Entrepreneurship and Small Business Management

Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning 1SLIDE

CHAPTER 6

6-16-1 Becoming an Entrepreneur

6-26-2 Small Business Basics

6-36-3 Starting a Small Business

Entrepreneurship and Small Business Management



Becoming an Becoming an EntrepreneurEntrepreneur

Goals Identify characteristics of successful

entrepreneurs.Recognize the importance of entrepreneurship

in the economy.Describe opportunities and risks of

entrepreneurship.

6-16-1


© 2009 South-Western, Cengage Learning

Chapter 6

3SLIDE

Key TermsKey Terms

entrepreneurentrepreneurshipventure capitalinnovationimprovement



Chapter 6

4SLIDE

CHARACTERISTICS OF CHARACTERISTICS OF ENTREPRENEURSENTREPRENEURS

Desire to be your own bossSpecial skills and abilities



Chapter 6

5SLIDE

ENTREPRENEURS ENTREPRENEURS IN ACTIONIN ACTION

Pankaj AroraRich Stachowski Jeffrey Rodriguez and John SerranoAbbey Fleck



Chapter 6

6SLIDE

WHAT DOES IT TAKE?WHAT DOES IT TAKE?

persistentinquisitiveenergeticgoal orientedindependent

self-confidentcreativereliablecompetitive

Entrepreneurs are moreEntrepreneurs are more



Chapter 6

7SLIDE

WHAT DOES IT TAKE?WHAT DOES IT TAKE?

problem-solving skillstolerance for ambiguitystrong integritypersonal initiativeability to secure resourcescapability to learn from failurewillingness to work hard

(continued)

Entrepreneurs haveEntrepreneurs have



Chapter 6

8SLIDE

Checkpoint >>Checkpoint >>

What personal characteristic are common to most successful entrepreneurs?

AnswerAny characteristics listed in Figure 6-1 are acceptable, such

as persistence, inquisitiveness, self-confidence, creativity, and so forth.



Chapter 6

9SLIDE

ENTREPRENEURSHIP ENTREPRENEURSHIP AND THE ECONOMYAND THE ECONOMY

EmploymentFinancingProductivity



Chapter 6

10SLIDE

Employment Growth by Business SizeEmployment Growth by Business Size

Source: U.S. Bureau of Labor Statistics



Chapter 6

11SLIDE

What are the sources of financing that entrepreneurs use for their new businesses?

Answerpersonal savings friends and familyventure capitalbank loans




Chapter 6

12SLIDE

OPPORTUNITIESOPPORTUNITIES

InnovationImprovement



Chapter 6

13SLIDE

RISKSRISKS

Lack of adequate capitalLow salesHigher than expected expensesCompetitive pressureAn owner unprepared to manage a growing

businessOperations requiring more time than the

owner is willing to commit

Recognizing risksRecognizing risks



Chapter 6

14SLIDE

Where do entrepreneurship opportunities begin?

AnswerOpportunities begin with innovations (ideas about new

products and services) or improvements (ideas for changes to existing products, services, or processes).




Small Business BasicsSmall Business Basics

Goals Identify important characteristics of small

businesses.Recognize the competitive advantages of

small businesses. Identify problems faced by many small

businesses.

6-26-2



Chapter 6

16SLIDE

Key TermsKey Terms

small businessSmall Business Administration (SBA)



Chapter 6

17SLIDE

SMALL BUSINESS SMALL BUSINESS OWNERSHIPOWNERSHIP

Description of a small businessOwner is usually the managerOperates in one or very few locationsTypically serves a small marketNot dominant in its field

Small business employmentOwnership diversity



Chapter 6

18SLIDE

COMMON TYPES OF COMMON TYPES OF SMALL BUSINESSESSMALL BUSINESSES

Source: Small Business Administration and U.S. Census Bureau

Common Common Types of Types of Small Small BusinessesBusinesses



Chapter 6

19SLIDE

What percentage of employees in the United States work for small businesses?

AnswerNearly 50 percent of the American workforce is employed by

small businesses. Small businesses are also responsible for 60–80 percent of all

new jobs.




