1. Entrepreneurship & Small Business
Busn 101 Chapter 06
Entrepreneurship & Small Business

2. Goals Why do Entrepreneurs take the risk of starting a business?
What are the attributes of an entrepreneur?
What are the benefits of entrepreneur teams & intrapreneurs?
Why is there growth in home-based and web-based businesses?
Why are small businesses important?
What are the major causes of small business failures?
How can you learn about how small businesses operate?
What does it take to start and run a small business?
What are the advantages and disadvantages of small businesses entering global markets?

3. Guess Which Company?
He was selling baking soda & decided to entice customers by putting in two packages of chewing gum with each sale. The excitement over the gum started him thinking.
Two Seattle teenagers pooled their money & came up with $100. They started delivering messages & parcels for local merchants.
Though he didn’t graduate from college, he found out college students eat a lot of pizza. He started his first pizzeria with $900 near a campus with a promise of 3-minute delivery.
Also available on a Transparency Acetate
See Learning Goal 1: Explain why people are willing to take the risks of entrepreneurship, list the attributes of successful entrepreneurs, describe the benefits of entrepreneurial teams and intrapreneurs, and explain the growth of home-based and web-based businesses.
Guess Which Company?
This slide will help in starting the chapter discussion. Students enjoy stories about how companies began and these short vignettes will supplement additional information about the history of successful entrepreneurs in the chapter.
See if the students can guess the companies in the short descriptions provided on the acetate. The answers are:
Wrigleys’ chewing Gum ( William Wrigley, Jr.)
United Parcel Service
Domino’s Pizza (Tom Monaghan)
Ask the students: Do you know of any interesting stories about how some other businesses got started? (This can also be assigned as a team project to generate a good discussion.)

4. Answers Wrigleys’ chewing Gum ( William Wrigley, Jr.)
United Parcel Service
Domino’s Pizza (Tom Monaghan)

5. Someone who accepts the risk of starting and running a business:
Entrepreneur
Someone who accepts the risk of starting and running a business:
Sole proprietorship
Corporation
Nonprofit
Cooperative

6. Why Do Entrepreneurs Take The Risk Of Starting A Business?
Many entrepreneurs are born with a risk taking personality which enables them to engage in risky activities at a higher frequency than people who are not born with a risk taking personality
Nina Vaca-Humrichouse said: “Being an entrepreneur is in my blood”
Because they are passionate about and believe in what they are doing
Peets Coffee,
Because they want to make a positive difference in the world
PCC,

7. Why Do Entrepreneurs Take The Risk Of Starting A Business?
Because they think that they can make more profits than just being an employee for someone else
Because they do not want to work for others
Text: Opportunity, Profit, Independence, Challenge

8. What Are The Attributes Of An Entrepreneur?
Problem Solvers
What do people want
What do people not want
Risk takers
Not afraid to fail
Sumner Redstone Said:
Success is not built on success. Success is built on failure
Learn from others
Determined
Hard working

9. What Are The Attributes Of An Entrepreneur?
Inventive
Insightful
Creative
Much of the creative process is unconscious, but that process is fueled by continual search and researching to solve a problem
Flashlight analogy
Organized
Good planners
Good researchers

10. What Are The Attributes Of An Entrepreneur?
Empathetic and good with people (Leader)
Inspirational
Text: Self-directed, Self-nurturing, Action-oriented, Highly-energetic, Tolerant of uncertainty

11. Types Of Entrepreneurs
Entrepreneurial team
A group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product
Micropreneur
Entrepreneurs willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle
Intrapreneur
Creative people that work as entrepreneurs within a corporation

12. Home-based Business Accountants and writers
What has helped home-based businesses grow?
Computers, Internet
Corporate downsizing
New tax laws
Downside:
Hard to separate home and work
Lack of self discipline
Not getting out in the world
Laws and insurance

13. Web-based Businesses
The same hard work and research that goes into starting and running a brick and mortar business must be used when starting and running a web- based business
Advantages of web-based businesses:
Access to world markets
Can work from home
Retailing and services such as web design are well suited for online

