cultural norms)

Bayh-Dole Act (1980)

federal statute permitting Universities to own the intellectual property of anything developed with federal funding, increased commercialization from academia, as long as the government received a non-exclusive license

Industry

a grouping of businesses that interact in a common environment as part of a value chain or distribution channel that delivers a particular good

Market

the customers who are willing to pay for the benefits of a product or service

Primary market

those customers or markets that have the most need for what you’re offering

Gross margins

gross profits divided by sales

North American Industry Classification System (NAICS)

identifies industries to allow for common standards across North America

Emerging, Growth, Differentiation, Shakeout, Maturity, Decline

stages of the industry life cycle

Shakeout

stage of the industry life cycle when GDP increases

Value chain

all of the companies that contribute to the development and distribution of products and services coming out of an industry; markups increase as you move down this

Keystoning

the retailer, who must buy from the distributor or sales rep, typically at least doubles its cost in setting the price to the customer

Porter’s five forces

a way of effectively looking at the structure of an industry and a company’s competitive strength and positioning relative to that industry and to the markets it serves; barriers to entry, threat from substitutes, threat from buyers’ bargaining power, threat from suppliers’ bargaining power, and rivalry among existing firms

Economies of scale

if costs are low and few economies of scale exist, then competitors can easily enter and disrupt the entrepreneur’s competitive strategy

Threat from buyers’ bargaining power

buyers have low switching costs and the ability to buy in bulk, it is more difficult for new firms to grow

Threat from suppliers’ bargaining power

can threaten to raise prices, limit the quality/quantity of goods, or integrate forward and purchase the outlets selling their goods

Rivalry among existing firms

firms will compete to win customers by offering the lowest prices, hurting all firms and potentially killing new ones

Attractive industry

high barriers to entry, weak supplier and buyer bargaining power, few substitutes, not highly competitive

Unattractive industry

low barriers to entry, strong supplier and buyer bargaining power, many substitutes, and intense competition

Gatekeepers

those who control the flow of information and ability for new firms to access customers

Influencers

people whose approval is often required before a decision to purchase is made

Deciders

people who make the final decisions about purchases, usually for a company and usually based on a budget

Purchasers

those who have the actual authority to buy

Users

the ultimate beneficiaries of the purchase

Ethnography

a way to explore the social culture of groups by studying them in their everyday environment

Direct competitor

businesses that serve the same customer needs with the same types of resources

Indirect competitor

serve the same customer needs but with different resources as in substitute products, services, or distribution channels

Potential or emerging competitor

not currently serving the same customer needs but have the resources to quickly move into that space and compete

Good competition

companies that are doing what they do very badly; in other words, they aren’t making customers happy

Bad competition

companies that are doing everything right. Their customers are happy, they add value, and they’re prosperous

The Innovator’s Dilemma

Clayton Christensen’s book explaining how the decisions that ultimately lead to a company’s decline are frequently made at a time when the company is widely regarded as being an astutely managed firm

Sustaining technologies

technologies that foster improved product performance for established products

Disruptive technologies

innovations that result in worse product performance, at least in the near-term, in an effort to create a new product

Theory of resource dependence

while managers may think they control the flow of resources in their firms, in the end it is really customers and investors who dictate how money will be spent. Established firms can harness this principle by creating an independent, separate organization, with a cost structure honed to achieve profitability at the low margins characteristic of most disruptive technologies

Matched

Established firms that have successfully seized positions in new markets enabled by disruptive technologies have done so by giving responsibility to commercialize the disruptive technology to an organization or team whose size \_______ the size of the targeted market

Discovery-based planning

managers in small markets must assume that forecasts are inaccurate and that the strategy they have chosen to pursue may likewise be wrong; therefore, a much more effective way to confront disruptive technologies is to first develop plans for what needs to be learned

High-margin

Values that cause employees to prioritize projects to develop \_________ products, cannot simultaneously accord priority to low-margin products

Capability

The resources, processes, and values that define what an organization can and cannot accomplish (RPV framework)

Resources

tangible assets (usually people or things), that managers can measure, value, and allocate in a flexible manner

Processes

How organizations transform inputs of resources into products and services of greater worth

Values

the standards by which employees make prioritization decisions - those by which they judge whether an order is attractive or unattractive, whether a particular customer is more important or less important than another, whether an idea for a new product is attractive or marginal, etc.

Heavyweight teams

groups and tools to create new processes or new ways of working together

Lightweight teams

tools for exploiting existing processes

Sole proprietorship

no corporate tax, unlimited liability, limited lifespan, difficult to transfer ownership

Corporation

corporate tax, limited liability, unlimited lifespan, easy to transfer ownership

C Corporations

subject to tax on net income, property, money or other assets distributed to shareholders

Alter ego doctrine

a court may disregard the corporate entity and hold the shareholders personally liable for the corporation’s obligations if the shareholders used the corporation to perpetrate a fraud or promote injustice

S corporations

do not pay federal income tax but pass the tax liability for their profits through to their shareholders, profits taxed only once, losses may be deducted from individual shareholders’ tax returns, taxed only once; must have no more than 100 shareholders and can only have one class of stock, preventing venture capital investment

General partnership

multiple owners (partners), unlimited liability, single taxation

Limited partnership

multiple partners, one or more of which has limited liability determined by the amount of their capital commitment