Entrepreneurship and Small and Medium Enterprises Management Chapter 8 Entrepreneurship and Small and Medium Enterprises Management

Entrepreneurs An entrepreneur takes ______ to start a business for the purpose of making a _______. Entrepreneurs are able to transform their dreams into successful business ________. risks profit ventures

We must achieve the goal! Entrepreneurs Characteristics and aptitudes of entrepreneurs A strong motivation to succeed Entrepreneurs have a strong desire for excellence and success in competitive situations. The desire becomes a powerful ________ for them. They often set _________ goals for themselves and their companies. motivator We must achieve the goal! challenging

Characteristics and aptitudes of entrepreneurs Willing to take initiatives Entrepreneurs want everything under their own ________ and make all possible efforts to achieve their goals. control To reduce production cost and time, I want to acquire a factory in the Mainland.

Entrepreneurs A strong desire for independence Characteristics and aptitudes of entrepreneurs A strong desire for independence Entrepreneurs do not like to be bound by ______ and ________. They have their own thoughts and ideas on how things should be done. rules policies I won’t follow what the others did!

Characteristics and aptitudes of entrepreneurs Energetic They are more energetic than average people. They often spend long hours managing their businesses.

Entrepreneurs Self-confident We will be the market leader within 3 years! Entrepreneurs Characteristics and aptitudes of entrepreneurs Self-confident They are confident of their own _________. They are willing to set _____ and difficult goals. They are __________ and enthusiastic about their businesses, even in difficult times. abilities risky optimistic

Characteristics and aptitudes of entrepreneurs I will overcome! Entrepreneurs Characteristics and aptitudes of entrepreneurs Persistent and determined They are willing to bear extreme _________ in order to achieve their goals. They persist and are not __________ by adverse situations. They have the _________ to overcome barriers that stand in the way of success. hardships discouraged willpower

Characteristics and aptitudes of entrepreneurs Initiating changes to stay ahead of competitors They understand the importance of initiating _______ in the market. They are willing to take risks and introduce ______ products and services before their competitors do. changes new

Characteristics and aptitudes of entrepreneurs Eager to seek new opportunities They always look for new ___________ in the market rather than following ________. New opportunities can provide more _________ and room for ________ in their businesses. opportunities trends challenges growth

Entrepreneurs Receptive to innovative ideas Characteristics and aptitudes of entrepreneurs Receptive to innovative ideas They like to create ____ ideas for their businesses. They see things from different _______ and are willing to accept new ways of ________. new angles thinking We can try to sell our products through the Internet.

Importance of entrepreneurship to business and economy Competition Entrepreneurship brings more and newer ________ and _________ to us. It creates better ways of using _________ and promotes __________ in the market.  Companies operate more ________ and make _____________ continuously. products services resources competition efficiently improvements

Importance of entrepreneurship to business and economy Competition Consumers benefit because they enjoy not only a ________ of products and services but also ______ prices and ______ quality. Entrepreneurship leads to ________ growth. diversity lower better economic

Importance of entrepreneurship to business and economy Production Entrepreneurs play an important role in society because they organise _________ for goods and services. They put ________ and _________ together to start a business. Entrepreneurship makes business ________ and _________ our economy. production people resources flourish supports

Importance of entrepreneurship to business and economy Innovation Innovation is important for business because new products and services are created to satisfy customer ________. Entrepreneurship is an important force behind innovation in business. They always look for and are able to seize market ____________ before other people. demand opportunities

Importance of entrepreneurship to business and economy Innovation Innovative products or services can create a new _________ and even an entirely new _________. Entrepreneurship not only enables _________ to prosper but also stimulates economic _______. business market businesses growth

Business Plan A business plan sets out the _____ ideas behind a business and describes the related _______ arrangements. The owner of a startup company should state clearly what he wants to achieve and how he can reach these goals. basic startup

Importance of a business plan To the company It provides a statement of ______ of the company and the ________ to be used to achieve those goals. goals strategies

