entrepreneurship and small business management
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Introduction to Business© Thomson South-Western
ChapterChapterChapterChapter
Entrepreneurship and Small Business Management
66
Introduction to Business© Thomson South-Western
Chapter 6
Slide 2
CHARACTERISTICS OF ENTREPRENEURS
Entrepreneur One who takes a risk in starting a business
to earn a profit Desire to be your own boss Special skills and abilities
Introduction to Business© Thomson South-Western
Chapter 6
Slide 3
ENTREPRENEURS IN ACTION
Barbers – Cabin Coffee Creative Graphics Schroeder Plumbing
Introduction to Business© Thomson South-Western
Chapter 6
Slide 4
WHAT DOES IT TAKE?
Entrepreneurs are more persistent inquisitive energetic goal oriented independent
self-confident creative reliable competitive
Introduction to Business© Thomson South-Western
Chapter 6
Slide 5
WHAT DOES IT TAKE?Entrepreneurs have problem-solving skills tolerance for ambiguity strong integrity personal initiative ability to secure resources capability to learn from failure willingness to work hard
(continued)
Introduction to Business© Thomson South-Western
Chapter 6
Slide 6
ENTREPRENEURSHIP AND THE ECONOMY
Employment 1/10 involved in some type of entrepreneurship 60% of these have hired employees
Financing Comes from entrepreneurship 50% also get help from family May use Venture Capital
Money provided by large investors
Introduction to Business© Thomson South-Western
Chapter 6
Slide 7
ENTREPRENEURSHIP AND THE ECONOMY
Productivity Account for over $600 billion in sales Responsible for nearly half of GDP
Introduction to Business© Thomson South-Western
Chapter 6
Slide 8
NUMBER OF EMPLOYEESIN NEW BUSINESSES
Introduction to Business© Thomson South-Western
Chapter 6
Slide 9
OPPORTUNITIES
Innovation Invention or creation that is brand new
(IPOD, IPAD)
Improvement Design change that increase the
usefulness of a product
(Post its – to wall hooks)
Introduction to Business© Thomson South-Western
Chapter 6
Slide 10
RISKS
Recognizing risks Lack of adequate capital Low sales Higher than expected expenses Competitive pressure An owner unprepared to manage a growing
business Operations requiring more time than the owner is
willing to commit
Introduction to Business© Thomson South-Western
Chapter 6
Slide 11
SMALL BUSINESS OWNERSHIP Description of a small business
Owner is usually the manager Operates in one or very few locations Typically serves a small market Not dominant in its field
Small business employment Employees nearly 50 of all workers
Introduction to Business© Thomson South-Western
Chapter 6
Slide 12
SMALL BUSINESS OWNERSHIP Ownership diversity
Women own over ¼ of all small business 16% owned by Ethnic backgrounds Most over 40 years old High School diploma, 30% have college degree Half are operated out of their homes.
Introduction to Business© Thomson South-Western
Chapter 6
Slide 13
COMMON TYPES OF SMALL BUSINESSES
Introduction to Business© Thomson South-Western
Chapter 6
Slide 14
SMALL BUSINESS ADVANTAGES Meeting customer needs
Serve those with specific needs
Providing unique services Plan a wedding, design a sound system
Introduction to Business© Thomson South-Western
Chapter 6
Slide 15
COMMON REASONS FOR SMALL BUSINESS FAILURE Not keeping adequate records Not having enough start-up money Lack of management experience Lack of experience with the type of business Not controlling operating expenses Poor location for the business Failure to manage credit offered to customers
Introduction to Business© Thomson South-Western
Chapter 6
Slide 16
SMALL BUSINESS ASSISTANCE Faculties of universities and colleges Local groups of business people Small Business Administration (SBA)
Introduction to Business© Thomson South-Western
Chapter 6
Slide 17
THE BUSINESS DECISION
An idea plus experience Right place and time Team approach Preparation and research
Introduction to Business© Thomson South-Western
Chapter 6
Slide 18
WHAT IS A 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.
Introduction to Business© Thomson South-Western
Chapter 6
Slide 19
ELEMENTS OF A BUSINESS PLAN1. Description of the Business
a) The business idea
b) Major products and services
c) Ownership structure
d) Strengths/weaknesses
e) Long- and short-term goals
Introduction to Business© Thomson South-Western
Chapter 6
Slide 20
ELEMENTS OF A BUSINESS PLAN2. Description of Competition
a) Characteristics of the industry
b) Condition of the economy
c) Strengths and weaknesses of major competitors
(continued)
Introduction to Business© Thomson South-Western
Chapter 6
Slide 21
ELEMENTS OF A BUSINESS PLAN3. Customer Analysis
a) Description of customers
b) Location, number, and resources of customers
c) Sales forecasts
(continued)
Introduction to Business© Thomson South-Western
Chapter 6
Slide 22
ELEMENTS OF A BUSINESS PLAN4. Operations Plan
a) Organization of the company
b) Description of major operations
c) Analysis of resources needed
d) Human resource plans
(continued)
Introduction to Business© Thomson South-Western
Chapter 6
Slide 23
ELEMENTS OF A BUSINESS PLAN5. Marketing Plan
a) Description of major marketing activities
b) Description of resources needed
c) Schedule of marketing activities
(continued)
Introduction to Business© Thomson South-Western
Chapter 6
Slide 24
ELEMENTS OF A BUSINESS PLAN6. Financial Plans
a) Start-up costs
b) Short- and long-term financial needs
c) Sources of financing
d) Budgets and financial statements
(continued)
Introduction to Business© Thomson South-Western
Chapter 6
Slide 25
STEPS IN DEVELOPING THE BUSINESS PLAN Gather and review information Develop the “game plan” Write the plan Ask an expert to review the plan
Introduction to Business© Thomson South-Western
Chapter 6
Slide 26
FINANCING THE SMALL BUSINESS
1. Types of financinga) Start-up financing - $ to start
b) Short-term financing - $ for current operations
c) Long-term financing - $ for capital resources
2. Sources of financinga) Owner-supplied funds
b) Borrowed fundsBanks – Family – Angel Investors
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