1. Entrepreneurship: Starting a Business
Chapter 6
Download this book for free at: ttp://hdl.handle.net/10919/70961

2. Review What are considerations in determining the business form?
What are the advantages and disadvantages of
Sole proprietorship
Partnership
Corporation
LLC
What are mergers and acquisitions?

3. Learning Objectives Define entrepreneur.
Identify entrepreneur advantages.
Know the importance of small businesses.
Understand small businesses innovation.
Describe the goods-producing and service-producing sectors.
Know the ways to start a business.
Explain why some businesses fail.
Know Small Business Administration services.
Download this book for free at: ttp://hdl.handle.net/10919/70961

4. Entrepreneurs Take business risk Reap rewards or suffer losses
Innovators
vs. small business owners
“lifestyle businesses”
Steve Wozniak (left) and Steve Jobs, co-founders of Apple Computer, holding an Apple I circuit board, c

5. Entrepreneurs Why be an entrepreneur?
Own boss
Accommodate lifestyle
Financial reward
Freedom
Reasons to not be an entrepreneur
Hard, long work
Responsibility and stress
Money
No security
Need to do things not good at or don’t enjoy

6. Financing Early stage Later stage Personal funds
Friends and family
Personal credit cards (BAD IDEA)
Crowd funding (e.g. Kickstarter)
Angel investors
Later stage
Venture capitalists

7. Small Businesses Independently owned and operated
Exerts little influence on industry
Less than 500 employees
Importance
Jobs
Entry point for most workers
First to hire in business cycle growth
Innovation
More patents per employee than large firms

8. New business openings (closings) Business expansions (contractions)
Small Businesses
Small Business Job Gains and Losses, (in millions of jobs)
New business openings (closings)
Business expansions (contractions)
Total
34.3
237.5
(33.1)
(233.9)
+1.2
+3.6
+4.8
Download this book for free at: ttp://hdl.handle.net/10919/70961

9. Small Businesses Opportunities for women and minorities
Many government and business contracts provide favorable treatment
Business Owners
2007 % of all Businesses
2012 % of all Businesses
Increase
Women
28.8
35.8
+7.0%
Hispanic Americans
8.3
12.0
+3.7%
African Americans
7.1
9.4
+2.3%
Asian Americans
5.7
6.9
+1.2%
Download this book for free at: ttp://hdl.handle.net/10919/70961

10. Industry Sectors Industry Goods-producing sector
Firms selling similar products
Goods-producing sector
Provide tangible goods
Service-producing sector
Do not make tangible goods
E.g. transportation, finance, entertainment, hospitality

11. Goods Sector Retailers Wholesalers
Buy goods and resell them to consumers
Wholesalers
Buy goods and sells them to retailers
Often provide warehousing function

12. Small Businesses Small Businesses by Industry, 2012
Download this book for free at: ttp://hdl.handle.net/10919/70961

13. Starting a Small Business
Create a business plan
What is the target market?
What is the business idea?
Is it feasible?
What is the competitive advantage?
How will it be started?
What form will it use?
How will it be financed?

14. Target Market and Business Idea
Fill an unmet need
Address a frustration
One person’s frustration is an entrepreneur’s opportunity
Save or make someone else money

15. Starting a Business Start from scratch Buy an existing business
Highest risk
Highest potential return
Buy an existing business
What are you buying?
Buy a franchise
Franchisor
Franchisee
Franchise agreement

16. Franchising Entrepreneur’s Franchise 500 Top Franchises.
Ranking
2015
2016 1
Hampton by Hilton
Jimmy John’s 2
Anytime Fitness 3
Subway
Supercuts 4
Jack in the Box
Servpro 5 6
McDonald’s 7
7-Eleven 8
Denny’s
Dunkin’ Donuts 9
Pizza Hut 10
The growth of Franchising in the U.S.
Number and Value of Franchises
Download this book for free at: ttp://hdl.handle.net/10919/70961

17. Why Businesses Fail Poor idea Cash flow Lack of skills, experience
Lack of customer focus
Unable to handle growth
Change in management approach
Change in scope

18. Sources of Assistance Small Business Administration, SBA
Loan guarantees (not loans)
Programs
Small Business Development Center
SBDC – Here at RVCC!
Free advice, literature
Service Corps of Retired Executives, SCORE