MGMT Test 2
Card Set Information
MGMT Test 2
terms for test 2
What are the characteristics of entrepreneurs?
•Internal locus of control
•High energy level
•High need for achievement
•Tolerance for ambiguity
•Passion & action orientation
•Self-reliance & desire for independence
What three main things define a small business?
500 or fewer employees
Independently owned and operated
Does not dominate its industry
What percentage of US businesses are small businesses?
99% are small businesses, 87% of those employ fewer than 20 people
What percentage of employment do family businesses provide?
Family businesses provide 60% of US employment and 78% of new jobs
What is the most crucial factor for the survival of a family business?
a proper succession plan
What are the statistics on family businesses after the first generation?
66% plan on keeping the business in the family, but 30% survive to the second generation, 12% to the third, only 3% beyond the third
How many small businesses fail within the first 5 years?
60-80% of new businesses fail in the first five years
Why do small businesses typically fail? (8 reasons)
•Lack of experience in the industry
•Lack of expertise in finance, production, sales...
•Lack of strategy or planning
•Poor financial control
•Growing too fast, ahead of cash flow
•Ethical failure—fraud, embezzlement
•Not usually lack of initial capital
a document that summarizes the business strategy and structure
Parts of a business plan
strategies used to achieve these goals
a plan of how the entrepreneur will implement these strategies
Advantages of Franchising
–Reduced financial risk of new business success through experience provided by franchisor.
–Training, financial, and management support by franchisor.
Disadvantages of Franchising
–Start-up fees to purchase franchise.
–Limitations of franchise (market area, product, customers).
–Imposed operational controls of franchisor.