14. What Can Governments Do To Help Small Business
Enterprise zones
Specific geographic areas to which governments try to attract private business investment by offering lower taxes and other government support
Example:
rprise.htm

15. Small Business
A business that is independently owned and operated, is not dominant in its field of operation, and meet certain standards of size (set by the Small Business Administration) in terms of employees or annual receipts

16. What Is Small Business? Independently Owned Not Dominant in Its Field
Meet Certain Standards of Size (Employees, Annual Receipts)
icials/size/summaryofssi/index.html
ts/sba_homepage/serv_sstd_tablepdf.pdf
See Learning Goal 2: Discuss the importance of small business to the American economy and summarize the major causes of small-business failure.
See text pages: 160

17. 20 Million Full/Part-time Businesses
U.S. Small Businesses
20 Million Full/Part-time Businesses
Account for More Than 50% of Gross Domestic Product (GDP)
Jobs
80% of Americans 1st job is in small business
75% of new jobs are created by small businesses
Minority-owned Businesses Growing Rapidly
See Learning Goal 2: Discuss the importance of small business to the American economy and summarize the major causes of small-business failure.
See text pages: 160

18. Where Did They Start? Hallmark YMCA room Williams-Sonoma
Abandoned Hardware Store
Estee Lauder
Vacant Former Restaurant
Walt Disney
Created Mickey in a Garage
Also available on a Transparency Acetate
See Learning Goal 3: Summarize ways to learn about how small businesses operate.
Where Did They Start?
This slide presents the humble beginnings of these major companies.
This slide can also be used with the previous slide – Early sales of well-known companies.
Ask the students: What can be learned from this slide and such beginnings of these corporations? (Business startups are always difficult but good planning, hard work, and perseverance certainly pays.)
Source: World Features Syndicate

19. Early Sales Of Well-known Companies
Johnson & Johnson
$3,000 Worth of Band-Aids 1st Year
Cyrus McCormick
Sold No Reapers 1st 10 Years
Subway
312 Sandwiches 1st Day
Burton’s Snowboards
Sold One 1st Year
Bose
Sold 40 Speakers 1st Year (today #1 in market)
Also available on a Transparency Acetate
See Learning Goal 3: Summarize ways to learn about how small businesses operate.
Early Sales of Well-Known Companies
This is an interesting slide which should generate good reactions from students.
Ask the student: If you sold only one snowboard in the whole year, would you stay in business? Why or why not?
How can businesses survive such poor performances? (Determination and passion of the owners and founders plays a big role.)
As can be seen from the slide, the best performance has been from Subway, which is typical of starting a restaurant type businesses.
Source: World Features Syndicate

20. What Are The Major Causes Of Small Business Failures?
Run out of cash
Did not keep good accounting records and as a result was unable to:
Understand how the business was really doing (profitability)
Unable to access resources like debt
Unable to make important internal business decisions like pricing products
Not considering expenses like insurance and tax

21. What Are The Major Causes Of Small Business Failures?
Did not do thorough research before starting business
Did not have a good business plan
Underestimating the amount of time it takes
Lack of Capital
Poor management

22. Situations That Small Businesses Can Take Advantage Of (Big Cannot)
Requires a lot of personal attention
Handmade items
Sales not large enough
Neighborhoods with crime or poverty or that are in rural areas
Buy a franchise
Growth industry

23. Small Business – Major Causes Of Failure
Plunging in without first testing
Under/over pricing
Too little capital
Little/no experience
Borrowing money without planning
Trying to do too much with too little
Buying too much on credit
Expanding credit too freely and rapidly
Incomplete and/or inaccurate records
Not understanding business cycles
Forgetting about taxes, insurances, etc.
Owner working or not, according to whim
See Learning Goal 2: Discuss the importance of small business to the American economy and summarize the major causes of small-business failure.
See text pages: 162

