Copyright ©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Pro and Cons of Smallness ADVANTAGES Personal relationships with customers and employees Ability to adapt to change Simplified recordkeeping Independence Advantages of sole proprietorships -Keeping all profits -Ease and low cost of going into business -Keeping business information secret DISADVANTAGES Risk of failure Limited potential Limited ability to raise capital 5 1

Copyright ©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Developing a Business Plan  Business plan—A carefully constructed guide for the person starting a business  Three basic purposes Communication Management Planning  Banking officials’ and investors’ questions What is the nature and mission of new venture? Why is it a good idea? What are the goals? How much will it cost? 5 2

Copyright ©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. TABLE 5-3 Components of a Business Plan Source: Adapted from Timothy S. Hatten, Small Business Management: Entrepreneurship and Beyond, 4th ed. Copyright © 2009 by Houghton Mifflin Company, pp. 93–118. Reprinted with permission. 5 3