1. Part 2 Chapter 5 Starting and Growing a Business © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

2. CHAPTER 4 Options for Organizing Business CHAPTER 5 Small Business, Entrepreneurship, and Franchising © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 2

3. Learning Objectives LO 5-1Define entrepreneurship and small business. LO 5-2 Investigate the importance of small business in the U.S. economy and why certain fields attract small business. LO 5-3 Specify the advantages of small-business ownership. LO 5-4 Summarize the disadvantages of small-business ownership, and analyze why many small businesses fail. LO 5-5 Describe how you go about starting a small business and what resources are needed. LO 5-6 Evaluate the demographic, technological, and economic trends that are affecting the future of small business. LO 5-7 Explain why many large businesses are trying to “think small”. © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 3

4. The Nature of Entrepreneurship Entrepreneurship –The process of creating and managing a business to achieve desired objectives  Entrepreneurship movement is accelerating, and many new small businesses are emerging  Technology is now easier to obtain by a small business  Websites, podcasts, online videos, social media, cellular phones, and expedited delivery services  Growing trend among small businesses is social entrepreneurship  Social entrepreneurs are individuals who use entrepreneurship to address social problems 4 © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

5. Great Entrepreneurs of Innovative Companies CompanyEntrepreneur Hewlett-PackardBill, Hewlett, David Packard Walt Disney ProductionsWalt Disney StarbucksHoward Schultz Amazon.comJeff Bezos DellMichael Dell MicrosoftBill Gates AppleSteve Jobs WalmartSam Walton GoogleLarry Page, Sergey Brin Ben & Jerry’sBen Cohen, Jerry Greenfield FordHenry Ford General ElectricThomas Edison © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 5

6. What Is a Small Business? Small Business –Any independently owned and operated business that is not dominant in its competitive area  “Smallness” is relative  Employees less than 500 people Small Business Administration (SBA) –An independent agency of the federal government that offers managerial and financial assistance to small businesses 6 © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

7. The Role of Small Business in the American Economy (1 of 2) Small firms represent 99.7% of all employer firms Small firms have generated 63% of net new jobs Small firms hire approximately 37% of high-tech workers (such as scientists, engineers, computer programmers, and others) Small firms produce 16 times more patents per employee than large patenting firms Small firms employ nearly half of all private-sector employees Small firms pay 42% of the total U.S. private payroll 7 © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

8. The Role of Small Business in the American Economy (2 of 2) 8 © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

9. Women- and Minority-Owned Businesses Women-owned Businesses –Responsible for employing 7.7 million workers –Contribute $1.3 trillion in sales –Women own more than 8 million businesses nationwide Minority-owned Businesses –Growing faster than other classifiable firms –Represent 21.3% of all small businesses 9 © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

10. Innovation »Small firms make up 52% of home-based businesses and 2% of franchises »Entrepreneurs provide fresh ideas and usually have greater flexibility to change than large firms »Jeffrey Lubell founded premium apparel True Religion in 2002. It has gone on to be listed among Forbes’ best publicly-traded small companies in America. 10 © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

11. UniKey © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. One of the most significant strengths of small businesses is ability to innovate & bring significant benefits to customers  Founder and CEO of the small firm UniKey, Phil Dumas, invented a way for consumers to keep doors locked  Dumas invented Kevo, a motorized deadbolt lock that links to users’ iPhones  With just a touch of a finger, consumers can lock and unlock their doors from remote locations  UniKey distributes products in major retailers  Just one example of a small company with the ability to innovate and contribute to the benefit of customers 11

12. Found in Nearly Every Industry Small businesses are found in nearly every industry, but these are some of the most attractive: Retailing and wholesaling Services Manufacturing High Technology Relatively easy to enter and require low initial financing 12 © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.