* * Chapter Six Entrepreneurship and Starting a Small Business Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

* * The Job-Creating Power of Entrepreneurship in the U.S. Entrepreneurship -- Accepting the risk of starting and running a business. WHAT is ENTREPRENEURSHIP? 6-2

* * Why People Take the Entrepreneurial Challenge Opportunity Profit Independence Challenge LG1 WHY TAKE the RISK? 6-3

* * Why People Take the Entrepreneurial Challenge Self-directed Self-nurturing Action-oriented Highly energetic Tolerant of uncertainty LG1 WHAT DOES IT TAKE to be an ENTREPRENEUR? 6-4

* * Small Versus Big Business There are 26.8 million small businesses in the U.S. Of all nonfarm business in the U.S., almost 97% are considered small. Small businesses account for over 50% of the GDP. Small businesses generate 60-80% of new jobs. About 80% of U.S. workers first jobs were in small business. LG2 SMALL BUSINESS STATISTICS 6-5

* * Small Business Success & Failure Owner closing a business to start another is reported as a “failure.” Changing forms of ownership is reported as a “failure.” Retirement is reported as a “failure.” LG2 BUSINESS FAILURES are LOWER THAN the REPORTS BECAUSE… 6-6

* * Learning About Small Business Operations Learn from Others – Investigate your local colleges for classes on small business and entrepreneurship; talk to and work for successful local entrepreneurs. Get Some Experience – Gain three years experience in the field; then start a part-time small business. Take Over a Successful Firm – Serve as an apprentice and eventually take over once the owner steps down. LG3 LEARNING ABOUT SMALL BUSINESS 6-7

* * Begin with Planning Business Plan -- A detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and owners qualifications. A business plan forces potential owners to be specific about what they will offer. A business plan is mandatory for talking with bankers or investors. LG4 BUSINESS PLANS 6-8

* * Getting Money to Fund a Small Business Personal savings Relatives Former employers Banks & finance companies Government agencies Angel investors Venture capitalists -- Individuals or companies that invest in new businesses in exchange for partial ownership. LG4 SOURCES of CAPITAL 6-9

* * The Small Business Administration Small Business Development Centers (SBDC) are funded jointly by the federal government and individual states.Small Business Development Centers (SBDC) SBDCs are able to evaluate the feasibility of your idea, develop your business plan and complete your funding application – for no charge. LG4 SMALL BUSINESS DEVELOPMENT CENTERS 6-10

* * Knowing Your Customers Market -- Consumers with unsatisfied wants and needs who have both resources and willingness to buy. Set out to fill the market’s needs by offering top quality and great service at a fair price. One of the great advantages of small businesses is the ability to know the market and quickly adapt to market needs. LG4 The MARKET 6-11