Because learning changes everything.

Chapter Two
Small Business Entrepreneurs
Mindset

Copyright 2021 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
 Because learning changes everything. ®

2-2
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education
 Because learning changes everything. ®

Entrepreneurial Mindset: Learning Objetives

What Is an Entrepreneurial Mindset?

If entrepreneurship the practice of creating, developing, and running your own business, then
an entrepreneurial mindset is the mode of thinking that helps you achieve those goals.

Successful entrepreneurs embrace challenges, mistakes, and failure as opportunities to

develop new skill sets to help them succeed in the future.

When it comes to running a successful business, the right mindset can be just as important
as hitting sales objectives or producing sustainable business models. It’s okay if you don’t
feel up to the task. Having doubts makes you human. Knowing how to nip them in the bud
can make you a great entrepreneur.

Source: Business 101: How to Develop an Entrepreneurial Mindset,

https://www.masterclass.com/articles/how-to-develop-an-entrepreneurial-mindset#what-is-an-
entrepreneurial-mindset
 Because learning changes everything. ®

The 4 Characteristics of an Entrepreneurial Mindset

Ability to confront self-doubt: Teaching yourself how to think means acting like your own
coach or even cheerleader.

Accountability: Having an entrepreneurial spirit includes recognizing your responsibility for the
outcomes and actions of your business.

Resilience: Mistakes are inevitable when attempting to launch new ventures. Everyone from
Silicon Valley billionaires to low-level employees makes mistakes.

Willingness to experiment: Whether you’re the co-founder of a bourgeoning business or

simply one of the many young people trying to set out on a new career path, your road to
sustained success will lead you to many tough decisions.

Source: Business 101: How to Develop an Entrepreneurial Mindset,

https://www.masterclass.com/articles/how-to-develop-an-entrepreneurial-mindset#what-is-an-
entrepreneurial-mindset

4
 Because learning changes everything. ®

How to Develop an Entrepreneurial Mindset

Some of the ways you can develop your entrepreneurial mindset in your everyday life:

Set clear goals. Setting a goal—speaking it to the universe, writing it down, mentioning it to
friends and family who will hold you accountable—can subtly influence aspiring entrepreneurs
to work towards that goal bit by bit each day.

Practice being decisive. Entrepreneurs, innovators, and new business owners must develop
the ability to analyze a situation, absorb the relevant data, and make a confident decision.
Small businesses and start-ups can be ruined by indecision, which is why making a decision
with confidence is one of the most vital entrepreneurial skills.

Redefine failure. Failing typically has negative connotations, but the best entrepreneurs turn
failure into something positive. Failing indicates that you’ve tried something, which can be a
scary thing to do. True failure is not trying at all. Practice failure dialogues.

Face your fears. Many entrepreneurs fear public speaking, failure, and embarrassment. The
only way to chisel away at that fear is to expose yourself to it. Take a public speaking class—
anything to get you more comfortable in front of a crowd.

Remain curious. Curiosity is one of the most important traits for entrepreneurs. To constantly
learn and maintain your competitive edge, you must always seek out new people and new
experiences. Never lose the curiosity to see around corners.

Source: Business 101: How to Develop an Entrepreneurial Mindset,

https://www.masterclass.com/articles/how-to-develop-an-entrepreneurial-mindset#what-is-an-e
ntrepreneurial-mindset 5
 The Psychology of Entrepreneurs

Aspects of an entrepreneur’s
behavior, their way of looking
There is no one pattern of
at and thinking about
entrepreneurial behavior or
themselves and their world is
called cognition, visible in
entrepreneurial type.
their actions.

Successful entrepreneurial
There are literally hundreds
behavior leads to the
of ways to think about
creation of a new firm that
entrepreneurial
meets the goals of the
personalities.
entrepreneur.

© McGraw-Hill Education 6
 The Five Ps of Entrepreneurial Behavior

Passion.

Perseverance.

Promotion-Prevention
Focus.

Planning Style.

Professionalization.

