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Small Business and the Entrepreneur © 2014 Pearson Education, Inc.5-1 chapter 5 Better Business 3rd Edition Solomon (Contributing Editor) · Poatsy · Martin
Small Business A small business: - Is independently owned and operated - Is not a dominant force in its field - In general, has fewer than 500 employees -Has an average of $7.5 million annual revenue (in retail and service industries) © 2014 Pearson Education, Inc. 5-2 Did you know? Approximately 70% fail within first year –Why? Over 99% of all businesses in US are considered small Can be operated on a Full or Part-time basis. Small businesses offer unique advantages over larger businesses. –Such as?
Small Business: The Pros and Cons © 2011 Pearson Education, Inc. 3 Disadvantages and Threats: Higher Risk of Failure Lack of Knowledge and Experience Competition Too Little Money High Stress Level Bigger Regulatory Burden Higher Health Insurance Costs Advantages and Opportunities: Market Niches Fosters Innovation Serves the needs of larger companies Personal Customer Service & Employee Relationships Lower Overhead Cost Technology Helps our Economy (employment, competition)
Why Do Small Businesses Fail? Accumulating too much debt Inadequate management Poor planning Unanticipated personal sacrifices High Stress Level © 2014 Pearson Education, Inc. 5-4
Small Business and the Economy In the U.S., small businesses Generate 65% of net new jobs Create more than ½ of U.S. GDP Export about one third of all U.S. exports of goods and services Represents the second largest economy in the world © 2014 Pearson Education, Inc. 5-5
Small Business Contributions Foster innovation Help bigger companies: - Supply products and services to the larger companies that they do not or cannot supply Help consumers: -Supply products and services that large companies cannot or will not provide -Provides competition to bigger companies, which reflects is more product choices and lower prices © 2014 Pearson Education, Inc. 5-6
Small Business and the Workforce Create over 65% of new jobs each year Employ many who do not fit into a traditional corporate structure Provide opportunities for women and minorities © 2014 Pearson Education, Inc. 5-7
The Impact of Technology on Small Business The personal computer, mobile devices, and the Internet have: - Created entirely new business opportunities - Made starting a new business easier Impact of social media © 2014 Pearson Education, Inc. 5-8
Why Go Into Business? Reasons to Start a Small Business © 2014 Pearson Education, Inc. 5-9
Entrepreneur Basics What is an entrepreneur? Traits of successful entrepreneurs: - Innovative - Risk takers - Motivated to succeed - Flexible and self-directed - Work well with others - Good leadership skills -“System thinkers” © 2014 Pearson Education, Inc. 5-10
Types of Entrepreneurs Lifestyle entrepreneurs Micropreneurs Home-based entrepreneurs Internet entrepreneurs Growth entrepreneurs Intrapreneurs Social entrepreneurs and social intrapreneurs Entrepreneurial teams © 2014 Pearson Education, Inc. 5-11
Going into Business: Developing a Business Plan © 2014 Pearson Education, Inc Recognize Opportunity New Business, Existing Business, Franchise Business Plan “Blue print for business,” a carefully constructed guide for the person starting the business SBA, SBDC, Score Write on a 4 th Grade Level Seek Capital $100,000 avg “seed” money Lenders/Investors –What do they look at? Family or Friends File and Register Business Operate and Manage
Where Do Small Business Owners Go for Help? © 2014 Pearson Education, Inc. 5-13
Financing Considerations Cash Credit cards Banks and small business loans Grants Angle investors Venture capitalists Small Business Investment Company (SBIC) program © 2014 Pearson Education, Inc. 5-14
Starting a Business: Several Opportunities © 2011 Pearson Education, Inc.15 New Business – starting a brand-new business from scratch Existing Business – buying an existing business Franchises – the right to operate an individually owned business as though it was a part of a chain or outlet of stores
Starting a Brand New Business © 2011 Pearson Education, Inc.16 ADVANTAGES Control you own destiny Personal satisfaction – It’s your business, you started it Unlimited income potential True independence DISADVANTAGES High risk of failure Long hours and hard work High stress levels Complete responsibility
Buying an Existing Business Pros and Cons Pros Ease of start-up Existing customer base Financing opportunities Cons Purchase price may be high Inheriting the previous owner’s mistakes Unknowns in transition Alienated customers? Employees? © 2014 Pearson Education, Inc ___Pros Ease of start-up Existing customer base Financing opportunities Pros Ease of start-up Existing customer base Financing opportunities
Due Diligence Research and analysis of the business to uncover any hidden problems associated with it © 2014 Pearson Education, Inc. 5-15
Franchise Basics © 2014 Pearson Education, Inc Franchise A license to operate an individually owned business as though it were part of a chain of outlets or stores Franchising The actual granting of a franchise Franchisor An individual or organization granting a franchise Franchisee A person or organization purchasing a franchise
Franchising Pros and Cons © 2014 Pearson Education, Inc –Royalty Fee - % of Franchise Sales or Profits –Franchise Fee – Fee paid to the Franchisor by the Franchisee
Questions to Ask Before Buying © 2014 Pearson Education, Inc. 5-21
© 2014 Pearson Education, Inc. 5-22
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a.
