6-1 Entrepreneurship & Small Business The process of creating and managing a business to achieve desired objectives is our working definition for entrepreneurship. Entrepreneurship

6-2 Entrepreneurship & Small Business Ability to see emerging trends & create company that satisfies those consumer needs. (Dell Computers)Dell Computers Create new markets (Amazon.com)Amazon.com Improve or re-package existing products (Starbucks)Starbucks Entrepreneurship & Entrepreneurs

6-3 Entrepreneurship & Small Business “Smallness” is relative. Defined, small business is any independently owned and operated business, not dominant in its competitive area, employing less than 500 people. What is a Small Business?

6-4 Impact of Small Business

6-5 Impact of Small Business 60-80% of all new jobs, annually, created by small business in the last 10 years.

6-6 Small Business & Innovation Airplane Audio tap recorder Double-knit fabric Fiber-optic examining equipment Heart valve Optical scanner Personal computer Soft contact lenses Zipper 55% of all innovations

6-7 Small Business Retailing and wholesaling, services, manufacturing and high technology are especially attractive to entrepreneurs. Industries that Attract Small Business

6-8 Retailing & Wholesaling Selling directly to the consumer Music stores Sporting-goods shops Dry cleaners Boutiques Drugstores Restaurants Hardware stores 14

6-9 Small Business 66% of the economy Employs 70% of workforce Services

6-10 Small Business Small business advantage over large firms – product customization Artwork, clothing, jewelry, clothing, furniture Manufacturing

6-11 Small Business Businesses that depend heavily on advanced scientific and engineering knowledge. 39% of high-tech jobs are in small business High Technology

6-12 Advantages of Small Business Ownership Independence Costs Flexibility Focus Reputation

6-13 Disadvantages of Small-Business Ownership High Stress Level High Failure Rate 90% of all new businesses fail within the first 5 years Undercapitalization Lack of funds to operate a business normally

6-14 Disadvantages of Small-Business Ownership Managerial Inexperience or Incompetence Inability to Cope with Growth

6-15 Starting the Small Business Start with a concept or general idea Devise a strategy to guide planning & development Make Decisions Form of ownership Financial resources needed Acquire existing business Start a new business Buy a franchise

6-16 The Business Plan Business Plan – a precise statement of the rationale for the business and a step-by-step explanation of how it will achieve its goals. Acts as a guide and reference document. Explanation of the business Analysis of competition Income/Expense estimates

6-17 Forms of Business Ownership Sole Proprietorship Partnership Corporation

6-18 Financial Resources Provide your own personal capital (money) Obtain capital (Financing options)

6-19 Starting a Small Business Do I start from scratch? Do I buy an existing business? Do I buy a franchise?

6-20 A license to sell another’s products or to use another’s name in business, or both Franchising Starting a Small Business

6-21 Franchiser – the company that sells a franchise (e.g. Dunkin’ Donuts, McDonald’s, Subway, Re/Max) Dunkin’ DonutsMcDonald’s) Franchisee – the purchaser of a franchise Franchising Starting a Small Business

6-22 Franchise – Advantages & Disadvantages AdvantagesDisadvantages Training & supportFees and profit sharing Brand name appealStandardized operations National advertisingRestrictions on purchasing Financial assistanceLimited product line Proven productsPossible market saturation Greater chance for successLess freedom in decisions