GEM Indicators and Entrepreneurial Characteristics

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

According to GEM indicators, what is the defining characteristic of a 'Nascent Entrepreneur'?

Having actively devoted resources to starting a business but not yet paid wages or salaries for three months. (correct)

Having paid wages or salaries for three months or more.

Running a business that has paid salaries for 42 months or more.

Being involved in entrepreneurial activities within a company as an employee.

What does 'TEA' stand for in the context of GEM indicators?

Total Established Activity

Total Emerging Activity

Total Entrepreneurial Activity (correct)

Total Employee Activity

What is the core difference between a 'New Business Owner' and an 'Established Business Owner' according to GEM?

New Business Owners have paid salaries for less than 42 months, while Established Business Owners have paid salaries for 42 months or more. (correct)

New Business Owners are still developing their business plan, while Established Business Owners are not.

New Business Owners tend to be younger, while Established Business Owners are older.

New Business Owners have not yet secured any funding, while Established Business Owners have.

Which of the following is NOT a key activity of an entrepreneur?

Avoiding all risks to ensure a safe venture. (A) Signup and view all the answers

What does 'EEA' measure in the context of GEM indicators?

The levels of employee involvement in entrepreneurial activities like developing new products. (D) Signup and view all the answers

According to the GEM study, which demographic is most likely to start a business?

Men, who are twice as likely to start a business as women. (B) Signup and view all the answers

Where do most entrepreneurs typically seek their initial capital?

Family members and friends (B) Signup and view all the answers

What age group is most likely to launch a business, according to the GEM study?

35-44 years old (B) Signup and view all the answers

Which trait is LEAST likely to be associated with a successful entrepreneur?

A strong desire to accumulate wealth (D) Signup and view all the answers

An entrepreneur's desire for immediate feedback is primarily driven by what need?

To quickly adjust strategies based on actual results (C) Signup and view all the answers

What aspect of entrepreneurial success is MOST emphasized in the text?

The diversity of individuals who can become entrepreneurs (B) Signup and view all the answers

Which of the following is NOT identified as a feeding factor for entrepreneurial growth?

A stable, rigid job market (B) Signup and view all the answers

An entrepreneur who is described as a 'risk eliminator' likely has what kind of risk preference?

A preference for moderate risk (D) Signup and view all the answers

Which characteristic is LEAST likely to be associated with a 'corporate dropout' turned entrepreneur?

A comfort in highly structured environments (D) Signup and view all the answers

If an entrepreneur is described as 'future-oriented,' which is the MOST applicable characteristic?

Seeking out opportunities and planning for growth (D) Signup and view all the answers

What is the MOST significant benefit of the internet, cloud computing, and mobile marketing as it relates to entrepreneurs?

Enhanced global reach and market access (D) Signup and view all the answers

What percentage of the United States' private sector workforce do small businesses employ?

48% (A) Signup and view all the answers

What percentage of net new jobs created over the last decade were attributed to small businesses?

63% (C) Signup and view all the answers

What is the defining characteristic of a 'Gazelle' business?

Growing at 20% or more per year with at least $100,000 in sales (B) Signup and view all the answers

Which of the following is NOT identified as one of the '10 Deadly Mistakes' that can lead to small business failure?

Lack of a unique selling proposition (D) Signup and view all the answers

What is a key characteristic of successful entrepreneurs in relation to failure?

They learn to fail intelligently. (B) Signup and view all the answers

Which of these is a recommended action for avoiding small business pitfalls given in the text?

Developing a solid business plan (A) Signup and view all the answers

Besides experience, what can allow entrepreneurs enhance their profitability, according to the text?

Acquiring additional knowledge (B) Signup and view all the answers

What is the percentage of small companies that create 67% of net new jobs in the economy?

5% (B) Signup and view all the answers

Study Notes

GEM Indicators

Nascent Entrepreneurs: Individuals actively starting a business but haven't paid wages/salaries for 3 months (including to themselves).
New Business Owners: Individuals who started and are running a business, paying wages/salaries for 3+ months.
Established Business Owners: Businesses operating for 42+ months, paying salaries.
TEA (Total Early-Stage Entrepreneurial Activity): The proportion of adults starting/running a new business in an economy. This is equivalent to the sum of Nascent + New Business Owners.
EBO (Established Business Ownership): The percentage of adults running an established business.
EEA (Levels of Employee Entrepreneurial Activity): The involvement of workers in entrepreneurial projects, like developing new services/products.

The World of the Entrepreneur

Global Entrepreneurship Monitor (GEM) study reports:
Men are twice as likely to start a business as women.
Most entrepreneurs primarily seek capital from family and friends.
Entrepreneurs who launch businesses are mostly between the ages of 35 and 44.

What is Entrepreneurship?

