Fundamentals of Management, 8th ed

entrepreneurship

The process of

planning, organizing,

operating, and

assuming the risks of

a business venture

entrepreneur

Someone who

engages in

entrepreneurship

small business

A business that is

privately owned by

one individual or a

small group of

individuals and has

sales and assets that

are not large enough

to meaningfully

influence its

environment

Chapter 5: Entrepreneurship and New Venture Management

1 2 9

Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

---

For example, when Microsoft Corporation first sold its stock to the public in 1986,

Bill Gates, then just 30 years old, received $350 million for his share of Microsoft.

3

Today his holdings—valued at over $53 billion—make him the richest person in

the United States and one of the richest in the world.

4

Many more entrepreneurs,

however, have lost a great deal of money. Research suggests that the majority

of new businesses fail within the first few years of founding.

5

Many that last longer

do so only because the entrepreneurs themselves work long hours for very little

income.

As Figure 5.1 shows, most U.S. businesses employ fewer than 100 people, and

most U.S. workers are employed by small firms. For example, Figure 5.1(a) shows

that approximately 86 percent of all U.S. businesses employ fewer than 20 people; another

11.7 percent employ between 20 and 99 people. In contrast, only about 2.1 percent employ

between 100 and 499 workers, and another 0.2 percent employ 500 or more. Figure 5.1(b)

shows that 24.5 percent of all U.S. workers are employed by firms with fewer than 20

people; another 29.6 percent work in firms that employ between 20 and 99 people. The

vast majority of these companies are owner-operated.

6

Figure 5.1(b) also shows that

80

40

20

60

90

50

30

10

70

100

0

80

40

20

60

90

50

30

10

70

100

0