LO 2.1  Articulate the differences between the small business manager and the entrepreneur.

An entrepreneur is a person who takes advantage of an opportunity and assumes the risk involved in creating a business for the purpose of making a profit. A small business manager is involved in the day-to-day operation of an established business. Each faces significant challenges, but they are at different stages of development in the entrepreneurship/small business management model.

LO 2.2  Discuss the steps in preparing for small business ownership.

The entrepreneurship process involves an innovative idea for a new product, process, or service. A triggering event is something that happens to the entrepreneur that causes him to begin bringing the idea to reality. Implementation is the stage at which the entrepreneur forms a business based on her idea. The first stage of the small business management process is growth, which usually means the business is becoming large enough to generate enough profit to support itself and its owner. The maturity stage is reached when the business is stable and well established. The harvest stage occurs when the small business manager leaves the business because of its sale, merger, or failure.

LO 2.3  Enumerate the advantages and disadvantages of self-employment.

The advantages of self-employment include the opportunity for independence, the chance for a better lifestyle, and the potential for significant profit. The disadvantages include the personal liability you would face should the business fail, the uncertainty of an income, and the long working hours.

LO 2.4  Explain the role of innovation to small business.

Product innovation is the catalyst for all business growth and small businesses make major contributions of innovation in the U.S. economy because they have more economic incentive to create truly innovative products than do large businesses. Innovation includes those new, more efficient and effective products, processes, services, technologies, or models.