Unit 1

Introduction to Small Business Operations

• DECA’s House of Grounds is a School Based Enterprise (SBE).

• This specialty coffee shop opened for business in January 2009.

The School Based Enterprise (SBE)

Frameworks 1.2

What is a School Based Enterprise?

“School-based enterprises are effective educational tools in helping to prepare students for the transition from school to work or college. For many students, they provide the first work experience; for

others, they provide an opportunity to build management, supervision and leadership

skills.”

Frameworks 1.2Source: www.schoolbasedenterprises.org

DECA

• DECA is a word that means An Association of Marketing Students.

• DECA’s mission is to prepare students for careers in marketing, management, and entrepreneurship.

• DECA is a co-curricular student organization.• Co-curricular means that DECA activities are

directly related to classroom instruction.

Frameworks 1.3Source: www.deca.org

DECA

• There are over 185,000 high school DECA students in 5,000 chapters, located in the U.S., Canada, Germany, Mexico, Puerto Rico and Guam.

• DECA helps students to develop skills for successful business careers, build self–esteem, experience leadership and practice community service.

Frameworks 1.3Source: www.deca.org

The Entrepreneur

An entrepreneur is someone who takes the risk to start a new business.

Entrepreneurship is the process of planning, creating, and managing a new business.

Fred Smith, founder of FedEx, wrote a business plan as a student at Yale University outlining his business idea for transporting packages overnight throughout the United States. Frameworks 1.4Source: Marketing, 3e, page 587

Benefits of an Entrepreneurial Career

Entrepreneurs often start their businesses while working for another company, this allows them to add to their income while still employed with another company.

Personal satisfaction from developing an idea into a business, providing jobs for people in the community, completing work that is interesting, and being able to control the profits of the company.

Frameworks 1.4Source: Marketing, 3e, page 587

Entrepreneurs Develop Small Businesses

Over 600,000 small businesses (with 20 or fewer employees) are started each year.

Over 10% of the working population of the US is self-employed.

Small businesses make up 97% of all businesses. Small businesses employ 52% of all non-government

workers and 38% of workers in high-tech occupations.

Small businesses are responsible for over half of all goods and services produced.

Over 95% of all companies involved in exporting are small businesses.

Frameworks 1.4Source: Marketing, 3e, page 590 – Figure 21-1

Characteristics of Entrepreneurs

Focused and goal oriented.Risk-taking – a willingness to risk the

chance of failure in order to be successful.Driven to achieve. Independent minded.Self-confident – believe in themselves and

their abilities and expect to be successful.Creativity – the ability to use imaginative

skills to find unique ways to solve problems.

Frameworks 1.6Source: Marketing, 3e, page 593

Forms of Business Ownership

Proprietorship – a business owned and managed by one person. A proprietor is a person who has sole ownership of a business.

Partnership – a business that is owned and operated by two or more people who share in the decision making and profitability of the company. A partnership agreement is a legal document that specifies the responsibilities and financial relationships of the partners.

Corporation – a business owned by people who purchase stock in the company. Corporations are granted a charter by the state in which they are formed.

Frameworks 1.7Source: Marketing, 3e, page 603

Corporation

A charter is a legal document allowing the corporation to operate as if it were a person.

Source: Marketing, 3e, pages 605-606

Proprietorship: Advantages

The proprietorship is the most common form of small business ownership.

The owner is the boss and makes all decisions.

The proprietor receives all profits from the operation of the business.

This is the most flexible form of ownership.This is the easiest form of ownership to

create.

Frameworks 1.7.1Source: Marketing, 3e, page 604

Proprietorship: Disadvantages

The proprietor may not have all the skills needed to run the business.

Most new businesses require a lot of money to start, this could be more than one owner can provide.

The risk can be great and must be carried by the proprietor, includes personal liability.

The business will not be able to continue if the owner becomes ill or dies.

Frameworks 1.7.1Source: Marketing, 3e, page 604

Proprietorship

Little Bell Wedding Chapel

Proprietorship

The Queen Anne House Bed & Breakfast

Proprietorship

                           

Shelby's, a family owned and operated business, is a 25-year tradition in the Ozark area. Pictured left to right: Shirley, Heidi, Erin, Shelby (owner), Susan, Ada and Genie.

Partnership: Advantages

Partners are able to combine their knowledge, skills, and abilities.

Partners usually will have greater financial resources to bring to the business.

If one partner decides to leave the business, the business does not have to close.

Frameworks 1.7.1Source: Marketing, 3e, page 605

Partnership: Disadvantages

Disagreements on important decisions can occur among partners.

All partners are responsible for any actions and decisions made by another partner.

Profits, as well as losses, are shared by the partners.

Frameworks 1.7.1Source: Marketing, 3e, page 605

Partnerships

                           

The Ol' Rockhouse Restaurant on South Pine Street is owned by Tracy and Dan Orr.

State DECA Competition 1996

Tracy Orr was a State Winner in Restaurant Management

Partnerships

                                                                                                                                                                                                                       

Neighbor's Mill Bakery & Café is owned by Mike and

Karin Nabors. The business specializes in handcrafted, all-natural breads, grilled and cold

sandwiches, soups, salads, pizzas, desserts and espresso coffees.

Corporation: Advantages

Offers the owners limited liability.The business can exist indefinitely, beyond

the life of the owners.Ownership is easy to transfer by the selling

of stock.

Frameworks 1.7.1Source: Marketing, 3e, page 606

Corporation: Disadvantages

Corporations face more government rules and regulations than other forms of business ownership.

Stockholders tend to be focused only profits. Individuals tend to avoid responsibility for the

actions of the corporation.Corporations are usually taxed at a higher

rate than other forms of ownership.

Frameworks 1.7.1Source: Marketing, 3e, page 606

Corporation

                           

The world’s largest retailer and private employer.

Corporation

FedEx Express was founded in 1971 by Fred Smith. The corporation was created in 1998 as FDX Corp. and became FedEx Corp. in January 2000. The company handles more than 6 million shipments daily. FedEx has more than 250,000 employees.

Corporation

Pace Industries, Inc., is a 635,000 square foot facility located in Harrison, Arkansas that specializes in commercial and consumer castings.

Developing a Business Plan

A business plan is a written document prepared to guide the development and operation of a new business.– The sections of a business plan usually include:

• An executive summary – which provides an overview of the business concept and the important points covered in the business plan.

• Description of the proposed business, product/service, community, potential target market, organizational structure, and owners.

• Description of the proposed marketing activities.• Description of the proposed financial plans.

Frameworks 1.8Source: Marketing, 3e, page 609

End of Unit 1

Visit the website www.quizlet.com to review the terms associated with this unit of instruction. If you have not already done so, create an account with

Quizlet.com. Use your first and last name (without a space) as your

login. Use your first name (or anything you can remember!) as

your password. Using the Quizlet.com search feature, search for

cdorman and find Mr. Dorman’s dashboard. Open the Subjects folder “Small Business Operations.” Study the flashcards. Use the test feature and use the scatter feature.