Entrepreneurship is recognizing business opportunities to develop innovative solutions for problems or to introduce new products, services, or businesses to the market.
It involves taking calculated risks, organizing resources, and assuming the financial, managerial, and operational responsibilities required to start and grow a venture.

What is an Entrepreneur?

An entrepreneur is an individual who initiates and manages a business venture, taking on the risks and rewards.
Entrepreneurs are characterized by their ability to identify opportunities, innovate, and take action to bring their ideas to life.

Characteristics of Entrepreneurs

Desire for responsibility
Preference for moderate risk-taking.
Confidence in their ability to succeed.
Desire for feedback.
High energy levels.
Future orientation.
Skilled at organization.
A strong desire for achievement over money.
Exhibit a high level of commitment.
Tolerance for ambiguity.
Flexibility.
Willingness to work hard.
Tenacity.

Most Important Qualities of an Entrepreneur

Vision (61%)
Work ethic (45%)
Resilience (41%)
Positivity (35%)
Passion (34%)

Sources of Entrepreneurial Success

Prior industry/work experience (96%)
Lessons learned from previous successes (89%)
Company's management team (82%)
Lessons learned from previous failures (78%)
Good fortune (73%)
Professional/business networks (72%)
Personal/social networks (61%)

Entrepreneurship: Diversity

Anyone, regardless of age, race, gender, color, national origin, or any other characteristic, can become an entrepreneur.

Entrepreneurship: Benefits and Drawbacks

Benefits:*
Creating your own destiny
Making a difference
Reaching your full potential
Reaping impressive profits
Contributing to society.
Being recognized for your efforts
Doing what you enjoy and having fun.
Drawbacks:*
Uncertainty of income
Risk of losing your investment
Long hours and hard work
Lower quality of life until the business is established.
High levels of stress
Complete responsibility
Discouragement

Sources of Stress for Entrepreneurs

Losing the business (54%)
Repaying personal debt (52%)
Losing clients (51%)
Bringing in new business (49%)
Health and well-being (41%)
Being on call 24/7 (38%)
Repaying business debt (35%)

Feeding the Entrepreneurial Fire

Entrepreneurs as heroes.
Entrepreneurial education.
Demographic and economic factors.
Shift to a service economy.
Technological advancements.
Independent lifestyle.
E-commerce and Internet/cloud computing/mobile marketing.
International opportunities/micro-multinationals.

Global Entrepreneurial Activity by Age Group

Data shows fluctuating rates of entrepreneurial activity across different age groups.

U.S. Online Retail Sales

Data on U.S. online retail sales for various years (2012-2020).

The Cultural Diversity of Entrepreneurship

Young entrepreneurs
Women entrepreneurs
Minority-owned enterprises
Immigrant entrepreneurs
Part-time entrepreneurs

Other Entrepreneurial Groups

Home-based businesses
Family businesses
Copreneurs
Corporate castoffs
Corporate dropouts
Social entrepreneurs
Retiring baby boomers

Characteristics of Women-Owned Businesses

Data on the number of women-owned businesses, employees, and sales revenue for different periods.

The Cultural Diversity of Entrepreneurship: By Age Group

Average index of entrepreneurial activity across different age groups (1996-2016).

Small Businesses

Make up 99.7% of U.S. businesses.
Employ 48% of the nation's private sector workforce.
Create more jobs than large businesses.
Created 63% of net new jobs in the last decade.
5% of small companies create 67% of net new jobs.
A small business (Gazelle) employs fewer than 100 people and grows 20%+ per year with $100,000+ in sales.

The Power of "Small" Business

A breakdown of business sectors in the U.S., and their percentage of total small business ownership.

Putting Failure into Perspective

Entrepreneurs are not paralyzed by the prospect of failure.
Failure is a natural part of the creative process.
Successful entrepreneurs learn to fail intelligently.

Small Business Failure Rate

Data on the failure rate of small businesses over time.

10 Deadly Mistakes of Entrepreneurship

Management mistakes
Lack of experience
Poor financial control
Weak marketing efforts
Failure to develop a strategic plan
Uncontrolled growth
Poor location
Improper inventory control
Incorrect pricing
Inability to make the "entrepreneurial transition"

Avoiding the Pitfalls of Small Business Failure

Know your business in depth.
Build a viable business model and test it.
Develop a solid business plan.
Manage financial resources.
Understand financial statements.
Learn to manage people effectively.
Set your business apart from the competition.
Maintain a positive attitude.

Conclusion

Entrepreneurs are a vital part of the free enterprise system.
They represent a diverse and talented group of individuals.
They represent a cross-section of society.
Entrepreneurs can enhance profitability by seeking additional knowledge and experience.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge on the Global Entrepreneurship Monitor (GEM) indicators and the characteristics that define different types of entrepreneurs. This quiz covers key concepts like 'TEA', 'EEA', and demographic trends in entrepreneurship. Challenge yourself on what makes a successful entrepreneur!