Entrepreneurship: Starting a Business Chapter 6 Download this book for free at: ttp://hdl.handle.net/10919/70961

Review What are considerations in determining the business form? What are the advantages and disadvantages of Sole proprietorship Partnership Corporation LLC What are mergers and acquisitions?

Learning Objectives Define entrepreneur. Identify entrepreneur advantages. Know the importance of small businesses. Understand small businesses innovation. Describe the goods-producing and service-producing sectors. Know the ways to start a business. Explain why some businesses fail. Know Small Business Administration services. Download this book for free at: ttp://hdl.handle.net/10919/70961

Entrepreneurs Take business risk Reap rewards or suffer losses Innovators vs. small business owners “lifestyle businesses” Steve Wozniak (left) and Steve Jobs, co-founders of Apple Computer, holding an Apple I circuit board, c. 1976.

Entrepreneurs Why be an entrepreneur? Own boss Accommodate lifestyle Financial reward Freedom Reasons to not be an entrepreneur Hard, long work Responsibility and stress Money No security Need to do things not good at or don’t enjoy

Financing Early stage Later stage Personal funds Friends and family Personal credit cards (BAD IDEA) Crowd funding (e.g. Kickstarter) Angel investors Later stage Venture capitalists

Small Businesses Independently owned and operated Exerts little influence on industry Less than 500 employees Importance Jobs Entry point for most workers First to hire in business cycle growth Innovation More patents per employee than large firms

New business openings (closings) Business expansions (contractions) Small Businesses Small Business Job Gains and Losses, 2000-2015 (in millions of jobs) New business openings (closings) Business expansions (contractions) Total 34.3 237.5   (33.1) (233.9) +1.2 +3.6 +4.8 Download this book for free at: ttp://hdl.handle.net/10919/70961

Small Businesses Opportunities for women and minorities Many government and business contracts provide favorable treatment Business Owners 2007 % of all Businesses 2012 % of all Businesses Increase Women 28.8 35.8 +7.0% Hispanic Americans 8.3 12.0 +3.7% African Americans 7.1 9.4 +2.3% Asian Americans 5.7 6.9 +1.2% Download this book for free at: ttp://hdl.handle.net/10919/70961

Industry Sectors Industry Goods-producing sector Firms selling similar products Goods-producing sector Provide tangible goods Service-producing sector Do not make tangible goods E.g. transportation, finance, entertainment, hospitality

Goods Sector Retailers Wholesalers Buy goods and resell them to consumers Wholesalers Buy goods and sells them to retailers Often provide warehousing function

Small Businesses Small Businesses by Industry, 2012 Download this book for free at: ttp://hdl.handle.net/10919/70961

Starting a Small Business Create a business plan What is the target market? What is the business idea? Is it feasible? What is the competitive advantage? How will it be started? What form will it use? How will it be financed?

Target Market and Business Idea Fill an unmet need Address a frustration One person’s frustration is an entrepreneur’s opportunity Save or make someone else money

Starting a Business Start from scratch Buy an existing business Highest risk Highest potential return Buy an existing business What are you buying? Buy a franchise Franchisor Franchisee Franchise agreement

Franchising Entrepreneur’s Franchise 500 Top Franchises. Ranking 2015 2016 1 Hampton by Hilton Jimmy John’s 2 Anytime Fitness 3 Subway Supercuts 4 Jack in the Box Servpro 5 6 McDonald’s 7 7-Eleven 8 Denny’s Dunkin’ Donuts 9 Pizza Hut 10 The growth of Franchising in the U.S. Number and Value of Franchises Download this book for free at: ttp://hdl.handle.net/10919/70961

Why Businesses Fail Poor idea Cash flow Lack of skills, experience Lack of customer focus Unable to handle growth Change in management approach Change in scope

Sources of Assistance Small Business Administration, SBA Loan guarantees (not loans) Programs Small Business Development Center SBDC – Here at RVCC! Free advice, literature Service Corps of Retired Executives, SCORE