Small Business and Forms of Business Ownership 5 Chapter Sections 5.1 – 5.5 Small Business and Forms of Business Ownership

What is Small Business? The Small Business Administration defines a small business to be a firm that is independently owned and operated and is not dominant in the field. Manufacturing business: fewer than 500 workers Wholesalers: fewer than 100 workers Retailers: less than $7 million in annual sales Agricultural business: less than $750,000

Most Businesses are Small Businesses A small business is an independent entity with few than 500 employees that is not dominant it its market 99.7% of all U.S. companies are considered small businesses These firms have generated 65% of new jobs in the past two decades They employ half of all private sector workers

Typical Small-Business Ventures Page 129

Major Industries Dominated by Small Businesses

Advantages and Disadvantages to a Home-based Business Pros Cons Make your own hours – AM, PM, split Often long hours Might run business from your home to reduce costs Difficult to separate personal time from work time

Contributions of Small Business Creating New Jobs Creating New Industries Innovation

Small Business Failure 3 in 10 businesses close permanently within two years. 50% of businesses fail within five years. By the 10-year mark, 66% of all small businesses have closed permanently.

Reasons Why Small Business Fail Management Shortcomings Inadequate Financing Government Regulation

Reasons Why Small Business Fail Management Shortcomings Lack of people skills Inadequate business knowledge (finances, inventory, decision-making) Poor time management Poor assessment of customer or competition Inadequate Financing Government Regulation

Reasons Why Small Business Fail Management Shortcomings Inadequate Financing Start up costs May take months or years to earn a profit Government Regulation

Reasons Why Small Business Fail Management Shortcomings Inadequate Financing Government Regulation Taxes (federal, state, social security, worker’s compensation, unemployment) Employment Laws – businesses with fewer than 50 employees have fewer requirements to ease the burden – FMLA, Affordable Care Act

Watch Entrepreneurship Video The Business Plan Executive Summary Introduction Financial Marketing Resume of Principals Mission & Vision of Founders Outline on Companies Unique Qualities Customers Competition Assessment of Risks Watch Entrepreneurship Video

Small Business Administration (SBA) Government agency concerned with helping small business firms Financial Assistance Loan Guarantees Microloans (up to $35,000 - average size is $13,000) Small Business Investment Companies (SBICs) Assistance with paperwork and obtaining contracts

Opportunities for Women & Minorities More than 40% of U.S. businesses are owned by women (10 million businesses) The number of businesses owned by minorities outpaced the growth in the number of U.S. businesses overall. Women and minorities still face challenges

Small Business Assignment Review Questions – page 156 Read Questions 1-5 Select any four of the first five Type the question number, the question, and the answer Don’t forget the assignment title and to be sure to check spelling, grammar, and punctuation.