SMALL BUSINESS MANAGEMENT Chapter 2 The Small Business Decision

CHAPTER OBJECTIVES  1. To discuss the ___________ and disadvantages of small business ownership as a starting point in making the small business decision.  2. To review the personal and organizational attributes of a successful small business owner.  3. To explain the reasons some ___________ succeed and others fail.  4. To discuss entrepreneurial development in large business.  5. To identify the differences between an ___________ and a manager.

The Small Business Decision  Personal Evaluation Self evaluation exercise

Advantages of Small Business Ownership  More personal ___________ with people  Independence  Skill ___________  Potential ___________ Rewards  Challenge  ___________

Disadvantages of Small Business Ownership  Risk  ___________  Need for Many Abilities  Limited Financial Rewards  People ___________  Time Demands

Entrepreneur Defined  A person who ___________ and/or operates a business.  All active owner-managers and second generation ___________ of family owned firms and owner-managers which buy out founders of existing firms.  Also includes ___________ managers of larger corporations who have a flair for innovation and risk.

Demographic Characteristics of Entrepreneurs  Parents ___________ business  Foreign parents  High school degree or less  ___________ or more  Age 31 and under  ___________ 40 or more

Personality Characteristics Required by Successful Entrepreneurs  Achievement Orientation  Risk Taking  Independence, Self ___________, Self Assurance  Innovativeness  Strong Verbal and ___________ Skills  Selling Skills

Personality Characteristics Required by Successful Entrepreneurs (cont)  Problem ___________ Abilities  Strategic Planning ___________

The Small Business Decision  Organizational Evaluation

Small Business Successes  Alertness to ___________  Ability to ___________ and Hold Competent Employees  Staying ___________ to the Consumer

Small Business Successes  Thoroughness with Operating Details  Ability to Obtain Needed Capital  Effective Handling of Laws, Rules, and Regulations

Small Business Successes  Entrepreneurial Success in a Large Business Ten Commandments for Intrapreneur Success

Small Business Failures  Bankruptcies

Entrepreneurialship and Small Business Management  Entrepreneurial Skills Characteristics  creativity, ___________, independence, risk-taking, idea oriented Situations  generating ideas and solutions to problems, starting a new business, expanding or opening new products

Characteristics of Artisan Entrepreneurs  Technical ___________  ___________ approach  Reluctance to delegate  Narrow view of strategy  Personal sales effort  Short ___________ horizon  Simple record keeping

Characteristics of Opportunistic ( Promoter) Entrepreneurs  Broad-based education  Scientific approach to problems  Willing to ___________  Broad view of strategy  Diversified ___________ approach  Longer planning horizon  Sophisticated accounting and financial control

Entrepreneurialship and Small Business Management  Managerial Skills Characteristics  develops ___________ and goal setting,  prefers to know outcomes of actions or activities,  team player,  works through others,  skills in finance, marketing, personnel, operations Situations  reaching ___________ objectives,  maintaining control of operations

Bright Lights, Deep Waters  Discuss the difference between an entrepreneur and a manager using David Green and Carmanah Lights as examples.  What dangers of obtaining equity financing are illustrated in this example?

Concept Checks  1. List the advantages of owning a small business.  2. List the disadvantages of owning a small business.  3. What are the characteristics of successful small business owners?

Concept Checks  4. What are the major cases of business failure?  5. What is the difference between an entrepreneur and a manager?