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© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 1 6-1 6-1Becoming an Entrepreneur 6-2 6-2Small Business.

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Presentation on theme: "© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 1 6-1 6-1Becoming an Entrepreneur 6-2 6-2Small Business."— Presentation transcript:

1 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE Becoming an Entrepreneur Small Business Basics Starting a Small Business 6 C H A P T E R Entrepreneurship and Small Business Management

2 © 2012 Cengage Learning. All Rights Reserved. SLIDE 2 6-1Becoming an Entrepreneur Goal 1Identify characteristics of successful entrepreneurs. Goal 2Recognize the importance of entrepreneurship in the economy. Goal 3Describe opportunities and risks of entrepreneurship.

3 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 3 KEY TERMS ●entrepreneur ●entrepreneurship ●venture capital ●innovation ●improvement

4 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 4 CHARACTERISTICS OF ENTREPRENEURS ●Desire to be your own boss ●Special skills and abilities

5 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 5 ENTREPRENEURS IN ACTION ●Joshua Moore ●Ben Cathers ●Rich Stachowski ●Abbey Fleck

6 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 6 WHAT DOES IT TAKE? ●Not all business owners and managers are entrepreneurs. ●Entrepreneurs have unique skills and personal characteristics.

7 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 7 ENTREPRENEURS ARE MORE ●Persistent ●Inquisitive ●Energetic ●Goal-oriented ●Independent ●Self-confident ●Creative ●Reliable ●Competitive

8 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 8 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

9 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 9 Checkpoint ●What personal characteristic are common to most successful entrepreneurs? ●Any characteristics listed in Figure 6-1 are acceptable, such as persistence, inquisitiveness, self-confidence, creativity, and so forth.

10 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 10 ENTREPRENEURSHIP AND THE ECONOMY ●Employment ●Financing ●Productivity

11 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 11 Employment Growth by Business Size, 1990–2005

12 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 12 Checkpoint ●What are the sources of financing that entrepreneurs use for their new businesses? ●Personal savings ●Friends and family ●Venture capital ●Bank loans

13 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 13 OPPORTUNITIES AND RISKS ●Before deciding to start a business, you need to think about the opportunities and risks.

14 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 14 NEW BUSINESS OPPORTUNITIES ●Innovation ●Improvement

15 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 15 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

16 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 16 Checkpoint ●Where do entrepreneurship opportunities begin? ●Opportunities begin with innovations (ideas about new products and services) or improvements (ideas for changes to existing products, services, or processes).

17 © 2012 Cengage Learning. All Rights Reserved. SLIDE Small Business Basics Goal 1Identify important characteristics of small businesses. Goal 2Recognize the competitive advantages of small businesses. Goal 3Identify problems faced by many small businesses.

18 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 18 KEY TERMS ●small business ●Small Business Administration (SBA)

19 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 19 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 ●Ownership diversity

20 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 20 Common Types of Small Businesses as Percent of All Small Businesses

21 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 21 Checkpoint ●Beyond the formal definition of a small business, what four points can be used to describe a small business? ●Owner is usually the manager ●Business operates in one or very few locations ●Business typically serves a small market ●Business is not dominant in its field

22 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 22 SMALL BUSINESS ADVANTAGES ●Meeting customer needs ●Providing unique services

23 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 23 Checkpoint ●How can small businesses compete successfully with larger businesses? ●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.

24 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 24 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

25 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 25 SMALL BUSINESS ASSISTANCE ●University and college faculty members ●Local groups of business people ●Small Business Administration (SBA)

26 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 26 Checkpoint ●List common reasons for small business failure. ●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

27 © 2012 Cengage Learning. All Rights Reserved. SLIDE Starting a Small Business Goal 1Recognize important factors to be considered when starting a business. Goal 2Describe the elements of a business plan. Goal 3Identify types and sources of financing for a small business.

28 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 28 KEY TERMS ●business plan ●start-up financing ●short-term financing ●long-term financing

29 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 29 THE BUSINESS DECISION ●An idea plus experience ●Right place and time ●Team approach ●Preparation and research

30 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 30 Checkpoint ●Why is it important to use a team approach when starting a new business? ●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.

31 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 31 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.

32 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 32 ELEMENTS OF A BUSINESS PLAN ●Description of the Business ●The business idea ●Major products and services ●Ownership structure ●Strengths/weaknesses ●Long- and short-term goals

33 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 33 ELEMENTS OF A BUSINESS PLAN ●Description of Competition ●Characteristics of the industry ●Condition of the economy ●Strengths and weaknesses of major competitors (continued)

34 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 34 ELEMENTS OF A BUSINESS PLAN ●Customer Analysis ●Description of customers ●Location, number, and resources of customers ●Sales forecasts (continued)

35 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 35 ELEMENTS OF A BUSINESS PLAN ●Operations Plan ●Organization of the company ●Description of major operations ●Analysis of resources needed ●Human resource plans (continued)

36 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 36 ELEMENTS OF A BUSINESS PLAN ●Marketing Plan ●Description of major marketing activities ●Description of resources needed ●Schedule of marketing activities (continued)

37 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 37 ELEMENTS OF A BUSINESS PLAN ●Financial Plans ●Start-up costs ●Short- and long-term financial needs ●Sources of financing ●Budgets and financial statements (continued)

38 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 38 STEPS IN DEVELOPING THE BUSINESS PLAN ●Gather and review information ●Develop the strategic alternatives ●Write the plan ●Ask an expert to review the plan

39 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 39 Checkpoint ●What are the “strategic alternatives” in a business plan? ●Strategic 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.

40 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 40 FINANCING THE SMALL BUSINESS ●Types of financing ●Start-up financing ●Short-term financing ●Long-term financing ●Sources of financing ●Owner-supplied funds ●Borrowed funds

41 © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 6 SLIDE 41 Checkpoint ●In addition to owner-supplied capital, what are several other sources of financing for a small business? ●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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