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2. Copyright ©2003 Prentice Hall, Inc. 4 - 2 Entrepreneurship and Small Business

3. Copyright ©2003 Prentice Hall, Inc. 4 - 3 “Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage.” ~ Victor Kiam

4. Copyright ©2003 Prentice Hall, Inc. 4 - 4 Brief Introduction topics Small business and its importance in the economy Sole proprietorships, partnerships, and corporations Creating and managing corporations Corporate trends and issues Starting and funding a small business Pros and cons of franchising

5. Copyright ©2003 Prentice Hall, Inc. 4 - 5 What Is “Small Business”? Independently owned and managed business that does not dominate its market

6. Copyright ©2003 Prentice Hall, Inc. 4 - 6 Job Creation Innovation Importance to Big Businesses Small business plays a critical role in the U.S. economy.

7. Copyright ©2003 Prentice Hall, Inc. 4 - 7 The Labor Force Reflects the Importance of Small Business 86.09 11.002.00 0.200.10 Percentage of All U.S. Businesses Total Employees Under 20 20- 99 100- 499 500- 1000 1000 or more 25.6029.1025.50 7.10 12.70 Percentage of All U.S. Workers Total Employees Under 20 20- 99 100- 499 500- 1000 1000 or more

8. Copyright ©2003 Prentice Hall, Inc. 4 - 8 Popular Areas of Small Business Enterprise Services Retailing Construction Financial Insurance Wholesaling Transportation Manufacturing Services 37.6% Retailing 22.7% Manufacturing 5% Finance & Insurance 10% Construction 10% Transportation 5% Other 1.7% Wholesale 8%

9. Copyright ©2003 Prentice Hall, Inc. 4 - 9 Types of Business Organizations Type of Business 73% 7% 20% Sole Proprietorship PartnershipCorporations Sales Revenue 5% 6% 89%

10. Comparative Summary: Three Forms of Business Business Form LiabilityContinuityManagement Investment Sources Personal, limited Ends with death or decision of owner Personal, unrestricted Personal Personal, unlimited Ends with death or decision of any partner Unrestricted or depends on partnership agreement Personal by partner(s) Capital invested As stated in charter, perpetual or for specified period of years Under control of board of directors, which is selected by stockholders Purchase of stock Proprietorship General Partnership Corporation Copyright ©2003 Prentice Hall, Inc. 4 - 10

11. Copyright ©2003 Prentice Hall, Inc. 4 - 11 Sole Proprietorships Advantages: Freedom Simple to form Low start up costs Tax benefits Disadvantages: Unlimited Liability Limited resources Limited fundraising capability Lack of continuity Unlimited Liability Legal principle holding owners responsible for paying off all debts of a business

12. Copyright ©2003 Prentice Hall, Inc. 4 - 12 Partnerships Advantages: More talent and money More fundraising capability Relatively easy to form Tax benefits Disadvantages: Unlimited Liability Disagreements among partners Lack of continuity Unlimited Liability Legal principle holding owners responsible for paying off all debts of a business

13. Copyright ©2003 Prentice Hall, Inc. 4 - 13 “When two men in business always agree, one of them is unnecessary.” William Wrigley Jr. Remember… But… An exit plan is still crucial!

14. Copyright ©2003 Prentice Hall, Inc. 4 - 14 What is a Corporation? “An artificial being, invisible, intangible, and existing only in contemplation of the law.”

15. Copyright ©2003 Prentice Hall, Inc. 4 - 15 Advantages: Limited Liability Continuity Stronger fundraising capability Corporations Disadvantages: Double Taxation Fluid control Complicated and expensive to form

16. Copyright ©2003 Prentice Hall, Inc. 4 - 16 Types of Corporations Closely Held (Private) Corporation Publicly Held (Public) Corporation S Corporation Limited Liability Corporation (LLC) Professional Corporation Multinational or Transnational Corporation

17. Copyright ©2003 Prentice Hall, Inc. 4 - 17 Stock: Share of ownership in a corporation Common Stock Preferred Stock Stockholders Owners of Corporations

18. Copyright ©2003 Prentice Hall, Inc. 4 - 18 Corporate Governance Hierarchy Officers Board of Directors Stockholders

19. Copyright ©2003 Prentice Hall, Inc. 4 - 19 Joint Ventures & Strategic Alliances Special Issues in Corporate Ownership Employee Stock Ownership Programs (ESOPS) Institutional Ownership

20. Copyright ©2003 Prentice Hall, Inc. 4 - 20 Mergers & Acquisitions (M&As) Special Issues in Corporate Ownership Divestitures & Spin-offs Mergers & Acquisitions (M&As) Divestitures & Spin-offs

21. Copyright ©2003 Prentice Hall, Inc. 4 - 21 Entrepreneurship vs. Small Business Entrepreneur: Accepts the risks and opportunities of creating, operating and growing a new business Small Business Owner: Does not have plans for growth

22. Copyright ©2003 Prentice Hall, Inc. 4 - 22 Trends in Small Business Start-ups Emergence of E-commerce Crossovers From Big Business Opportunities for Minorities & Women GlobalOpportunities Increased Survival Rates

23. Copyright ©2003 Prentice Hall, Inc. 4 - 23 E-commerce Continues to Grow Rapidly

24. Copyright ©2003 Prentice Hall, Inc. 4 - 24 Reasons for Success and Failure Reasons for Failure Poor management Neglect Weak control systems Insufficient capital Reasons for Success Hard work, drive, dedication Market demand Strong management Luck!!! Reasons for Success Hard work, drive, dedication Market demand Strong management Luck!!!

