Because learning changes everything.

Chapter One
Small Business Ventures:
Varieties and Impacts

Copyright 2021 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Starting an Entrepreneurial Small Business: Four Key Ideas

Consider four key things when starting a small business.

• Believe that you can do this – referred to as self-efficacy.
• Planning + Action = Success.
• Help helps.
• Do well. Do good.
There are many ways to become an entrepreneur.
• Most firms go through a similar start-up process.

© McGraw-Hill Education 2
 Entrepreneurs Are Everywhere

An entrepreneur’s occupation depends on the type of goods or

services they, and their firm, are producing.
Entrepreneurial businesses show novelty in their products, services, or
business models, while small businesses are imitative.

Small business owners are self-employed entrepreneurs.

Founders start a business – by themselves or in a franchise.

Other groups consist of buyers and heirs.

After entry, another role emerges – the owner-manager.

© McGraw-Hill Education 3
 CSI: Entrepreneurship

Self-employed founders are involved in independent entrepreneurship.

Founders of nonprofit organizations or for-profit social ventures are
pursuing social entrepreneurship.
• When focus is on ecological issues, it is considered sustainable or
green entrepreneurship.
Corporate entrepreneurship focuses on bringing new products or
services to market, or opening up new markets for their firm.

Motivation can be:

Taken together, corporate, social, and Opportunity-driven
independent entrepreneurship represent CSI entrepreneurship
entrepreneurship. or
• Or the three forms of entrepreneurship. Necessity-driven
entrepreneurship.

© McGraw-Hill Education 4
The Many Types of Entrepreneurial Small Businesses in UAE

• SMEs account for about 90 percent of businesses in the world and 94 percent in the
Emirates
• SMEs generate more than 50 percent of the private sector’s employment worldwide
and a whopping 86 percent in the UAE.
• SMEs contribute almost 50 percent to the global GDP, and 53 percent of the Emirates’
GPD in 2019.
• There are over 30 million entrepreneurial firms in the U.S., called many things, such as:
• Small and medium enterprises (SMEs).
• Independent small businesses.
• Owner-managed firms.

Some entrepreneurs become serial entrepreneurs.

Innovativeness refers to how important a role new ideas, products,
services, processes, or markets play in an organization.

© McGraw-Hill Education 5
 The Small Businesses Enterprises in UAE

Segment Trade Manufacturing Services

≤ 5 employees; ≤ 9 employees; ≤ 5 employees;

Micro enterprises
or ≤ AED 3 million or ≤ AED 3 million or ≤ AED 2 million
annual revenues annual revenues annual revenues

6 - 50 employees; 10 - 100 employees; 6 - 50 employees;

Small enterprises
or ≤ AED 50 million or ≤ AED 50 million or ≤ AED 20 million
annual revenues annual revenues annual revenues

51 – 200 employees; 101 – 250 employees; 51 – 200 employees;

Medium enterprises
or ≤ AED 250 million or ≤ AED 250 million or ≤ AED 200 million
annual revenues annual revenues annual revenues

Source: Cabinet Resolution No. 22 of 2016 defining an SME under the UAE law.
© McGraw-Hill Education 6
 Table 1.2: Differences between Small Businesses and
High-Growth Ventures

Access text alternative for this image.

© McGraw-Hill Education 7
 Entrepreneurs and Firm Growth Strategies

A firm’s overall growth

strategy can be:
• Lifestyle or part-time
firms.
• Traditional small
businesses.
• High-performing
small businesses.
• High-growth
ventures, including
unicorns.
All but high-growth
ventures are considered
main street businesses.
Access text alternative for this image.

© McGraw-Hill Education 8
 Myths about Small Businesses

There’s not enough financing.

• Besides SBA and/or bank loans, there is crowdfunding, P2P
lending, drop-shipping, and bootstrapping techniques.
To make profits, you need to make something.
• There are plenty of service industries making profits.
If you fail, you can never try again.
• Not true, Henry Ford failed – twice – before making Ford.
Students (or some other group) don’t have the skills to start a business.
• There are examples of successful companies founded by students,
moms, and second-career entrepreneurs.
Ninety percent of all new businesses fail within two years.
• The percentage is wrong – 25% survive 15 years or more; also the
majority of businesses do not fail – they close financially successful.

© McGraw-Hill Education 9
 Table 1.3: Major Inventions from Small Businesses and
Student-Started Businesses

Access text alternative for this image.

© McGraw-Hill Education Sources: The State of Small Business: A Report of the President, 1994 (Washington, DC: U.S. Government Printing Office, 1995); Meinie Reid, “How a Shop Assistant Saw the Light and Saved Lives,” The Times, July 17, 2008. 10
 Entry Competencies – The BRIE Model

You need four elements when starting a business: boundary, resources, intention, and
exchange.

Access text alternative for this image.

© McGraw-Hill Education 11
 Small Business and the Economy

New Jobs. Small business are willing to offer jobs to people with atypical work
histories or needs.

New Ideas. They cause creative destruction by creating new goods,

services, or firms that hurt existing ones.

New Opportunities. Small businesses create new opportunities for

entrepreneurs, customers, and larger businesses.

New Markets. Small businesses find new markets by importing

and exporting.

Small businesses also conduct e-commerce using virtual instant

global entrepreneurship (VIGE).

© McGraw-Hill Education 12
 Challenge and the Entrepreneurial Way

• If you don’t succeed the first time, try, try again – perseverance.
• Scale back to the level of resources you currently have.
• Bird in the hand - one strategy is effectuation.
• Pivot – also called the corridor principle.
• Take it on the road by trying a market different from the one you live
in.
• Ask for help – harness the wisdom of crowds through
crowdsourcing.
• Plan to earn – find the best idea for you and then plan for action to
make it happen.

© McGraw-Hill Education 13