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Small Business Entry: Paths to
Part-Time Entrepreneurship
Chapter 5
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Learning Objectives
LO1 Describe when and why part-time entrepreneurship makes sense.
LO2 Assess the feasibility of opportunities to enter into a part-time business.
LO3 Describe the major paths to part-time entrepreneurship.
LO4 Use the BRIE model to describe what it takes to be successful in part-time entrepreneurship.
5-2
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Learning Objectives
LO5 Describe the advantages and pitfalls of delegating and outsourcing.
LO6 Explain the benefits of Bootstrapping methods for entrepreneurship.
LO7 Describe the ethical challenges of part-time entrepreneurship.
LO8 Describe the challenges of moving from part-time to full-time entrepreneurship.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Why Part-time Businesses Are Important
Part-time self-employment working for yourself
for 35 or fewer hours a week
Full-time self-employment 35 or more hours
per week
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Why Part-time Businesses Are Important
Most entrepreneurs start out working part time on their new business
The sheer number of part-time self-employeds makes them a major force in our economy
Around half of the 27.2 million small businesses in the United States in 2007, were part-time businesses
Volatility frequency of business starts and stops
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
When to Consider Part-TimeEntrepreneurship
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Figure 5.1
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Key Considerations for Success inPart-Time Entrepreneurship
Cost to start-up The amount of money it takes to start a new
business.Time to start-up
How long it takes to start a new business.Permanence
The impression of long-term continuity a business gives others.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Home-based Business
There were about 14.4 million home-based businesses in the United States in 2007, and they represented 52 percent of all firms.
Home-based business meets at least two of the three criteria for start-up.
It is inexpensive, since you are already living somewhere and you can get your business going where you live in a moment.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Home-based Business
Zoning laws Government
specifications for acceptable use of land and buildings in particular areas.
Covenants The limitations
imposed on your property by your neighborhood group.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Home-based Business
Variance Permission from a government organization to
act differently that the laws state.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Issues Important to Running a Home-based Business
Choose a work location inside your home that is away from noise, distractions, and family traffic.
Be realistic about the amount of space you’ll need for your equipment.
An office door can keep business separate from family and the rest of life.
Try your location out for a day or two to check out noise, traffic patterns, lighting needs, and distractions.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Issues Important to Running a Home-based Business
Don’t overload on hours of work, or on snacks from the refrigerator down the hall.
Setup your work day to minimize distractions from household or family chores
Consider hiring help to handle household or family chores to free up your time.
Set the ground rules early and stick with them.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Equipment for a Home-based Business
Comfortable, usable desk and chair and adequate lighting
TelephoneHigh-capacity
Internet serviceBusiness e-mail
account
High-speed desktop computer
Fax machineCopier Appropriate
software
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Twenty Questions toAsk Before Planning
Your Home Office
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Internet Informational Websites
E-commerce The use of the Internet to conduct business
transactions.Informational Web sites
An Internet site designed to introduce and explain a business to others.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Internet Informational Websites
Business-to-consumer (B2C) Business-to-consumer transactions using e-
commerce.Business-to-business (B2B)
Business-to-business transactions using e-commerce.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
E-Commerce as Percent of Total Value: 2002–2010
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Figure 5.2
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Internet Informational Websites
The Internet’s power comes from its being a very cost-effective and efficient way to contact your customers.
Most small businesses need to have a Web site regardless of whether or not they use it for actual sales.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Internet Informational Websites
Potential customers will use it to find you.If they’ve heard about you from something
other than the Internet, they will use your site to find out more information about you and to decide if they want to actually contact you.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Internet Informational Websites: Typical Pages
Home/Introduction
“About us”
Support/Customer
ServiceResources
Press/Media
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Internet Informational Websites
Blog A Web page in which entries are posted in
reverse chronological order (i.e., the most recent at the top of the page)
RSS feed An Internet messaging service that pushes
(sends) whatever Web material you specify to subscribers to that feed.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Internet Informational Websites
Multichannel marketing The use of several different channels to reach
your customers, for example, a Web site, direct mail, and traditional retailing.
Reciprocal links A listed, live connection to a different Web site,
which in turn displays a similar link to the first Web site.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Internet Informational Websites
Search engine optimization A general approach to Web site design intended
to result in the site being displayed toward the beginning of a search engine’s (e.g., Google, Yahoo!, etc.) listing for that term.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Internet Informational Websites
Sponsored link A form of paid advertising that gets your
company’s website at the top of a search list.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Search Engine RankingsFebruary 2012
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Figure 5.3
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
E-Commerce and eBay Websites
eBay reports over 4 million sellers in the United States alone, and seven out of every eight sellers work on eBay only part time
For part-timer entrepreneurs the online approach makes a highly attractive opportunity because it offers the advantages of a large market, 24/7 availability of your products, and a start-up which is quickly done and potentially inexpensive
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
E-Commerce and eBay Websites
Payment Most online
transactions use a credit card or an online payment system like PayPal.
Chargebacks This is a fee the
service levels on you for any of a variety of problems related to the sale
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
E-Commerce and eBay Websites
Reverse auction An auction in which the low bid gets the business
or wins.Reserve price
A minimum acceptable selling price in an auction. If the bidding does not exceed the price, the sale will not go through.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
The Multiple Channelsof Business Promotion
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Figure 5.5
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
The Next Best Things to a Home-Based Business
Home retail: parties and door-to-door Avon, Mary Kay
Success Factors hosts with good contacts, matching product to
community, closing the sale
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Home Retail
Advantages ease of setup, low
cost of start-up, ability to work away from home and employer
Disadvantages working “on the
road”, lack of a base to organize and work, variable income, finding ways for customers to reach you
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
The Next Best Things to a Home-Based Business
Network marketing An approach to
selling in which the salesperson recruits customers to become distributors of the product or service to others.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
The Next Best Things to a Home-Based Business
Stand retail the roadside, flea market, farmers’ market, or
craft fair business one of the most ancient forms of business
Mentioned in the BibleTend to be semi-permanentSuccess Factors: location, inventory
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Stand Retail
Advantages little investment,
variety of locations, quickly established, easily ended
Disadvantages variable income,
legal requirements
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
The Next Best Things to a Home-Based Business
Mobile Offices
Virtual Offices, Executive Offices, and Incubators
Doing Business without a Business Organization
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Doing Business without a Business Organization
Intellectual property (IP) Property coming
from some sort of original thought, for example, patents, trade secrets, trademarks, and copyrights.
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Success Factors for Part-time Businesses
Boundary separating and balancing business and home
Time management Use a to-do list Prioritize Keep it in its own space (home based)
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Making Do When You Are Starting Out
Bootstrapping using low-cost or free techniques to minimize
your cost of doing businessUndercapitalization
not having enough money available to the business to cover shortfalls in sales or profits
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Ethics and Part-time Small Business
Moonlighting working on your
own part-time after your regular job
Aggrandizing making your
business or yourself seem more accomplished than it is
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Moving from Part-time to Full-time
Key question is usually financial Wait until there is a solid income Make use of any transition services offered by
the former employer Recognize that initially, you will spend all your
time running and marketing the business
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