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Exploring Business © 2009 FlatWorld Knowledge
5-1The Challenges of Starting a The Challenges of Starting a BusinessBusiness
Exploring Business © 2009 FlatWorld Knowledge
5-2
Chapter ObjectivesChapter Objectives1.1. What Is An Entrepreneur?What Is An Entrepreneur?2.2. Importance Of Small Business To The U.S. EconomyImportance Of Small Business To The U.S. Economy3.3. What Industries Are Small Businesses in?What Industries Are Small Businesses in?4.4. Should You Start a Business?Should You Start a Business?5.5. Starting A BusinessStarting A Business6.6. The Business PlanThe Business Plan7.7. How To Succeed In Managing A BusinessHow To Succeed In Managing A Business
Exploring Business © 2009 FlatWorld Knowledge
5-3
EntrepreneurEntrepreneur
• “…“…someone who identifies a someone who identifies a business opportunity and business opportunity and
assumes the risk of creating and assumes the risk of creating and running a business to take running a business to take
advantage of it.”advantage of it.”
Exploring Business © 2009 FlatWorld Knowledge
5-4Why Be An Why Be An Entrepreneur?Entrepreneur?
Be Own BossBe Own BossFinancial IndependenceFinancial IndependenceCreative FreedomCreative FreedomUse Own Skills & KnowledgeUse Own Skills & Knowledge
Exploring Business © 2009 FlatWorld Knowledge
5-5
Entrepreneurs Vs. OwnersEntrepreneurs Vs. Owners
EntrepreneursEntrepreneursInnovatorsInnovators
New/Improved ProductsNew/Improved ProductsGrow & ExpandGrow & Expand
OwnersOwnersProvide IncomeProvide IncomeNot InnovativeNot Innovative
No Plan For ExpansionNo Plan For Expansion
Exploring Business © 2009 FlatWorld Knowledge
5-6Small BusinessSmall Business•SBA ClassificationSBA Classification
Independent OwnershipIndependent Ownership Little Influence In IndustryLittle Influence In Industry Less Than 500 EmployeesLess Than 500 Employees
Economic ImpactEconomic Impact 20M+ Businesses20M+ Businesses 50% Of GDP50% Of GDP
Exploring Business © 2009 FlatWorld Knowledge
5-7
Small Business ImportanceSmall Business Importance
Job CreationJob Creation InnovativeInnovative Opportunities For Women Opportunities For Women
& Minorities& Minorities Helps Big BusinessHelps Big Business
Exploring Business © 2009 FlatWorld Knowledge
5-8Net New JobsNet New JobsBy Firm SizeBy Firm Size
Exploring Business © 2009 FlatWorld Knowledge
5-9Women & MinorityWomen & MinorityOwned BusinessOwned Business
Exploring Business © 2009 FlatWorld Knowledge
5-10Small Business Small Business IndustriesIndustries
•80% = Intangible Services80% = Intangible Services
–Retailing = 25%Retailing = 25%
–Wholesaling = 10%Wholesaling = 10%
–Professional/Business Services = Professional/Business Services = 35%35%
•20% = Tangible Goods20% = Tangible Goods
Exploring Business © 2009 FlatWorld Knowledge
5-11
Small Business By IndustrySmall Business By Industry
Exploring Business © 2009 FlatWorld Knowledge
5-12
Small Business OwnershipSmall Business Ownership
•AdvantagesAdvantagesIndependenceIndependenceFinancial RewardsFinancial RewardsLifestyleLifestyleLearning Opps.Learning Opps.Creative Freedom & Creative Freedom & Personal SatisfactionPersonal Satisfaction
DisadvantagesDisadvantagesFinancial RiskFinancial RiskStressStressTime CommitmentTime CommitmentUndesirable DutiesUndesirable Duties
Exploring Business © 2009 FlatWorld Knowledge
5-13Entrepreneur’s Work Entrepreneur’s Work WeekWeek
Exploring Business © 2009 FlatWorld Knowledge
5-14Business PlanBusiness Plan
• “…“…a document that identifies the a document that identifies the goals of your proposed company goals of your proposed company
and explains how they will be and explains how they will be achieved...”achieved...”
Exploring Business © 2009 FlatWorld Knowledge
5-15Blueprint for Blueprint for CompanyCompany
•How Business Will be BuiltHow Business Will be Built•How Intend To Make It SturdyHow Intend To Make It Sturdy•Get FinancingGet Financing
Exploring Business © 2009 FlatWorld Knowledge
5-16Sources For Business Sources For Business IdeaIdea
IndustryIndustry
ExperienceExperience
HobbiesHobbies
Exploring Business © 2009 FlatWorld Knowledge
5-17Ownership Ownership OptionsOptions
Start From ScratchStart From Scratch
Buy ExistingBuy Existing
Buy A FranchiseBuy A Franchise
Exploring Business © 2009 FlatWorld Knowledge
5-18Growth Of Growth Of FranchisingFranchising
Exploring Business © 2009 FlatWorld Knowledge
5-19 FranchiseFranchiseAdvantagesAdvantages
Recognized Recognized
Name/ProductName/Product
Help In Start-upHelp In Start-up
AdvertisingAdvertising
Ongoing SupportOngoing Support
DisadvantagesDisadvantagesExpensiveExpensive
• Franchise FeeFranchise Fee• Royalty FeeRoyalty Fee
Franchiser’s RulesFranchiser’s RulesFranchiser May Not Franchiser May Not Follow ThroughFollow Through
Exploring Business © 2009 FlatWorld Knowledge
5-20
Benefits Of Business PlanBenefits Of Business Plan
Forces You To Think Forces You To Think CriticallyCritically
Reduces RiskReduces RiskAnalyze Analyze
Concept/IndustryConcept/Industry
Exploring Business © 2009 FlatWorld Knowledge
5-21
Audiences of PlanAudiences of Plan InvestorsInvestors
•Quality of ConceptQuality of Concept
•Ability to ManageAbility to Manage
Bankers- Ability To Bankers- Ability To Repay LoanRepay Loan
Exploring Business © 2009 FlatWorld Knowledge
5-22Business Plan:Business Plan:1)1) Executive SummaryExecutive Summary2)2) Description of BusinessDescription of Business3)3) Industry AnalysisIndustry Analysis4)4) Mission Statement/Core ValuesMission Statement/Core Values5)5) Management PlanManagement Plan6)6) Goods/ServicesGoods/Services7)7) Development & ProductionDevelopment & Production8)8) MarketingMarketing9)9) Global IssuesGlobal Issues10)10) Financial PlanFinancial Plan11)11) AppendicesAppendices
Exploring Business © 2009 FlatWorld Knowledge
5-23Executive Executive SummarySummary
1-3 Page Overview1-3 Page Overview
Most Important PartMost Important Part
Written After Plan CompletedWritten After Plan Completed
Exploring Business © 2009 FlatWorld Knowledge
5-24
Description Of BusinessDescription Of Business
What Will Do?What Will Do? Goods/Services Provided?Goods/Services Provided? Unique?Unique? Customers?Customers? How Sold?How Sold? Location?Location?
