1 SMALL BUSINESS MANAGEMENT Chapter 2 The Small Business Decision

2 u Personal Evaluation

3 Advantages of Small Business Ownership u More personal contacts with people u Independence u Skill Development u Potential Financial Rewards u Challenge u Enjoyment

4 Disadvantages of Small Business Ownership u Risk u Stress u Need for Many Abilities u Limited Financial Rewards u People Conflicts u Time Demands

5 Demographic Characteristics of Entrepreneurs u Parents owned business u Foreign parents u High school degree or less u College or more u Age 31 and under u Age 40 or more

6 Personality Characteristics Required by Successful Entrepreneurs u Achievement Orientation u Risk Taking u Independence, Self Confidence, Self Assurance u Innovativeness u Strong Verbal and Numerical Skills u Selling Skills

7 Personality Characteristics Required by Successful Entrepreneurs u Selling Skills u Problem Solving Abilities u Strategic Planning u Perseverance

8 The Small Business Decision u Organizational Evaluation

9 Small Business Successes u Alertness to Change u Ability to Attract and Hold Competent Employees u Staying Close to the Consumer

10 Small Business Successes u Thoroughness with Operating Details u Ability to Obtain Needed Capital u Effective Handling of Laws, Rules, and Regulations

11 Small Business Successes u Environments Conducive to Small Business Success – Personal Attention to Daily Operation – Owner Contact with Employees – Small or Local Demand

12 Small Business Successes – Industries that Require Flexibility F high growth rates, erratic demands, perishable products perishable products – More Labor and Less Capital Intensive – Considerable Government Encouragement

13 Small Business Failures u Bankruptcies

14 Entrepreneurialship and Small Business Management u Entrepreneurial Skills – Characteristics F creativity, innovativeness, independence, risk- taking, idea-oriented – Situations F generating ideas and solutions to problems, starting a new business, expanding or opening new products, reaching performance objectives, maintaining control of operations

15 Entrepreneurialship and Small Business Management u Managerial Skills – characteristics F develops strategy and goal setting, prefers to know outcomes of actions or activities, team player, works through others, skills in finance, marketing, personnel, operations F situations F generating ideas and solutions to problems, starting a new business, expanding or opening new products, reaching performance objectives, maintaining control of operations

16 Concept Checks u 1. What are the major causes of business failure? u 2. What are the characteristics of a successful business? u 3. List the advantages of owning a small business.

17 Concept Checks u 4. List the disadvantages of owning a small business. u 5. What are the characteristics of successful small business owners? u 6. What is the difference between an entrepreneur and a manager?

18 Concept Checks