1. Chapter 7: SMALL BUSINESS AND ENTREPRENEURSHIP
Economic Rocket Fuel

2. LAUNCHING NEW VENTURES: WHAT’S IN IT FOR ME?
Greater Financial Success
Independence
Flexibility
Challenge
Survival
On any given day in the United States, more people are trying to start a new business than are getting married or having children.

3. THE ENTREPRENEUR: A DISTINCTIVE PROFILE
Self-Reliance
Vision
Confidence
Energy
Tolerance of Failure
Entrepreneurs – People who risk their time, money, and other resources to start and manage a business.
Tolerance of Uncertainty

4. OPPORTUNITIES AND THREATS FOR SMALL BUSINESS: A TWO-SIDED COIN
Higher Risk of Failure
Lack of Knowledge and Experience
Too Little Money
Bigger Regulatory Burden
Higher Health Insurance Costs
Opportunities:
Market Niches
Personal Customer Service
Lower Overhead Cost
Technology

5. SMALL BUSINESS FAILURE
Year in Business
Survival Rate
Change vs. Prior Year (%)
Year 1
81%
19%
Year 2
66%
15%
Year 3
54%
12%
Year 4
44%
10%
Year 5
38% 6%
Year 6
34% 4%
Year 7
31% 3%

6. DOT-COM DEBACLES
Webvan: the value of this early online grocer peaked at $1.2 billion, but Webvan left 2,000 people out of work when it closed its doors in the middle of 2001.
Arrangeonline.com, Funeral.com, Heavenly-Door.com and Plan4ever.com marketed funeral arrangements and related services
Pets.com: Shutting down only nine months after its $82.5 million IPO, Pets.com hawked pet care products from doggie treats to kitty litter, but lacked a workable plan for high shipping costs.
Petstore.com offered a fish delivery service. They were bought out by Pets.com for $13 million in stock

17. LAUNCH OPTIONS Starting from scratch Buying an established business
Buying a franchise

18. BUYING AN ESTABLISHED BUSINESS
Key Pros:
Key Cons:
The concept, organizational structure, and operating practices are in place.
Relationships are established.
Obtaining financing is less challenging.
Working with someone else’s idea may not be fun.
You may inherit old mistakes.

19. STARTING A BUSINESS FROM SCRATCH
Key Pros:
Key Cons:
It’s all you : Your concept, your decisions, your structure.
You don’t have to deal with the prior owner’s bad decisions.
It’s all you. That’s a lot of pressure.
It can be hard to get credit.
Logistics can be challenging
It takes time, money, and sheer sweat to build a customer base.

20. BUYING A FRANCHISE Key Pros: Key Cons: Less Risk Training and Support
Brand Recognition
Access to Funding
Costs
Lack of Control
Negative Halo Effect
Growth Challenges
Restriction on Sale
Poor Execution

21. ENTERING INTO A FRANCHISE AGREEMENT
Know all the facts before signing the dotted line:
Terms and Conditions
Fees and Other Payments
Training and Support
Specific Operational Requirements
Conflict Resolution
Assigned Territory
Franchisors must provide a Franchise Disclosure Document (FDD)
The Federal Trace Commission (FTC) require:
The FDD must be written in plain English
The franchisor must be given 14 days to review the FDD
The Franchisee should have a lawyer review the document

22. TOOLS FOR BUSINESS SUCCESS
Small Business Administration
Gain Experience
Learn from Others
Educate Yourself
Write a Business Plan
Not only are small businesses a big part of the economy as employers, innovation and economics but they are also active customers. Review the resources that American Express dedicates to small business – American Express OPEN is an entire division.

23. The Business Plan

24. FINDING THE MONEY: FUNDING OPTIONS
Personal Resources
Loans
Angel Investors
Venture Capital

25. SMALL BUSINESS AND THE ECONOMY: AN OUTSIZED IMPACT
Creating New Jobs
Fueling Innovation
Vitalizing Inner Cities
Note that small business has such a strong impact on our economy, there is a government agency to support small business. Click link.

26. ECONOMIC IMPACT
Just 9.8% of the world’s entrepreneurs expect to create almost 75% of the jobs generated by new business ventures in the next five years.
1 out of 10 adults worldwide start businesses every year
Three key factors drive entrepreneurship globally:
Per Capita Income
Opportunity Cost
Cultural/Political Environment