1. Chapter 5

2.  Explain the importance of small businesses.  Examine whether entrepreneurship is for you.  Describe the challenges of entrepreneurship.  Describe why agribusinesses fail.  Analyze a potential agribusiness venture.  Prepare a business plan.  Explain the 5 major areas of agribusiness management.  Establish goals for an agribusiness.  Discuss the importance of problem solving and decision making.

3.  Be your own boss if you want to be!  Possible for a person to start with very little capital and build a successful business  Very difficult process  Important to understand the basic processes involved in business planning and organizing

4.  Most agribusinesses are small businesses  Small Business Administration (SBA) defines “small business” as one that is:  independently operated  is not dominant in its field  meets certain size standards number of employees annual receipts

5.  Not in the number of people they employ!  90% of the nation’s new jobs in the private sector are in small businesses  2/3 of all new jobs are in companies with fewer than 25 employees  Very good chance that you will either work in a small business someday or start one

6.  25.4 million full-and part-time home-based businesses in US  97% of all non-farm businesses considered small by the SBA  Account for more than 40% of GDP  Total number of employees who work in small business is greater than the populations of Australia and Canada combined  First jobs of about 80% of all Americans are in small businesses  Number of women who own small businesses has increased elevenfold since 1960  Minority-owned businesses increased more than 64% between 1962 and 1987  Small companies produce 90% of the new jobs

7.  Small businesses essential to US economy  Fill a jar with sand  No spaces between sand  Fill a jar with rocks  Big spaces between rocks  Small businesses fill in the empty areas  Serve customer needs big businesses can’t!

8.  Work for themselves  Income they earn above financial obligations is theirs to keep  Test their own theories and ideas on how to run a business  Set their own working hours  Set prices, determine production levels, and control inventory  Determine the product or service offered  Solve the problems  Hire, train, and fire employees  Set company policy

9.  Independent* Self-nurturing  Energetic*Action-Oriented  Self confident* Risk-Taker  Organized* Sense of urgency  Visionary* Flexible  Persistent* Stable  Optimistic* Problem Solver  Committed* Motivated

10.  Management  Labor  Financial resources  Undercapitalization

11.  Several start-up factors to consider  What financial resources are needed?  What labor does the agribusiness need?  What management requirement exist?  Does a market exist for the product or service?  Where should the agribusiness be located?  Should you buy an agribusiness or start a new one?  So is it better to buy an existing business?

12.  Allows a quicker start  Provides ready-made customers  Eliminates some competition  Reduces cost of getting established  Has a base of financial information estimating costs and profits

13.  More capital resources needed in beginning  No time to learn while the business is developing  Possibility of misjudging and buying a loser  Problem of having to either accept the location or move the business  Loss of the safety that comes from expanding and growing into a business as resources permit

14.  What resources are needed?  Are these resources available?  What are the costs of the resources?  What level of management is required?  Does the prospective owner have the experience necessary to operate the business?

15.  Written description of a new business venture  Describes all aspects of the proposed agribusiness  Focuses on:  what you want to do  how you will do it  what you expect to accomplish  Essential for receiving help from potential investors and financial institutions

16.  Agribusiness management refers to the responsibility of a person to:  make decisions  organize resources to implement decisions  monitor the implementation of decisions  evaluate the effects of decisions on the overall success of the operation  Agribusiness management has five major areas of activity, as follows

17.  Determining what is to be done and where, how, and when to do it  Important functions:  Determining the present status of the business  Surveying the environment  Setting objectives  Forecasting future situations  Starting necessary actions and resources  Evaluating proposed actions  Revising plans in response to changing conditions  Communicating effectively

18.  Grouping together activities, people, and other resources to implement a plan  Organizing involves:  Identifying  Breaking  Grouping  Defining  Grouping positions  Assigning work to be performed  Revising and adjusting  Communicating duties

19.  Providing instruction and guidance to employees  Concerned with the relationship between managers/leaders and employees  Involves:  Communicating and explaining objectives to employees  Setting standards for performance  Providing motivation  Coaching employees  Rewarding employees  Praising and criticizing constructively and fairly  Communicating throughout all processes

20.  Includes all activities involved in the recruitment, selection, training, and retention of personnel  Hiring staff is the principal job of any leader  Involves:  Determining human resource needs  Recruiting excellent employee candidates  Selecting excellent employees from those recruited  Training and developing employees  Revising the number of employees according to changing conditions of the agribusiness

21.  Covers all the activities that are necessary to ensure that the policies of the agribusiness are being carried out  Involves:  Establishing standards (achievement, performance, quality, etc.)  Monitoring results and comparing them to standards  Correcting deviations from standards  Revising and adjusting methods in response to changes the agribusiness experiences, on an ongoing basis  Communicating necessary changes throughout the organization

22.  People do not plan to fail  They fail to plan  Prior planning prevents poor performance!  Rules for setting goals:  Write down your goals  Organize your goals Arrange your goals according to these three groups: immediate, short term, and long term

23.  Immediate  accomplish within a day, a week, or a month or two  Short-term  accomplish in a year or two  Long-term  intend to work toward for many years  give you an idea of where you want your business to be several years from now

24.  Manage your time  Avoid procrastinating  Judge your time  Schedule your time  Establish priorities  Break goals into manageable units

25.  Numerous decisions to make and problems to solve when starting an agribusiness  Decision making is the term that describes the process used to choose the new and different action  May involve setting new goals to solve a problem  In extreme cases, when a problem cannot be readily solved, the decision may actually be to do nothing at all  Page 117

26.  Reflexive-  make decisions quickly  Reflective-  consider all options and consequences before making a decision  Consistent-  consider all options and still make decisions in a timely manner

27.  Systematic approach to problem solving can be of great benefit  Steps are similar to the seven steps of the scientific method  Recognize the problem  Determine your alternatives  Gather information  Evaluate the alternatives  Select a workable solution  Carry out your solutions  Evaluate your results