SMALL BUSINESS MANAGEMENT Chapter 2 The Small Business Decision

The Small Business Decision Personal Evaluation

Advantages of Small Business Ownership More personal contacts with people Independence Skill Development Potential Financial Rewards Challenge Enjoyment

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

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

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

Personality Characteristics Required by Successful Entrepreneurs Selling Skills Problem Solving Abilities Strategic Planning Perseverance

The Small Business Decision Organizational Evaluation

Small Business Successes Alertness to Change Ability to Attract and Hold Competent Employees Staying Close 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 Environments Conducive to Small Business Success Personal Attention to Daily Operation Owner Contact with Employees Small or Local Demand

Small Business Successes Industries that Require Flexibility high growth rates, erratic demands, perishable products More Labor and Less Capital Intensive Considerable Government Encouragement

Small Business Failures Bankruptcies

Entrepreneurialship and Small Business Management Entrepreneurial Skills Characteristics creativity, innovativeness, independence, risk- taking, idea-oriented Situations generating ideas and solutions to problems, starting a new business, expanding or opening new products, reaching performance objectives, maintaining control of operations

Entrepreneurialship and Small Business Management Managerial Skills characteristics develops strategy and goal setting, prefers to know outcomes of actions or activities, team player, works through others, skills in finance, marketing, personnel, operations situations generating ideas and solutions to problems, starting a new business, expanding or opening new products, reaching performance objectives, maintaining control of operations

Concept Checks 1. What are the major causes of business failure? 2. What are the characteristics of a successful business? 3. List the advantages of owning a small business.

Framemakers Part 1 What aspects of Robert and Teresa’s background will contribute to their success if they decide to go ahead with picture framing store? What further areas should Robert and Teresa explore before making this decision?

Concept Checks 4. List the disadvantages of owning a small business. 5. What are the characteristics of successful small business owners? 6. What is the difference between an entrepreneur and a manager?

Concept Checks