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Part 1: Dynamic Role of Small Business
1.1. Starting Your Small BusinessStarting Your Small Business2.2. Family-Owned BusinessesFamily-Owned Businesses3.3. Forms of Ownership of Small Forms of Ownership of Small
BusinessBusiness4.4. Maintaining Good Government Maintaining Good Government
Relations and Business EthicsRelations and Business EthicsCopyright © 2009 McGraw-Hill
Companies, Inc.: BE 322 Ms
Tabinda Zabin
Part I: Chapter 1• Chapter 1 covers material to help you decide
whether pursuing a career in small business is the right course of action for you
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Chapter 1• Starting Your Small
Business
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Learning Objectives
Define ‘business’ Contributions of small business Current problems small business face Current trends challenging entrepreneurs & small
business Why do people start small business? Characteristics of ‘entrepreneurs’ Opportunities & concerns of small business
Ch
ap
ter
11
Ryan McVay/Getty Images 1 - 3
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Business classification by size
Under 20 employeesUnder 20 employees Very SmallVery Small
20 - 9920 - 99 SmallSmall
100 – 499100 – 499 MediumMedium
500 Or More500 Or More LargeLarge
Terms in SBA: small business administrationpg. 9
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
• Small business (micro business)• Small business owner
– Establishes a business to further personal goals, such as profitability and fame
• Entrepreneur:– Business owner whose goals include achievement,
profit, growth, achieved through innovation and strategic management
• Entrepreneurial venture:– Business owner’s principal objectives are profitability
and growth
Define ‘Small Business’• It is independently owned and operated
and is not dominant in its field of operation.• Independent Management• Capital/Ownership = Few Individuals• Operations are primarily local but market
may have global branches• Business is small compared to its
competitors
Hisham F. Ibrahim/Getty Images
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Why interest in Small Business? pg.4-8– Number of small businesses are growing rapidly– 23 million small business in USA– Small firms generate new private employment– Public favors small business– Interest increased at high schools, colleges, and
universities– Trend towards self employment– Entrepreneurship is attractive to all ages– Real world example 1.1, 1.2, 1.3
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Contributions of Small Business pg.9-12
• Encourage innovation & flexibility• Maintain close relationship with customers &
community• Keep larger firms competitive• Provide employees with comprehensive learning
experience• Develop risk takers• Generate new employment• Greater employee job satisfaction• Real world example 1.4, 1.5, 1.6
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin Royalty-Free/CORBIS
Most CommonHome-Based Businesses
Personal Svcs.14%
Bus. Services
27%
Bldg. Trades31%
Financial & Real Estate
5%Sales & Distribution
10%
Arts/ Design Creative
13%
Source: Independent Insurance Agents of America
Current problems facing small businesspg. 12-13
• Recession/Current Economy• Retirement/Transition• Capital/Financing• Unexpected Growth• Succession• Inadequate Financing• Inadequate Management• Government Regulations/Paperwork
Royalty-Free/CORBIS
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Challenges to small businesspg. 14-15
• Exploding technology• Occupational and industry shifts
–Reinvention–Reengineered–Downsizing/Rightsizing
• Global challenges• Real world example 1.7
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Factors Affecting Industry/BusinessTable 1.4 pg. 23
1) Economics2) Technology3) Lifestyle4) Political/Legal5) Demographics Royalty-Free/CORBIS
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Declining Job Types
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Why Start ASmall Business?
72%
10%
10%
8%
Independence
Control
Satisfaction
Other
Why To Not StartA Small Business?
12%23%
22%17%
17%
Long Hours
Taxes
Risk
Responsibility
Other
Small Business Concerns pg. 25Poorly planned growthLoss of independenceThreat of failure
– Discontinuance– Failure
• Formal• Personal/Informal• Failure occurs due to
• Lack of managerial experience & financial backing• Poor location• Unexpected growth• Communication skills
Jim Arbogast/Getty Images
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Job Satisfaction
0%
10%
20%
30%
40%
50%
60%
70%
Self-Employed Working For Others
GreatBritain
U.S.
Objectives ofSmall Business Owners
pg. 15-19
• Achieve independence
• Additional income
• Help families
• Provide products not available elsewhere
• Expertise specialty
Ryan McVay/Getty Images
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Checklist ForAspiring Entrepreneurs
pg. 15-19
Passion Not Money
Something You Know
PatienceMentorFunding
Cash Manager
Build Sales
Don’t Rush
Wary of bad advice & suppliers/creditors
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Business Objectivespg. 15-19
• Service• Profit• Social• Growth• Mesh objectives (network)
Nick Rowe/Getty Images
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Ms Tabinda Zabin
Characteristics OfSuccessful Owners
pg. 20
+ Desire Independence
+ Strong Sense Of Initiative
+ Personal/Family Motivation
+ Quick/Concrete Results
+ Able To React Quickly
+ Dedicated To Business
+ Enter Business By Chance And/Or Design
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
What leads to successful SBM?pg. 21
• Adequate market• Sufficient capital• Recruit effectively• Timely information• Cope with government regulations• Expertise• Flexible• NBIA – Business incubators
– Nurture young firms and help them to survive and grow during the startup period when they are most vulnerable
Ryan McVay/Getty Images
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Personal Analysis
• Values
• Mental Abilities
• Attitudes
• Real world example 1.7, 1.8, 1.9, 1.10
Mel Curtis/Getty Images
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Stages in the Development of Business
Figure 1.5 Pg. 25• Stage 1:
– Owner– Hire manager, workers
and delegates
• Stage 2:– Owner-manager– workers
• Stage 3– Owner – managers –
workers– Size increases– Positions open up– Branch extends
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Ideas ForSmall Business
Career Counseling Catering Computer & Office
Machine Repair Day Care Education
Financial Planning Home Health Marketing Senior Fitness &
Recreation Specialized Delivery
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Where Arethe New Jobs?
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Chapter 1 Review
Copyright © 2009 McGraw-Hill Companies, Inc.: BE 322
Ms Tabinda Zabin
Summary page 26-27 Learn key terms page 27 Attempt questions page 28 Case Study 1.1 page. 28 Case Study 1.2 page 29
