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BA 101 Introduction to Business6. Entrepreneurs and Small Business
Owners
The World of Small Business
Not DominantNot DominantIn Its FieldIn Its Field
Not DominantNot DominantIn Its FieldIn Its Field
Fewer ThanFewer Than500 Employees500 Employees
Fewer ThanFewer Than500 Employees500 Employees
IndependentlyIndependentlyOwned and OperatedOwned and Operated
IndependentlyIndependentlyOwned and OperatedOwned and Operated
Relatively SmallRelatively SmallAnnual SalesAnnual Sales
Relatively SmallRelatively SmallAnnual SalesAnnual Sales
Roles of Small Business
Provide New Jobs
Introduce New Products
ServiceLarge Corporations
Inject Money IntoThe Economy
Take Business Risks
Provide SpecialtyGoods and Services
Types of Small Business
LifestyleLifestyle High-GrowthHigh-Growth
Run by IndividualsRun by Individuals
Limited Products/ServicesLimited Products/Services
Limited ResourcesLimited Resources
Limited MarketplaceLimited Marketplace
Run by TeamsRun by Teams
Multiple Products/ServicesMultiple Products/Services
Investment CapitalInvestment Capital
Large MarketplaceLarge Marketplace
The Typical Small Business
Narrow FocusNarrow Focus
Limited ResourcesLimited Resources
InnovationInnovation
How Entrepreneurs Spend Their TimeHow Entrepreneurs Spend Their Time
0% 5% 10% 15% 20% 25% 30%
Other Services
Plan for Growth
Arrange Finances
Deal with Suppliers
Maintenance
Production
Direct Selling
Keep Records
Deal with Employees
Factors Contributing to Small Business Growth
E-Commerce and Technology
Growing Diversity
Downsizingand Outsourcing
Highly DisciplinedHighly Disciplined
Energy and StaminaEnergy and Stamina
Relate Well to OthersRelate Well to Others
Self-ConfidentSelf-Confident
Control Their DestinyControl Their Destiny
Seek New SkillsSeek New Skills
Characteristicsof Entrepreneurs
Learn From MistakesLearn From Mistakes
Exploit OpportunitiesExploit Opportunities
Positive and TenaciousPositive and Tenacious
Monitor MarketsMonitor Markets
Success DrivenSuccess Driven
Take Moderate RisksTake Moderate Risks
Characteristicsof Entrepreneurs
Develop a Business Plan
Summarize the Business
Communicate Goals
Highlight Plans
Show Customer Benefits
Importance of a Business Plan
Guide OperationsGuide Operations
Outline StrategyOutline Strategy
Attract CapitalAttract Capital
Starting a New Business
+ Control your destinyControl your destiny
+ Reach your potentialReach your potential
+ Unlimited profitsUnlimited profits
+ RecognitionRecognition
+ Doing what you enjoyDoing what you enjoy
– Uncertainty of incomeUncertainty of income
– Risk of lossRisk of loss
– Long hours & hard workLong hours & hard work
– Complete responsibilityComplete responsibility
– High stress levelsHigh stress levels
AdvantagesAdvantages DisadvantagesDisadvantages
Buying an Existing Business
+ Customer base
+ Business systems
+ Product or service
+ Location
+ Financing
– Alienated customers
– Obsolescence
– Bad location
– Personality clashes
– Outstanding bills
Advantages Disadvantages
The Franchise Alternative
FranchiseeFranchisee FranchisorFranchisor
TypesTypes
ProductProduct ManufacturingManufacturing Business-Business-FormatFormat
Evaluating a Franchise
Initial franchise
Periodic royalties
Trademarks and names
Advertising and promotion
Business location
Evaluating a Franchise
Exclusive territory
Right of first refusal
Equipment and supplies
Agreement termination
Franchise assignment
The Pros and Cons of Franchising
Advantages
Get a viable business
Name recognition
Network of support
Blueprint for success
Disadvantages
No guarantee of wealth
High monthly royalties
Limited independence
Limited flexibility
Why Businesses Fail
Management IncompetenceManagement Incompetence
Lack of ExperienceLack of Experience
Insufficient FinancingInsufficient Financing
Poor Cash ManagementPoor Cash Management
No Strategic PlanningNo Strategic Planning
Ineffective MarketingIneffective Marketing
Uncontrolled GrowthUncontrolled Growth
Untenable LocationUntenable Location
Poor Inventory ControlPoor Inventory Control
Poor Entrepreneurial SkillsPoor Entrepreneurial Skills
Financing A New Business
Avoid CommonAvoid CommonMistakesMistakes
Overestimating SalesOverestimating SalesOverestimating SalesOverestimating Sales
Overestimating Cash FlowOverestimating Cash FlowOverestimating Cash FlowOverestimating Cash Flow
Underestimating ExpensesUnderestimating ExpensesUnderestimating ExpensesUnderestimating Expenses
Private Financing Sources
Venture CapitalistsVenture Capitalists
Angel InvestorsAngel Investors
Credit CardsCredit Cards
Banks and MicrolendersBanks and Microlenders
Going PublicGoing Public
Initial Public Offering (IPO)Initial Public Offering (IPO)Initial Public Offering (IPO)Initial Public Offering (IPO)
AdvantagesAdvantagesAdvantagesAdvantages
Raising NeededRaising NeededCapitalCapital
Raising NeededRaising NeededCapitalCapital
DisadvantagesDisadvantagesDisadvantagesDisadvantages
Expensive andExpensive andTime ConsumingTime Consuming
Expensive andExpensive andTime ConsumingTime Consuming