25. Copyright ©2003 Prentice Hall, Inc. 4 - 25 Getting Started Buying an Existing Business Starting From Scratch

26. Copyright ©2003 Prentice Hall, Inc. 4 - 26 Financing the Small Business Personal resources Loans Venture capital companies Small-business investment companies Small Business Association (SBA)  Financial aid and management advice

27. Copyright ©2003 Prentice Hall, Inc. 4 - 27 FRANCHISING Advantages Proven business opportunity Access to management expertise Advantages Proven business opportunity Access to management expertise Disadvantages Start-up costs On-going payments Management rules and restrictions Disadvantages Start-up costs On-going payments Management rules and restrictions An Ownership Opportunity

28. Copyright ©2003 Prentice Hall, Inc. 4 - 28 INNOVATION AND ENTREPRENUERSHIP Practice and principles

29. Copyright ©2003 Prentice Hall, Inc. 4 - 29 AREA OF FOCUS The Entrepreneurial Economy The Practice of Innovation The Practice of Entrepreneurship Entrepreneurial Strategies Conclusion: The Entrepreneurial Sociality

30. Copyright ©2003 Prentice Hall, Inc. 4 - 30 The Practice of Innovation Systematic Entrepreneurship

31. Copyright ©2003 Prentice Hall, Inc. 4 - 31 Concept about entrepreneur? Entrepreneurship, and economic theory, social theory? Entrepreneurship,risk,and methodology

32. Copyright ©2003 Prentice Hall, Inc. 4 - 32 Say’s definition: shifts economic resources out of an area of lower and into an area of higher productivity and greater yield. U.S. way: one who starts his own, new and small business. Drucker’s comments: entrepreneurship does not need small, new and economic affairs

33. Copyright ©2003 Prentice Hall, Inc. 4 - 33 Drucker’s Concept about entrepreneur? Entrepreneur create something new, something different; they change and transmute value. Entrepreneur see change as the norm and as healthy. The entrepreneur always searches for change, responds to it, and exploits it as an opportunity

34. Copyright ©2003 Prentice Hall, Inc. 4 - 34 Entrepreneurship and economic theory, social theory

35. Copyright ©2003 Prentice Hall, Inc. 4 - 35 Entrepreneurship rests on a theory of economy and society Entrepreneurship pertains to all activities of human beings, including business, economic and social sphere

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37. Copyright ©2003 Prentice Hall, Inc. 4 - 37 Entrepreneurship, it is commonly believed, is enormously risky Entrepreneurship is risky mainly because so few of the so-called entrepreneur know what they are doing. they lack methodology Entrepreneurship does need, however, to be systematic, to be managed. Above all,it needs to be based on purposeful innovation

38. Copyright ©2003 Prentice Hall, Inc. 4 - 38 Joseph Schumpeter: dynamic disequilibrium brought on by the innovating entrepreneur,rather than equilibrium and optimization, is the norm of a healthy economy and the central reality for economic theory and economic practice.

39. Copyright ©2003 Prentice Hall, Inc. 4 - 39 PRACTICAL MALAWIAN EXAMPLES Alfred Kamkuzi Trevor Milazi Chipiliro Mizere

40. Copyright ©2003 Prentice Hall, Inc. 4 - 40 ALFRED KAMKUZI Legal Wallet

41. Copyright ©2003 Prentice Hall, Inc. 4 - 41 INNOVATION OR INVETION?

42. Copyright ©2003 Prentice Hall, Inc. 4 - 42 ALFRED”S IDEA

43. Copyright ©2003 Prentice Hall, Inc. 4 - 43 TREVOR MILAZI BUSINESS BOOK

44. Copyright ©2003 Prentice Hall, Inc. 4 - 44 TREVOR’S IDEA Business or Entreprenuership

45. Copyright ©2003 Prentice Hall, Inc. 4 - 45 CHIPILIRO MIZERE POWER SUPPLY

46. Copyright ©2003 Prentice Hall, Inc. 4 - 46 CHIPILIRO’S IDEA INVENTION OR INNOVATION?

47. Copyright ©2003 Prentice Hall, Inc. 4 - 47 PRACTICAL MALAWI EXAMPLES Asif Aziz Born in Malawi in 1967, Aziz moved to London at the age of ten where he acquired his first London property, in the 1980s, whilst still at school. He graduated from the British American College London with a business baccalaureate. Daniel LiwimbT Kenneth Thindwa

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49. Copyright ©2003 Prentice Hall, Inc. 4 - 49 Asif Aziz Criterion Capital is a property company which owns and manages a £2bn property portfolio across London and South East of England. including 15 commercial buildings in the West End of London Piccadilly Hotel on Piccadilly Circus in London, which was acquired in 2005store.[5] Criterion Capital is also developing projects in Croydon with the purchase of two office buildings [6]

50. Copyright ©2003 Prentice Hall, Inc. 4 - 50 Daniel Symphoriana Liwimbi is a businessman. Liwimbi was General Manager of the privately owned Ethanol Company of Malawi (ETHCO), which makes Ethanol from sugar cane]

51. Copyright ©2003 Prentice Hall, Inc. 4 - 51 Criterion Capital by Asif Aziz

52. Copyright ©2003 Prentice Hall, Inc. 4 - 52. In October 2007, his company and Malawi's department of Science and Technology jointly unveiled the first set of imported Brazilian-made 'flex-fuel' vehicles in a ceremony in Balntyre.

53. Copyright ©2003 Prentice Hall, Inc. 4 - 53 WHA ARE YOU DOING? WITH YOUR EDUCATION NOW?