© Prentice Hall, 2005Excellence in Business, Revised Edition Chapter Small Business, Entrepreneurship, and Franchises.
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© Prentice Hall, 2007Excellence in Business, 3eChapter Putting Yourself in Charge: Entrepreneurs and Small Business Owners.
Copyright © 2009 Pearson Education Canada4-1 Chapter 4 Starting and Financing a Small Business.
Becoming an Entrepreneur O An entrepreneur is someone who takes a risk in starting a business to earn a profit O Can you think of a current or historical.
© Prentice Hall, 2005Business In Action 3eChapter Starting and Financing a Small Business.
Entrepreneurship & Small Business Management 10/2/
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SLIDE Becoming an Entrepreneur Small Business Basics Starting a Small Business 6 C H A P T E R Entrepreneurship and Small Business.
Forms of Business Ownership and Organization Chapter 5.
Back to Table of Contents pp Chapter 5 Entrepreneurship and Small Business.
McGraw-Hill/Irwin Copyright © 2015 by the McGraw-Hill Companies, Inc. All rights reserved. Entrepreneurship and Starting a Small Business CHAPTER 6.
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 5 | Slide 1 Chapter 5: Small Business, Entrepreneurship, and Franchises.
Chapter 6. Lessons 1. Becoming an Entrepreneur 2. Small Business Basics 3. Starting a Small Business EQ: What role does small business play in the U.S.
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5-1 Chapter 5: The Challenges of Starting a Business Exploring Business 2.0 © 2012 Flat World Knowledge.
Chapter 1: Entrepreneurship 1 Copyright 2005 Prentice Hall Inc. A Pearson Education Company The Foundations of Entrepreneurship.
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6-1 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. NickelsMcHughMcHugh With help from Timothy.
Economics 11 Chapter 4 The Entrepreneur/Franchising.
Chapter 6 Copyright © 2011 by Nelson Education Ltd. 1 Prepared by Norm Althouse University of Calgary Prepared by Norm Althouse University of Calgary.
Chapter 6 Entrepreneurship and Small Business Management.
WHAT DOES THE ENTREPRENEUR THINK?
Small Business and Entrepreneurship Economic Rocket Fuel.
Businesses and the People that Start Them What It Takes to Start A Business.
Entrepreneurship: is a business started by someone who notices a need for a product or service. Soared in the late 1990s….but why? Because of Virtual.
Chapter 1 Entrepreneurship Copyright 2006 Prentice Hall Publishing Company 1 Entrepreneurs: The Driving Force Behind Small Business.
CHAPTER 7: SMALL BUSINESS AND ENTREPRENEURSHIP Economic Rocket Fuel.
1 Mgmt 371 Chapter Ten Managing New Venture Formation and Entrepreneurship Much of the slide content was created by Dr, Charlie Cook, Houghton Mifflin,
CHAPTER 6 Entrepreneurship & Small Business Management.
Why Businesses Fail Can Name a Local Business that Failed for the Reasons Given? Record them. Lack of money Lack of business experience Poor management.
Exploring Business © 2009 FlatWorld Knowledge 5-1 The Challenges of Starting a Business.
The Foundations of Entrepreneurship Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall CHAPTER 1.
Chapter 1: Entreprenurship1 Copyright 1999 Prentice Hall Publishing Company Entrepreneurs: The Driving Force Behind Small Businesses.
Entrepreneurs: The Powerful Economic Force CHAPTER 1 BENTR2101 FUNDAMENTAL OF ENTREPRENUERSHIP.
Entrepreneurship and Small Business. What Is “Small Business”? Independently owned and managed business that does not dominate its market.
Entrepreneurship: Starting and Managing Your Own Business 6 Chapter © 2004 by Nelson, a division of Thomson Canada Limited.
1 Chapter 6: Entrepreneurship and Small Business Management Lesson 6-1 Becoming an Entrepreneur Lesson 6-2 Small Business Basics Lesson 6-3 Starting a.
Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved. 6-1 ©2013 John Wiley & Sons, Inc. All rights reserved. JOHN R. SCHERMERHORN,
Entrepreneurship and Small Businesses Unit 2, Chapter 5 Page
Chapter 5: Entrepreneurship & Small Business. Learning Objectives 1. Describe an entrepreneurship and a small business. 2. List the advantages and disadvantages.
© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 2 | Slide 1 Small Business, Entrepreneurship, and Franchises Chapter5.
Business Basics Better Business 2nd Edition Solomon (Contributing Editor) · Poatsy · Martin © 2012 Pearson Education, Inc. Publishing as Prentice Hall.
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Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1: The Foundations of Entrepreneurship.
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