Presentation on theme: "6 Entrepreneurship and Small Business Management"— Presentation transcript:
16 Entrepreneurship and Small Business Management C H A P T E R6Entrepreneurship and Small Business Management6-1 Becoming an Entrepreneur6-2 Small Business Basics6-3 Starting a Small Business
26-1 Becoming an Entrepreneur Goal 1 Identify characteristics of successful entrepreneurs.Goal 2 Recognize the importance of entrepreneurship in the economy.Goal 3 Describe opportunities and risks of entrepreneurship.
3KEY TERMS entrepreneur entrepreneurship venture capital innovation improvement
4CHARACTERISTICS OF ENTREPRENEURS Desire to be your own bossSpecial skills and abilities
5ENTREPRENEURS IN ACTION Joshua MooreBen CathersRich StachowskiAbbey Fleck
6WHAT DOES IT TAKE?Not all business owners and managers are entrepreneurs.Entrepreneurs have unique skills and personal characteristics.
7ENTREPRENEURS ARE MORE PersistentInquisitiveEnergeticGoal-orientedIndependentSelf-confidentCreativeReliableCompetitive
8ENTREPRENEURS HAVE Problem-solving skills Tolerance for ambiguity Strong integrityPersonal initiativeAbility to secure resourcesCapability to learn from failureWillingness to work hard
9Checkpoint 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.
10ENTREPRENEURSHIP AND THE ECONOMY EmploymentFinancingProductivity
12Checkpoint What are the sources of financing that entrepreneurs use for their new businesses?Personal savingsFriends and familyVenture capitalBank loans
13OPPORTUNITIES AND RISKS Before deciding to start a business, you need to think about the opportunities and risks.
14NEW BUSINESS OPPORTUNITIES InnovationImprovement
15RECOGNIZING RISKS Lack of adequate capital Low sales Higher than expected expensesCompetitive pressureAn owner unprepared to manage a growing businessOperations requiring more time than the owner is willing to commit
16Checkpoint 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).
176-2 Small Business Basics Goal 1 Identify important characteristics of small businesses.Goal 2 Recognize the competitive advantages of small businesses.Goal 3 Identify problems faced by many small businesses.
18KEY TERMSsmall businessSmall Business Administration (SBA)
19SMALL BUSINESS OWNERSHIP Description of a small businessOwner is usually the managerOperates in one or very few locationsTypically serves a small marketNot dominant in its fieldSmall business employmentOwnership diversity
20Common Types of Small Businesses as Percent of All Small Businesses
21Checkpoint Beyond the formal definition of a small business, what four points can be used to describe a small business?Owner is usually the managerBusiness operates in one or very few locationsBusiness typically serves a small marketBusiness is not dominant in its field
22SMALL BUSINESS ADVANTAGES Meeting customer needsProviding unique services
23Checkpoint 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.
24COMMON REASONS FOR SMALL BUSINESS FAILURE Not keeping adequate recordsNot having enough start-up moneyLack of management experienceLack of experience with the type of businessNot controlling operating expensesPoor location for the businessFailure to manage credit offered to customers
25SMALL BUSINESS ASSISTANCE University and college faculty membersLocal groups of business peopleSmall Business Administration (SBA)
26Checkpoint List common reasons for small business failure. Not keeping adequate recordsInsufficient start-up moneyLack of management experienceLack of experience with the type of businessNot controlling operating expensesPoor locationFailure to manage credit
276-3 Starting a Small Business Goal 1 Recognize important factors to be considered when starting a business.Goal 2 Describe the elements of a business plan.Goal 3 Identify types and sources of financing for a small business.
28KEY TERMS business plan start-up financing short-term financing long-term financing
29THE BUSINESS DECISION An idea plus experience Right place and time Team approachPreparation and research
30Checkpoint 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.
31WHAT 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.
32ELEMENTS OF A BUSINESS PLAN Description of the BusinessThe business ideaMajor products and servicesOwnership structureStrengths/weaknessesLong- and short-term goals
33ELEMENTS OF A BUSINESS PLAN (continued)Description of CompetitionCharacteristics of the industryCondition of the economyStrengths and weaknesses of major competitors
34ELEMENTS OF A BUSINESS PLAN (continued)Customer AnalysisDescription of customersLocation, number, and resources of customersSales forecasts
35ELEMENTS OF A BUSINESS PLAN (continued)Operations PlanOrganization of the companyDescription of major operationsAnalysis of resources neededHuman resource plans
36ELEMENTS OF A BUSINESS PLAN (continued)Marketing PlanDescription of major marketing activitiesDescription of resources neededSchedule of marketing activities
37ELEMENTS OF A BUSINESS PLAN (continued)Financial PlansStart-up costsShort- and long-term financial needsSources of financingBudgets and financial statements
38STEPS IN DEVELOPING THE BUSINESS PLAN Gather and review informationDevelop the strategic alternativesWrite the planAsk an expert to review the plan
39Checkpoint 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.
40FINANCING THE SMALL BUSINESS Types of financingStart-up financingShort-term financingLong-term financingSources of financingOwner-supplied fundsBorrowed funds
41Checkpoint 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.