Chapter 6

20SLIDE

SMALL BUSINESS SMALL BUSINESS ADVANTAGESADVANTAGES

Meeting customer needsProviding unique services



Chapter 6

21SLIDE

How can small businesses compete successfully with larger businesses?

AnswerSmaller businesses are able to provide more personalized

products and services to their customers. They are able to provide products and services where smaller

orders and projects are required and tend to fill unique customer needs, which larger companies do not provide.




Chapter 6

22SLIDE

COMMON REASONS FOR COMMON REASONS FOR SMALL BUSINESS FAILURESMALL BUSINESS FAILURE

Not keeping adequate recordsNot having enough start-up moneyLack of management experienceLack of experience with the type of businessNot controlling operating expensesPoor location for the businessFailure to manage credit offered to customers



Chapter 6

23SLIDE

SMALL BUSINESS SMALL BUSINESS ASSISTANCEASSISTANCE

Faculties of universities and collegesLocal groups of business peopleSmall Business Administration (SBA)



Chapter 6

24SLIDE

List common reasons for small business failure.

Answer not keeping adequate records insufficient start-up money lack of management experience lack of experience with the type of business not controlling operating expenses poor location failure to manage credit




Starting a Small BusinessStarting a Small Business

GoalsRecognize important factors to be considered

when starting a business.Describe the elements of a business plan. Identify types and sources of financing for a

small business.

6-36-3



Chapter 6

26SLIDE

Key TermsKey Terms

business planstart-up financingshort-term financinglong-term financing



Chapter 6

27SLIDE

THE BUSINESS DECISIONTHE BUSINESS DECISION

An idea plus experienceRight place and timeTeam approachPreparation and research



Chapter 6

28SLIDE

Why is it important to use a team approach when starting a new business?

AnswerA team approach allows employees to feel valued and

motivated to take personal responsibility for the benefit of the business.

Owners cannot expect to be able to do everything alone. Building a team will allow the business to increase productivity and, ultimately, profits.




Chapter 6

29SLIDE

WHAT IS A WHAT IS A BUSINESS PLAN?BUSINESS PLAN?

A business plan is a written description of the business idea and how it will be carried out, including all major business activities.



Chapter 6

30SLIDE

ELEMENTS OF A ELEMENTS OF A BUSINESS PLANBUSINESS PLAN

Description of the BusinessThe business ideaMajor products and servicesOwnership structureStrengths/weaknessesLong- and short-term goals



Chapter 6

31SLIDE


Description of CompetitionCharacteristics of the industryCondition of the economyStrengths and weaknesses of major

competitors

(continued)



Chapter 6

32SLIDE


Customer AnalysisDescription of customersLocation, number, and resources of

customersSales forecasts

(continued)



Chapter 6

33SLIDE


Operations PlanOrganization of the companyDescription of major operationsAnalysis of resources neededHuman resource plans

(continued)



Chapter 6

34SLIDE


Marketing PlanDescription of major marketing activitiesDescription of resources neededSchedule of marketing activities

(continued)



Chapter 6

35SLIDE


Financial PlansStart-up costsShort- and long-term financial needsSources of financingBudgets and financial statements

(continued)



Chapter 6

36SLIDE

STEPS IN DEVELOPING STEPS IN DEVELOPING THE BUSINESS PLANTHE BUSINESS PLAN

Gather and review informationDevelop the strategic alternativesWrite the plan Ask an expert to review the plan



Chapter 6

37SLIDE

What is the “strategic alternatives” in a business plan?

AnswerStrategic alternatives are alternative plans for production,

staffing, financing, and so on. Even the best business plan cannot predict every possible

circumstance. An alternate plan allows a business to be prepared for the

unforeseeable.




Chapter 6

38SLIDE

FINANCING FINANCING THE SMALL BUSINESSTHE SMALL BUSINESS

Types of financingStart-up financingShort-term financingLong-term financing

Sources of financingOwner-supplied fundsBorrowed funds



Chapter 6

39SLIDE


In addition to owner-supplied capital, what are several other sources of financing for a small business?

AnswerBorrowed money may come from banks, finance companies,

or other individuals, such as friends and family. Some suppliers may also be willing to extend credit.

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