HIGH-POTENTIAL VENTURES VERSUS ATTRACTIVE SMALL FIRMS AND MICRO BUSINESSES
Small businesses differ drastically in their growth potential. The few businesses that have phenomenal prospects for growth are called high-potential ventures, or gazelles. Even within this group, there is variation in styles of operation and approaches to growth. Some are high-tech start ups the kind that made Silicon Valley in California famous. These success stories often feature a technology wizard with a bright idea, backed by venture capitalists eager to finance the next Microsoft. When such companies prosper, they usually grow at blinding speed and make their founders and investors wealthy by being sold or by issuing shares of stock to public investors.
In contrast to such high-potential ventures, attractive small firms offer substantial financial rewards for their owners. Income from these entrepreneurial ventures may eas¬ily be in the millions or even tens of millions. They represent a major segment of small businesses—solid, healthy firms that can provide rewarding careers. Many of these are owned by women, who are starting new businesses at twice the rate of men. And an increasing number of them are starting firms in previously male-dominated industries— some of the fastest-growing companies in construction, manufacturing, and computer services are now owned by women.
Despite their progress in the business arena, women-owned companies are significantly smaller than men-owned firms. One reason for this, suggested by Sharon Hadary, the former director and founder of the Center for Women’s Business Research, is that women have lower expectations for their businesses than do men. In her opinion,
Men tend to start businesses to be the “boss,” and their aim is for their businesses to grow as big as possible. Women start businesses to be personally challenged and to inte¬grate work and family and they want to stay at a size where they personally can oversee all aspects of the business.26
The least profitable types of businesses—including many service companies, such as dry cleaners, beauty shops, and appliance repair shops—provide modest returns to their owners. These are called micro businesses, and their distinguishing feature is their limited ability to generate significant profits. Entrepreneurs who devote personal effort to such ventures receive a profit that does little more than compensate them for their time. Many companies of this type are also called lifestyle businesses because they permit an owner to follow a desired lifestyle, even though they provide only modest financial returns. They employ fewer than 10 employees and make up the largest sector of the U.S. economy. Such enterprises usually do not attract investors and are financed through micro financing, where loans as small as twenty-five cents will help fund a small business in some part of the world. Micro businesses are seen not only in developing countries in Asia, South America, and Africa, but also in the United States.
ARTISAN VERSUS OPPORTUNISTIC ENTREPRENEURS
Because of their varied backgrounds, entrepreneurs display differences in the degrees of professionalism and the styles of management they bring to their businesses. The ways in which they analyze problems and approach decision making may differ radically.
In this regard, there are two basic types of entrepreneurs: artisan (or craftsman) entrepreneurs and opportunistic entrepreneurs. Artisan entrepreneurs normally have technical job experience, but may lack good communication skills and managerial training
HIGH-POTENTIAL VENTURES VERSUS ATTRACTIVE SMALL FIRMS AND MICRO BUSINESSES
Small businesses differ drastically in their growth potential. The few businesses that have phenomenal prospects for growth are called high-potential ventures, or gazelles. Even within this group, there is variation in styles of operation and approaches to growth. Some are high-tech start ups the kind that made Silicon Valley in California famous. These success stories often feature a technology wizard with a bright idea, backed by venture capitalists eager to finance the next Microsoft. When such companies prosper, they usually grow at blinding speed and make their founders and investors wealthy by being sold or by issuing shares of stock to public investors.
In contrast to such high-potential ventures, attractive small firms offer substantial financial rewards for their owners. Income from these entrepreneurial ventures may eas¬ily be in the millions or even tens of millions. They represent a major segment of small businesses—solid, healthy firms that can provide rewarding careers. Many of these are owned by women, who are starting new businesses at twice the rate of men. And an increasing number of them are starting firms in previously male-dominated industries— some of the fastest-growing companies in construction, manufacturing, and computer services are now owned by women.
Despite their progress in the business arena, women-owned companies are significantly smaller than men-owned firms. One reason for this, suggested by Sharon Hadary, the former director and founder of the Center for Women’s Business Research, is that women have lower expectations for their businesses than do men. In her opinion,
Men tend to start businesses to be the “boss,” and their aim is for their businesses to grow as big as possible. Women start businesses to be personally challenged and to inte¬grate work and family and they want to stay at a size where they personally can oversee all aspects of the business.26
The least profitable types of businesses—including many service companies, such as dry cleaners, beauty shops, and appliance repair shops—provide modest returns to their owners. These are called micro businesses, and their distinguishing feature is their limited ability to generate significant profits. Entrepreneurs who devote personal effort to such ventures receive a profit that does little more than compensate them for their time. Many companies of this type are also called lifestyle businesses because they permit an owner to follow a desired lifestyle, even though they provide only modest financial returns. They employ fewer than 10 employees and make up the largest sector of the U.S. economy. Such enterprises usually do not attract investors and are financed through micro financing, where loans as small as twenty-five cents will help fund a small business in some part of the world. Micro businesses are seen not only in developing countries in Asia, South America, and Africa, but also in the United States.
ARTISAN VERSUS OPPORTUNISTIC ENTREPRENEURS
Because of their varied backgrounds, entrepreneurs display differences in the degrees of professionalism and the styles of management they bring to their businesses. The ways in which they analyze problems and approach decision making may differ radically.
In this regard, there are two basic types of entrepreneurs: artisan (or craftsman) entrepreneurs and opportunistic entrepreneurs. Artisan entrepreneurs normally have technical job experience, but may lack good communication skills and managerial training
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