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2. Entrepreneurship Process of initiating a business venture
Organizing the necessary resources
Assumes associated risks and rewards

3. Five types of Small Business Owners
Rewarded by chance to work on something new and creative
Thrive on the challenge of building a larger, more profitable business
Enjoy chance to balance work and personal life
Hard Workers 20%
Idealists 24%
Optimizers 21%
Jugglers 20%
Sustainers 15%
Get personal satisfaction from being a business owner
High energy people who enjoy handling every detail of their own business
SOURCE: Study conducted by Yankelovish Partners, reported in Mark Henricks, “The-Cast,” Entrepreneur (March 2000),

4. Why Small Business Today?
Economic changes
Globalization
Increased competition
Advancing technology
New market niches

5. Definition of Small Business
Definition used by SBA is detailed and complex, 37 pages of SBA regulations
Independently owned and operated
Minor player in its field
Depending on the industry the number of employees
Annual sales consideration, depends on the industry

6. Impact of Entrepreneurial Companies
Between 1989 and million new businesses were started
Approximately 600,000 new businesses each year
Only 16,000 businesses employ more than 500 people
Job Creation
Created 76.5% of net new jobs between 1990 and 1995
Created 75.8% of net new jobs between 1996 and 1997
Diversity
Approximately 9.1 million women-owned businesses
Women owned businesses employ about 30 million people
Women owned businesses contribute $3.6 trillion to U.S. economy
U.S. Department Of Labor, Women’s Bureau, goal is to promote profitable employment opportunities for women.

7. Characteristics of Entrepreneurs
Internal Locus of Control
Tolerance for Ambiguity
High Energy Level
Entrepreneurial
Personality
Awareness of Passing Time
Need to Achieve
Self-Confidence
Source: Adapted from Charles R. Kuehl and Peggy A. Lambing, Small Business: Planning and Management (Ft. Worth: The Dryden Press, 1994),45.

8. Hours Worked per Week by Owners of New Businesses30 25 20
Percent % of New Business Owners 15 10 5
Less than 50
50-59
60-69
70-79
More than 80
SOURCE: National Federation of Independent Business, Reported in Mark Robichaux, “Business First, Family Second,” The Wall Street Journal, May 12, 1989,B1.

9. Sources of Entrepreneurial Motivation and New-Business Ideas
Reasons for Starting a Business
Source of New-Business Ideas
Joined Family Business
In-depth Understanding
of Industry/Profession
41%
41%
37%
36%
To Control My Future
36%
Market Niche Spotted
27%
To Be My Own Boss 7%
Brainstorming
25%
To Fulfill a Dream
Copying Someone Else 4 5%
Downsized/Laid Off
Hobby 4
Other
11%
Source: “The Rewards,” Inc. State of Small Business, 2001, May , 50-51; and Leslie Brokaw, “How To Start an Inc. 500 Company,” Inc. 500, 1994,

10. Financial Resources One-third were started on less than $10,000
One-third needed from $10,000 to $50,000
One-third needed more than $50,000
Debt Financing
borrowing that has to be repaid at a later date
banks provide some 25% of all financing
Equity Financing
money invested by owners
funds that are invested in exchange for ownership

11. Starting an Entrepreneurial Firm
Starts with a business idea
Need to develop a business plan
Select a legal form of business
Start a business from scratch
Buy an existing business 7

12. Becoming A Business Owner
Sole Proprietorship, business that is owned by an individual for profit
Partnership, business owned by two or more people
Franchising, an agreement to sell a product or service of another.
Corporation, artificial entity created by the state and existing apart from its owners.

13. Launching an Internet Business
Have a viable idea
Write a business plan
Acquire financing
Building and Testing the Product or Service
Launch company
Be prepared to obtain additional financing
Develop partnerships
Consider going public

14. Five Stages of Growth For an Entrepreneurial Company

15. Early Stage of Business
Formal planning tends to be nonexistent except for the business plan
Primary goal, just to survive

16. Business Plan Business Plans Characteristics:
Demonstrate a clear, compelling vision
Understand the target market
Include detailed information about the industry and competitors
Provide evidence of an effective entrepreneurial team
Keep the plan short
Highlight critical risks
Spell out the sources and uses of funds
Provide clear and realistic financial projections
Capture the reader’s interest with a killer summary