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Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE1 CHAPTER 6 6-1 6-1Becoming an Entrepreneur 6-2 6-2Small Business Basics 6-3 6-3Starting.

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Presentation on theme: "Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE1 CHAPTER 6 6-1 6-1Becoming an Entrepreneur 6-2 6-2Small Business Basics 6-3 6-3Starting."— Presentation transcript:

1 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE1 CHAPTER Becoming an Entrepreneur Small Business Basics Starting a Small Business Entrepreneurship and Small Business Management

2 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE2 Becoming an Entrepreneur Goals Identify characteristics of successful entrepreneurs. Recognize the importance of entrepreneurship in the economy. Describe opportunities and risks of entrepreneurship. 6-1

3 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 3 Key Terms entrepreneur entrepreneurship venture capital innovation improvement

4 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 4 CHARACTERISTICS OF ENTREPRENEURS Desire to be your own boss Special skills and abilities

5 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 5 ENTREPRENEURS IN ACTION Pankaj Arora Rich Stachowski Jeffrey Rodriguez and John Serrano Abbey Fleck

6 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 6 WHAT DOES IT TAKE? persistent inquisitive energetic goal oriented independent self-confident creative reliable competitive Entrepreneurs are more

7 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 7 WHAT DOES IT TAKE? problem-solving skills tolerance for ambiguity strong integrity personal initiative ability to secure resources capability to learn from failure willingness to work hard (continued) Entrepreneurs have

8 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 8 Checkpoint >> What personal characteristic are common to most successful entrepreneurs? Answer Any characteristics listed in Figure 6-1 are acceptable, such as persistence, inquisitiveness, self-confidence, creativity, and so forth.

9 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 9 ENTREPRENEURSHIP AND THE ECONOMY Employment Financing Productivity

10 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 10 Employment Growth by Business Size Source: U.S. Bureau of Labor Statistics

11 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 11 What are the sources of financing that entrepreneurs use for their new businesses? Answer personal savings friends and family venture capital bank loans Checkpoint >>

12 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 12 OPPORTUNITIES Innovation Improvement

13 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 13 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 Recognizing risks

14 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 14 Where do entrepreneurship opportunities begin? Answer Opportunities begin with innovations (ideas about new products and services) or improvements (ideas for changes to existing products, services, or processes). Checkpoint >>

15 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE15 Small Business Basics Goals Identify important characteristics of small businesses. Recognize the competitive advantages of small businesses. Identify problems faced by many small businesses. 6-2

16 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 16 Key Terms small business Small Business Administration (SBA)

17 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 17 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

18 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 18 COMMON TYPES OF SMALL BUSINESSES Source: Small Business Administration and U.S. Census Bureau Common Types of Small Businesses

19 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 19 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. Checkpoint >>

20 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 20 SMALL BUSINESS ADVANTAGES Meeting customer needs Providing unique services

21 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 21 How can small businesses compete successfully with larger businesses? 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. Checkpoint >>

22 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 22 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

23 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 23 SMALL BUSINESS ASSISTANCE Faculties of universities and colleges Local groups of business people Small Business Administration (SBA)

24 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 24 List common reasons for small business failure. Answer 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 Checkpoint >>

25 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE25 Starting a Small Business Goals 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

26 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 26 Key Terms business plan start-up financing short-term financing long-term financing

27 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 27 THE BUSINESS DECISION An idea plus experience Right place and time Team approach Preparation and research

28 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 28 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. Checkpoint >>

29 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 29 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.

30 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 30 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

31 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 31 ELEMENTS OF A BUSINESS PLAN Description of Competition Characteristics of the industry Condition of the economy Strengths and weaknesses of major competitors (continued)

32 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 32 ELEMENTS OF A BUSINESS PLAN Customer Analysis Description of customers Location, number, and resources of customers Sales forecasts (continued)

33 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 33 ELEMENTS OF A BUSINESS PLAN Operations Plan Organization of the company Description of major operations Analysis of resources needed Human resource plans (continued)

34 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 34 ELEMENTS OF A BUSINESS PLAN Marketing Plan Description of major marketing activities Description of resources needed Schedule of marketing activities (continued)

35 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 35 ELEMENTS OF A BUSINESS PLAN Financial Plans Start-up costs Short- and long-term financial needs Sources of financing Budgets and financial statements (continued)

36 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 36 STEPS IN DEVELOPING THE BUSINESS PLAN Gather and review information Develop the strategic alternatives Write the plan Ask an expert to review the plan

37 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 37 What is the “strategic alternatives” in a business plan? Answer 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. Checkpoint >>

38 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 38 FINANCING THE SMALL BUSINESS Types of financing Start-up financing Short-term financing Long-term financing Sources of financing Owner-supplied funds Borrowed funds

39 Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 6 39 Checkpoint >> 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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