©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 Small Business and Entrepreneurship: Economic Rocket Fuel Explain the key reasons to launch a small business Describe the typical entrepreneurial mindset and characteristics Discuss funding options for small business Analyze the opportunities and threats that small businesses face

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 Small Business and Entrepreneurship: Economic Rocket Fuel Discuss ways to become a new business owner and tools to facilitate success Explain the size, scope, and economic contributions of small business

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Reasons People Start their Own Business ￭ Greater financial success  Entrepreneurs: Risk their time, money, and other resources to start and manage a business ￭ Independence ￭ Flexibility ￭ Challenge ￭ Survival 4

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Entrepreneurial Mindset 5 Aim to change the world through blockbuster goods or services Deliver the best ideas, changing the economic and social landscape

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Entrepreneurial Characteristics 6 ￭ Vision: Bringing out new ideas and solutions

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Entrepreneurial Characteristics Internal locus of control: Deep-seated sense that the individual is personally responsible for what happens in his or her life External locus of control: Deep-seated sense that others are responsible for what happens one’s life Self-reliance 7

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Entrepreneurial Characteristics Putting in extra hours and days Energy Ability to achieve and act boldly Confidence Turning uncertainty into an advantage Tolerance of uncertainty Viewing failure as a chance to learn Tolerance of failure 8

Reality TV Video Slide 9 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. eos/07startupjunkies.html

© iStockphoto.com / DNY59 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ￭ Ron Wiener, founder and CEO of Earth Class Mail, is a serial entrepreneur. He founded and sold four other businesses before founding Earth Class mail. What do you think has motivated him to do this? ￭ What key entrepreneurial characteristics aptly describe Ron Wiener? 10

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Web-link: The Blackstone Entrepreneurship Initiative ￭ The Blackstone entrepreneurship initiative has identified, created, and replicated four distinct program models with the greatest potential to create high- growth businesses and industries most known to ignite job growth foundation/entrepreneurship-initiative

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Funding Options for Small Businesses ￭ Personal resources  Family or friends  Credit cards ￭ Loans  Commercial loans  U.S. Small Business Administration (SBA)  Peer-to-peer 12

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Funding Options for Small Businesses ￭ Angel investors: Invest in start-ups with high growth potential in exchange of share in ownership ￭ Venture capital firms: Invest in start-up businesses with high growth potential in exchange for a share of ownership 13

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Web-link: New York Angels ￭ One of the longest running active angel groups in New York City, The New York Angels typically invest $100,000- $1,000,000 in seed/early stage companies, and syndicate deals 14

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit New Business Survival Rates 15

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Opportunities for Small Businesses ￭ Gain profitable market niches  Market niche: Small segment of a market with fewer competitors than the market as a whole ￭ Personal customer service ￭ Lower overhead costs ￭ New opportunities fueled by the Internet 16

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Threats for Small Businesses ￭ High risk of failure ￭ Lack of knowledge and experience ￭ Insufficient funds ￭ Bigger regulatory burden ￭ Higher health insurance costs 17

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit Pros and Cons of Starting a Business from Scratch versus Buying an Established Business 18

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Becoming an Entrepreneur 19 Learn about industry and make contacts Gain experience People who have succeeded or failed provide deep insight Learn about others Provides information on industry-specific statistics, general trends, and updates on small business regulations Access Small Business Administration (SBA) resources Business plan: Describes a business concept, outlines core business objectives, and details strategies and timelines for achieving them Helps maintain focus and critical for obtaining outside funding Develop a business plan

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Small Business Administration (SBA) ￭ Agency of the federal government that maintains and strengthens the nation’s economy  Counsels, assists, and protects the interests of small businesses ￭ Affiliates  Small Business Development Centers (SBDCs): Provide comprehensive management assistance to small businesses 20

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Small Business Administration (SBA)  SCORE (Service Corps of Retired Executives): Provides free, comprehensive counseling for small business owners from qualified volunteers 21

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Core Questions for a Business Plan ￭ What service or product does the business provide, and what needs does it fill? 22

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Core Questions for a Business Plan ￭ Who are the potential customers for the product or service, and why will they purchase it from you? ￭ How will the potential customers be reached? ￭ Where will the funding to start your business be obtained? ￭ When can profitability be achieved? 23

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Components of a Business Plan Executive summary Description of business Marketing Competition Operating procedures Personnel Complete financial data and plan, including sources of start-up money Appendix 24

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Small Businesses: Characteristics & Impact ￭ Small businesses play a vital role in the U.S. economy ￭ Contribution to the economy  Create new jobs  Fuel innovation  Vitalize inner cities 25

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit Early Phase Entrepreneurship Rates

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Factors Contributing to Difference in Entrepreneurship Rates 27 Low-income countries have high overall level of entrepreneurship Per capita income Rates are significantly lower in countries that provide: High level of employment protection Strong unemployment insurance Opportunity cost Extensive, complex regulations hinder entrepreneurship by raising barriers Cultural/political environment

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28 Explain the key reasons to launch a small business Describe the typical entrepreneurial mindset and characteristics Discuss funding options for small business Analyze the opportunities and threats that small businesses face

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 29 Discuss ways to become a new business owner and tools to facilitate success Explain the size, scope, and economic contributions of small business