Importance of a business plan To the company The company can provide __________ of the business to outsiders including __________ customers, suppliers, lenders and investors. information prospective Lender Investor Supplier

Importance of a business plan To an entrepreneur A business plan forces the entrepreneur to think about issues that are important for the ________ of the business. He has to determine the products or services to be offered, analyse the competition, calculate how much money he needs, and think through the __________ details. success operational

Importance of a business plan To an entrepreneur Possible _____ and ________ that may arise are also identified in advance. The entrepreneur can then take ________ immediately to deal with the problems when they arise and minimise losses. risks problems measures

Contents of a business plan Title page Table of contents name and address of the company names of the owner(s) and the management team the contact person(s) date of the prepared plan sections of the plan with page numbers

Contents of a business plan Executive summary Vision and mission statement an overview of the plan with highlights on important points and issues. the values, principles and philosophy of the company

Contents of a business plan Company and industry the nature of business forms of ownership company objectives products and services strengths and weaknesses market analysis existing competitors government policies analysis of business opportunities

Contents of a business plan 6 Marketing plan an analysis of target market and opportunities profile of target customers methods of attracting customers selling strategies sales promotion and advertising strategies distribution channels pricing strategies

Contents of a business plan 7 Operating plan the production location(s) production process(es) major types of operating equipment quality control mechanisms sources of supply purchasing procedures inventory control

Contents of a business plan 8 Financial plan the projected financial statements for the next 3-5 years projected capital expenditure breakeven analysis planned sources of financing

Contents of a business plan 9 Management plan information on the management team organisational structure employee recruitment and training

Process of developing of a business plan Queen’s Road West Gather information about the company and industry relevant to the business. Evaluate market opportunities for the business.

Process of developing of a business plan Queen’s Road West Examine market threats, identify major competitors in the market and study changes which may adversely affect the business. Decide the company’s vision, mission and objectives.

Process of developing of a business plan Develop business strategies, project that financial resources needed and plan what to do in terms of marketing, operations and management. Compile and analyse all the information and write up the business plan.

Small and Medium Enterprise In Hong Kong, according to the definition by the Trade and Industry Department, in the manufacturing sector, an SME is an enterprise which employs fewer than ____ persons. in the non-manufacturing sector, an enterprise that employs fewer than ____ persons is considered as an SME. 100 50

Small and Medium Enterprise Forms of business ownership for SMEs SMEs can operate as ______________, __________ or ________________. SMEs can be found in both the secondary and _______ industries. The majority of SMEs in HK is in the ______ and ________ business. Most entrepreneurs start from SMEs It is because they have ______ capital and are unable to get ________ from banks. sole proprietors partnerships limited companies tertiary import export little loans

Small and Medium Enterprise Characteristics of SMEs in Hong Kong Owned and managed by single individuals Most SMEs are owned by _______________ who also manage the businesses. Some SMEs are partnerships and ________ companies. It is common for owners to work _____ hours. single individuals limited long

Small and Medium Enterprise Characteristics of SMEs in Hong Kong Limited resources and capital Most SMEs are financed by their ______ only. They have limited resources and capital to finance their __________ and _______ their businesses. It is also difficult for them to get ______ from banks because of their small size. owners operations expand loans

Small and Medium Enterprise Characteristics of SMEs in Hong Kong Family members are involved in managing the business The owners often seek support from their _______ members. The owner’s _______ and ________ usually take up important management positions in the business. family spouse children

Small and Medium Enterprise Characteristics of SMEs in Hong Kong Focus on narrow markets SMEs often focus on _______ markets in which ______ companies are not interested. They can tailor their products and services to cater for the ______ of a particular group of customers. narrow large needs

Small and Medium Enterprise Characteristics of SMEs in Hong Kong Innovative SMEs are eager to explore new ___________ in the market and are more ________ to new ideas. To attract customers, they are willing to introduce ______ products and services. opportunities receptive new

