ENTREPRENEURIAL CONSULTING Entrepreneurship 475 Spring 2010 Dr. Robert Lahm Dr. Frank Lockwood

Introduction  ENT 475 is the capstone course for the entrepreneurship program. The course is designed to give you the opportunity: –Analyze the operations of an ongoing business –Develop an analysis of the problem –Conduct a market or industry analysis –Develop and present a plan to solve the problem (could be a business plan) to the management of the small business

What is a “Small Business”  The SBA* defines a small business as an independent business with < 500 employees  How important are small businesses to the U.S. economy? –99.7% of all employer firms –½ of all employees work for small businesses –22.8% of federal prime contracts in 2006 –40% of high tech workers (where innovation happens) –13X’s as many patents per employee as large firms *All statistics are from the SBA

Job Creation  Most jobs are created by small business –60-80% of all new jobs in the U. S. each of the last 10 years were created in small businesses –90% of jobs in western NC –Large firms lost more jobs than they created  Net loss of>180,00 jobs in large firms

Job Creation  Breakdown of U.S. jobs –115.1 million non-farm private sector jobs in 2004  58.6 million in firms < 500 workers  41.8 million in firms < 100 workers  21.2 million in firms < 20 workers  Survival rate for new businesses –66% survive at least 2 years –44% survive at least 4 years  Rates don’t vary much by industry or class

Job Creation  Why do some survive when others don’t? –Adequate supply of capital –Being large enough to have employees –Education level of the owner –Owner’s reason for starting the business  Freedom for family life  Wanting to be their own boss  A recent USA Today survey indicated that 60% of parents wish that their children could start and run their own business

Sources of Capital  Equity –Personal savings –Friends and family –Angel investors –Venture capitalists –Public Offerings  Debt –Commercial banks or other depositories (65%)  Incl. loans, credit lines, leases, etc. –Credit Cards