Entrepreneurship and Small Business ManagementEntrepreneurship and
Recognize the importance of entrepreneurship in the economy.
Describe opportunities and risks of entrepreneurship.
6-1
Special skills and abilities
Abbey Fleck
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willingness to work hard
Answer
Any characteristics listed in Figure 6-1 are acceptable, such as persistence, inquisitiveness, self-confidence, creativity, and so forth.
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Source: U.S. Bureau of Labor Statistics
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What are the sources of financing that entrepreneurs use for their new businesses?
Answer
An owner unprepared to manage a growing business
Operations requiring more time than the owner is willing to commit
Recognizing risks
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Answer
Opportunities begin with innovations (ideas about new products and services) or improvements (ideas for changes to existing products, services, or processes).
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Recognize the competitive advantages of small businesses.
Identify problems faced by many small businesses.
6-2
Operates in one or very few locations
Typically serves a small market
Not dominant in its field
Small business employment
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What percentage of employees in the United States work for small businesses?
Answer
Nearly 50 percent of the American workforce is employed by small businesses.
Small businesses are also responsible for 60–80 percent of all new jobs.
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Answer
Smaller 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.
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Not keeping adequate records
Lack of management experience
Not controlling operating expenses
Failure to manage credit offered to customers
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Small Business Administration (SBA)
Answer
not controlling operating expenses
Recognize 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.
6-3
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Why is it important to use a team approach when starting a new business?
Answer
A 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.
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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.
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(continued)
Sales forecasts
Description of resources needed
Schedule of marketing activities
Sources of financing
Gather and review information
Develop the strategic alternatives
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Answer
Even the best business plan cannot predict every possible circumstance.
An alternate plan allows a business to be prepared for the unforeseeable.
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In addition to owner-supplied capital, what are several other sources of financing for a small business?
Answer
Borrowed 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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