Exploring Business © 2009 FlatWorld Knowledge
5-25Industry Industry AnalysisAnalysis
Players?Players?Outlook?Outlook?Total Projected Sales?Total Projected Sales?Factors of Expansion/Contraction?Factors of Expansion/Contraction?Future Economic Conditions?Future Economic Conditions?
Exploring Business © 2009 FlatWorld Knowledge
5-26Mission Statement & Core Mission Statement & Core ValuesValues
Mission Statement- Purpose or Mission Statement- Purpose or mission of companymission of company
Core Values- Fundamental Core Values- Fundamental beliefs...what is/is not beliefs...what is/is not appropriate in business activities, appropriate in business activities, idealsideals
Exploring Business © 2009 FlatWorld Knowledge
5-27
Management PlanManagement PlanoMember QualificationsMember Qualifications
•EducationEducation•ExperienceExperience•ExpertiseExpertise
oLegal FormLegal Form•Sole ProprietorshipSole Proprietorship•PartnershipPartnership•CorporationCorporation
Exploring Business © 2009 FlatWorld Knowledge
5-28
Goods & ServicesGoods & Services
DescriptionDescription
Better Than CompetitorsBetter Than Competitors
Market NeedsMarket Needs
Competitive AdvantageCompetitive Advantage
Exploring Business © 2009 FlatWorld Knowledge
5-29Development & Development & ProductionProduction
Product DesignProduct DesignTechnologyTechnologyOwn Or Contract For FacilitiesOwn Or Contract For FacilitiesWhere?Where?EquipmentEquipmentDesign/Layout Of FacilitiesDesign/Layout Of FacilitiesNumber of EmployeesNumber of EmployeesUnits ProducedUnits ProducedEnsure High Quality?Ensure High Quality?
Exploring Business © 2009 FlatWorld Knowledge
5-30MarketingMarketing Target MarketTarget Market
PricingPricing
DistributionDistribution
PromotionPromotion
Exploring Business © 2009 FlatWorld Knowledge
5-31Global IssuesGlobal Issues Buying/Selling In Other CountriesBuying/Selling In Other Countries
Identify Cross Border ChallengesIdentify Cross Border Challenges
How Overcome ChallengesHow Overcome Challenges
Strategies For FutureStrategies For Future
Exploring Business © 2009 FlatWorld Knowledge
5-32Financial PlanFinancial Plan Cash NeedsCash Needs
• Start-upStart-up• OperationsOperations• Funding SourcesFunding Sources
Repay DebtRepay Debt ProjectionsProjections
• Expected SalesExpected Sales• CostsCosts• Profits (Losses)Profits (Losses)
Exploring Business © 2009 FlatWorld Knowledge
5-33AppendicesAppendicesResumesResumesFinancial StatementsFinancial Statements
Exploring Business © 2009 FlatWorld Knowledge
5-34Succeeding In Succeeding In BusinessBusiness Know BusinessKnow Business
Know ManagementKnow Management Proper AttitudeProper Attitude Get Adequate FundingGet Adequate Funding Manage MoneyManage Money Manage TimeManage Time Know PeopleKnow People Satisfy CustomerSatisfy Customer Know How To CompeteKnow How To Compete
Exploring Business © 2009 FlatWorld Knowledge
5-35SBA AssistanceSBA AssistanceAssistance In:Assistance In:
– Business PlanBusiness Plan– StartingStarting– FinancingFinancing– ManagingManaging
FinancingFinancingManagement/Technical Management/Technical
Services/TrainingServices/Training
Exploring Business © 2009 FlatWorld Knowledge
5-36SBA Loan SBA Loan GuaranteesGuarantees
Exploring Business © 2009 FlatWorld Knowledge
5-37SBA ProgramsSBA ProgramsSBDCs Assist withSBDCs Assist with
Business ProblemsBusiness Problems
Free Training & Technical Info.Free Training & Technical Info.
Service Corps of Retired Service Corps of Retired ExecutivesExecutives
Exploring Business © 2009 FlatWorld Knowledge
5-38Why Businesses Why Businesses FailFail
Bad Business IdeaBad Business IdeaCash ProblemsCash ProblemsInexperience or IncompetenceInexperience or IncompetenceLack Of Customer FocusLack Of Customer FocusInability To Handle GrowthInability To Handle Growth