© McGraw-Hill Education 7
 Five Ps of Entrepreneurial Behavior:
Passion and Perseverance

An entrepreneur’s passion both increases their commitment to the firm,

and inspires key stakeholders like potential investors or employees.
Passion is displayed in three ways:
• By looking at the challenges of the business in a creative way.
• By being persistently focused on the business.
• By being absorbed by the tasks and concerns of the business.

Perseverance is best thought of as a type of learned optimism and one

of the most powerful contributors to entrepreneurial success.
• The danger is to keep trying the same action repeatedly without
learning.
• This is a problem behavior called perseveration.

© McGraw-Hill Education 8
 Five Ps of Entrepreneurial Behavior:
Promotion-Prevention Focus and Planning

A promotion focus is intent on maximizing gains.

• Yields results in richer, dynamic, environments or industries.
A prevention focus is intent on minimizing losses.
• Can work well in an established industry or a poor one.
Successful entrepreneurs balance the two focuses.

Comprehensive planners take a long-term view and act on their plans.

Critical-point planners plan first, act on it, then consider more planning.
Opportunistic planners start with a goal and look to achieve it.
Reactive planners are passive, the environment determines actions.
Habit-based planners do not really plan, they just have a routine.
• Reactive and habit planners generally do very poorly in business.

© McGraw-Hill Education 9
 Five Ps of Entrepreneurial Behavior: Professionalization

Every industry has an average called a standard business practice.

• Performing at that level or better is termed professionalization.

There are three levels or professionalization.

• Expert business professionalization occurs One other
when most aspects of the business meet or approach to
exceed the industry’s standard. thinking about the
• Specialized business professionalization entrepreneurial
occurs when one or two aspects of the personality is the
business are at this level. idea of the
entrepreneurial
• Minimalized business professionalization
mindset.
occurs when none of the aspects of the
industry standard appear in the business.

© McGraw-Hill Education 10
 Entrepreneurial Operational Competencies

Successful entrepreneurs exhibit

business-related expertise, called
competencies.
The BRIE model’s boundary uses
Resources lead to specific
key business functions to create
resource competencies, or the
the boundary.
ability to procure raw materials.
• There is also industry-
Intention reflects determination, or
specific knowledge that uses
determination competencies,
a particular kind of skill.
shown through focus and choices.
• A mechanic. Exchange, or ‘making sales,’ uses
• A cook. opportunity competencies.

© McGraw-Hill Education 11
 Entrepreneurial Teams

Most teams are family related.

• They know/trust each other.
When assembling a team, work
out key issues ahead of time.
Pick good team members for a
strong organizational culture.
They should have passion for:
• The mission.
• The team.
• Innovation.
• Fairness.
Access text alternative for this image.

© McGraw-Hill Education Source: Original analysis using PSED 1 and PSED 2 data (covering 1998 and 2006, N = 1749) done by Kelly Shaver, College of Charleston, for Entrepreneurial Small Business, February 2019. 12
 Family Businesses

Firms with a majority family ownership are a family business and they
employ 58% of America’s total workforce.
• A strong unit can be effective with quick decision making.
• Families are a source of funds and personnel.
• They also tend to raise future entrepreneurs.

Two challenges are role conflict and time Lack of a clear

management. succession plan
• Reduce role conflict by keeping family issues could end a family
out of the business. business.

• A basic method of time management is to Create a family

make a list, prioritize that list, then delegate council, gather an
advisory board, or a
tasks – repeat daily and strategize weekly.
formal board of
directors for advice.

© McGraw-Hill Education 13
 Rewards for Starting a Small Business

Income rewards are the money made from owning your own business.

Flexibility rewards Growth rewards

are perhaps the come from facing
most rapidly and beating or
growing type of learning from
reward. challenges.

Access text alternative for this image.

Source: Nancy M. Carter, William B. Gartner, and Kelly G. Shaver, “Career Reasons,” in William B. Gartner, Kelly G. Shaver, Nancy M. Carter, and Paul D. Reynolds (eds.), Handbook of Entrepreneurial
© McGraw-Hill Education Dynamics: The Process of Business Creation (Thousand Oaks, CA: Sage, 2004). 14