Small and Medium Enterprise Characteristics of SMEs in Hong Kong Greater flexibility SMEs are _____ and have _______ flexibility than large companies. Since the owners can make decisions _______, SMEs are able to make changes ________. small greater quickly promptly

Small and Medium Enterprise Contributions of SMEs to the local economy Providing specialised goods and services ______ companies do not produce all goods and services society needs. As SMEs are _____ in scale and their operating costs are usually ______, they can specialise in serving _____ markets and still make a ______. Large small lower small profit

Small and Medium Enterprise Contributions of SMEs to the local economy Providing jobs SMEs are important to a society because they offer jobs to _______ and ____________ labour. The owners of SMEs are ____________ as they manage the companies themselves. unskilled inexperienced self-employed

Small and Medium Enterprise Contributions of SMEs to the local economy Introducing new products and services SMEs are more willing to be _________ to compete with large companies. e.g. in recent years, some bookstores in Hong Kong not only sell books but also provide snacks and drinks. This creates a more relaxing environment to customers. innovative

Small and Medium Enterprise Contributions of SMEs to the local economy Supporting large companies Large companies rely on _______ to provide goods and services. Many SMEs are _____________ of large companies. They are hired by large companies to perform _______ tasks.  The large companies can reduce their ________ and enhance __________. SMEs subcontractors specific workload efficiency

Differences between Small and Large Businesses Small business Large business Scope of business Company management Produce or sell one type of product or service Simple business operations Produce or sell many types of products and services Complex business operations Professional managers with specialised roles and duties Different levels of management Managed by the owners themselves Perform a variety of job functions

Differences between Small and Large Businesses Small business Large business Planning Organising Loose and informal planning process Make short-term and operational plans. Systematic and formal planning process Have long-term goals and develop strategic plans Flat structure Various job duties Face-to-face communication Tall structure Highly-specialised job duties Written and electronic means of communication

Differences between Small and Large Businesses Small business Large business Leading Controlling Autocratic owners Simpler and faster decision-making Delegation is common Slow decision- making Fewer rules and regulations Loose and informal control Mainly done by the owners Many rules and regulations Formal control mechanisms and processes Done by a specific department or a unit

Government Support for SMEs No sufficient funds! Difficult to get bank loans! Lack management skills! No expertise to conduct market analysis! How can my SME survive? You can seek government support.

Government Support for SMEs Provide supplementary functions Business Start-up Centre Provides office facilities and administrative assistance to business starters Hong Kong Productivity Council Offers customised business solutions and management training to SMEs

Government Support for SMEs Provide supplementary functions Hong Kong Trade Development Council Provides SMEs with useful market information and analysis

Government Support for SMEs Set up funding schemes SME Loan Guarantee Scheme Aim: to help SMEs enhance productivity and _____________. Helps SMES obtain loans from _______ institutions which participate in the scheme with the government acting as the _________. competitiveness lending guarantor

Government Support for SMEs Set up funding schemes SME Export Marketing Fund Aim: to help SMEs expand their businesses through participation in _______ promotion activities. Provides grants to SMEs for their particpation in ________ trade fairs and _________ and study missions, as well as local trade fairs and exhibitions which are _______-oriented. export overseas exhibitions export

Government Support for SMEs Set up funding schemes SME Development Fund Aim: to provide financial support to projects which can enhance the _____________ of HK’s SMEs. Projects to be supported include award schemes, best practices, conferences, seminars, databases etc. competitiveness

Government Support for SMEs Set up funding schemes The Funding Scheme for Workplace English Training Aim: to subsidise employees who need to use _______ in the workplace to reach the relevant benchmark for their job type. Funding is granted to employees for taking an English training course commissioned by their ________. It can also be used for a specified __________ business English examination. English company international

Government Support for SMEs Set up funding schemes Small Entrepreneur Research Assistance Programme Aim: to finance entrepreneurs in the _________ sector to start up, carry out R&D, and conduct market ______ before they can raise funds from _______ capitalists. Technology entrepreneurs of a locally incorporated company with less than _____ employees can apply for this fund. technology studies venture 100