Presentation on theme: "Entrepreneurship and Small Business Management"— Presentation transcript:
1 Entrepreneurship and Small Business Management CHAPTER 6Entrepreneurship and Small Business Management6-1 Becoming an Entrepreneur6-2 Small Business Basics6-3 Starting a Small Business
2 Becoming an Entrepreneur 6-1Becoming an EntrepreneurGoalsIdentify characteristics of successful entrepreneurs.Recognize the importance of entrepreneurship in the economy.Describe opportunities and risks of entrepreneurship.
4 CHARACTERISTICS OF ENTREPRENEURS Chapter 6CHARACTERISTICS OF ENTREPRENEURSDesire to be your own bossSpecial skills and abilities
5 ENTREPRENEURS IN ACTION Chapter 6ENTREPRENEURS IN ACTIONPankaj AroraRich StachowskiJeffrey Rodriguez and John SerranoAbbey Fleck
6 WHAT DOES IT TAKE? Entrepreneurs are more persistent inquisitive Chapter 6WHAT DOES IT TAKE?Entrepreneurs are morepersistentinquisitiveenergeticgoal orientedindependentself-confidentcreativereliablecompetitive
7 WHAT DOES IT TAKE? Entrepreneurs have problem-solving skills Chapter 6WHAT DOES IT TAKE?(continued)Entrepreneurs haveproblem-solving skillstolerance for ambiguitystrong integritypersonal initiativeability to secure resourcescapability to learn from failurewillingness to work hard
8 Chapter 6Checkpoint >>What personal characteristic are common to most successful entrepreneurs?AnswerAny characteristics listed in Figure 6-1 are acceptable, such as persistence, inquisitiveness, self-confidence, creativity, and so forth.
9 ENTREPRENEURSHIP AND THE ECONOMY Chapter 6ENTREPRENEURSHIP AND THE ECONOMYEmploymentFinancingProductivity
10 Employment Growth by Business Size Chapter 6Source: U.S. Bureau of Labor StatisticsEmployment Growth by Business Size
11 Chapter 6Checkpoint >>What are the sources of financing that entrepreneurs use for their new businesses?Answerpersonal savingsfriends and familyventure capitalbank loans
13 RISKS Recognizing risks Lack of adequate capital Low sales Chapter 6RISKSRecognizing risksLack of adequate capitalLow salesHigher than expected expensesCompetitive pressureAn owner unprepared to manage a growing businessOperations requiring more time than the owner is willing to commit
14 Checkpoint >> Where do entrepreneurship opportunities begin? Chapter 6Checkpoint >>Where do entrepreneurship opportunities begin?AnswerOpportunities begin with innovations (ideas about new products and services) or improvements (ideas for changes to existing products, services, or processes).
15 6-2 Small Business Basics Goals Identify important characteristics of small businesses.Recognize the competitive advantages of small businesses.Identify problems faced by many small businesses.
16 Chapter 6Key Termssmall businessSmall Business Administration (SBA)
17 SMALL BUSINESS OWNERSHIP Chapter 6SMALL BUSINESS OWNERSHIPDescription 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
18 COMMON TYPES OF SMALL BUSINESSES Chapter 6COMMON TYPES OF SMALL BUSINESSESCommon Types of Small BusinessesSource: Small Business Administration and U.S. Census Bureau
19 Chapter 6Checkpoint >>What percentage of employees in the United States work for small businesses?AnswerNearly 50 percent of the American workforce is employed by small businesses.Small businesses are also responsible for 60–80 percent of all new jobs.
20 SMALL BUSINESS ADVANTAGES Chapter 6SMALL BUSINESS ADVANTAGESMeeting customer needsProviding unique services
21 Chapter 6Checkpoint >>How can small businesses compete successfully with larger businesses?AnswerSmaller 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.
22 COMMON REASONS FOR SMALL BUSINESS FAILURE Chapter 6COMMON REASONS FOR SMALL BUSINESS FAILURENot 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
23 SMALL BUSINESS ASSISTANCE Chapter 6SMALL BUSINESS ASSISTANCEFaculties of universities and collegesLocal groups of business peopleSmall Business Administration (SBA)
24 Checkpoint >> List common reasons for small business failure. Chapter 6Checkpoint >>List common reasons for small business failure.Answernot keeping adequate recordsinsufficient start-up moneylack of management experiencelack of experience with the type of businessnot controlling operating expensespoor locationfailure to manage credit
25 Starting a Small Business 6-3Starting a Small BusinessGoalsRecognize 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.
26 Key Terms business plan start-up financing short-term financing Chapter 6Key Termsbusiness planstart-up financingshort-term financinglong-term financing
27 THE BUSINESS DECISION An idea plus experience Right place and time Chapter 6THE BUSINESS DECISIONAn idea plus experienceRight place and timeTeam approachPreparation and research
28 Chapter 6Checkpoint >>Why is it important to use a team approach when starting a new business?AnswerA 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.
29 Chapter 6WHAT 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.
30 ELEMENTS OF A BUSINESS PLAN Chapter 6ELEMENTS OF A BUSINESS PLANDescription of the BusinessThe business ideaMajor products and servicesOwnership structureStrengths/weaknessesLong- and short-term goals
31 ELEMENTS OF A BUSINESS PLAN Chapter 6ELEMENTS OF A BUSINESS PLAN(continued)Description of CompetitionCharacteristics of the industryCondition of the economyStrengths and weaknesses of major competitors
32 ELEMENTS OF A BUSINESS PLAN Chapter 6ELEMENTS OF A BUSINESS PLAN(continued)Customer AnalysisDescription of customersLocation, number, and resources of customersSales forecasts
33 ELEMENTS OF A BUSINESS PLAN Chapter 6ELEMENTS OF A BUSINESS PLAN(continued)Operations PlanOrganization of the companyDescription of major operationsAnalysis of resources neededHuman resource plans
34 ELEMENTS OF A BUSINESS PLAN Chapter 6ELEMENTS OF A BUSINESS PLAN(continued)Marketing PlanDescription of major marketing activitiesDescription of resources neededSchedule of marketing activities
35 ELEMENTS OF A BUSINESS PLAN Chapter 6ELEMENTS OF A BUSINESS PLAN(continued)Financial PlansStart-up costsShort- and long-term financial needsSources of financingBudgets and financial statements
36 STEPS IN DEVELOPING THE BUSINESS PLAN Chapter 6STEPS IN DEVELOPING THE BUSINESS PLANGather and review informationDevelop the strategic alternativesWrite the planAsk an expert to review the plan
37 Chapter 6Checkpoint >>What is the “strategic alternatives” in a business plan?AnswerStrategic 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.
38 FINANCING THE SMALL BUSINESS Chapter 6FINANCING THE SMALL BUSINESSTypes of financingStart-up financingShort-term financingLong-term financingSources of financingOwner-supplied fundsBorrowed funds
39 Chapter 6Checkpoint >>In addition to owner-supplied capital, what are several other sources of financing for a small business?AnswerBorrowed money may come from banks, finance companies, or other individuals, such as friends and family.Some suppliers may also be willing to extend credit.