24. Small Business – Situations For Success
Personal attention
Products not easily made by mass production
Sales are not large enough for a large firm
Unattractive neighborhood
Franchising
Paying attention to new competitors
The business is in a growth industry
See Learning Goal 2: Discuss the importance of small business to the American economy and summarize the major causes of small-business failure.
See text pages: 163

25. What Does It Take To Start And Run A Small Business?
A good idea
Determination
Time and hard work
Good research and planning
Resources
Find a good accountant and lawyer
Empathetic and good with people (Leader)

26. Small Business Administration (SBA)
A US government agency that advises and assists small businesses by providing:
Management training
Financial advice
Loans
Loans less based on collateral and credit history and more on the business plan
Seattle: wa/index.html

27. How Can You Learn About How Small Businesses Operate?
Look at others
Experience form working as an employee
School
Looking for Help:
Corps of Retired Executives
Small Business Development Center (here at HCC):

28. Succeed As An Entrepreneur
Plan your business
Finance your business
Knowing your customer (Marketing)
Managing your employees (Human resource)
Keeping records (Accounting)

29. Plan Your Business A written document that:
Describes the nature of the business
Target Market
Advantages that the business has over competitors
Resources of owner
Qualifications of owner
How much money will be needed to start
Details of operations
Web site:
Video:

30. Finance Your Business Personal funds Relatives & Friends (90%)
Banks (Must have good accounting records)
Venture capitalists (invest in your good idea for an equity stake)
SBA: art/financestartup/index.html
Farmers Home Administration
Economic Development Authority
Minority Business Development Agency

31. Knowing Your Customer (Marketing)
A market consists of people with unsatisfied wants and needs who have both the resources and willingness to buy
A market is filled with potential customers
Entrepreneurs know their market, and deliver a quality product at a fair price or they go out of business
SBA: /manage/marketandprice/serv_mstrat_mr esearch.html

32. Succeed As An Entrepreneur
Managing your employees (Human resource)
Chapters 7-12
Keeping records (Accounting)
Chapters 17

33. Advantages Disadvantages
What Are The Advantages And Disadvantages Of Small Businesses Entering Global Markets?
Advantages
Disadvantages
Overseas buyers enjoy dealing with individuals instead of large bureaucracies
Begin shipping more quickly
Help to provide a wide variety of suppliers
More personal service
Financing can be hard to find
Exporters may not know where to get started
Cultural differences
Bureaucratic paper work

34. Why Do Entrepreneurs Take The Risk Of Starting A Business?
Risk taking personality
Passionate about and believe in what they are doing
Do not want to work for others
More profits
Make a positive difference in the world

35. What Are The Attributes Of An Entrepreneur?
Problem Solvers & Risk takers & Not afraid to fail
Determined & Hard working
Inventive & Insightful & Creative
Organized & Good planners & Good researchers
Empathetic and good with people (Leader)
Inspirational

36. What Are The Benefits Of Entrepreneur Teams & Intrapreneurs?
Synergy  = 5
The more eyes that look at a problem, the more ideas that can be generated

37. Why Is There Growth In Home-based And Web-based Businesses?
Convenience
It is convenient to work from home
Small business web sites may require fewer resources to start and can reach a world audience quickly
Some businesses are well suited for the Web & Home:
Handmade items
Bookkeeping
Retailing

38. Why Are Small Businesses Important?
Small business employ many people around the world
Small businesses are nimble (compared to big businesses) and can:
React quickly to changes in the market
Get started on new innovative ideas quickly

39. What Are The Major Causes Of Small Business Failures?
Run out of cash
Did not keep good accounting records
Did not do thorough research before starting business
Did not have a good business plan
Underestimating the amount of time it takes
Lack of Capital
Poor management

40. How Can You Learn About How Small Businesses Operate?
Look at others
School
Experience form working as an employee
Nolo Press
Corps of Retired Executives
Small Business Development Center (here at HCC):
ghline.edu/cel/sbd c.htm

41. What Does It Take To Start And Run A Small Business?
Plan your business
Finance your business
Knowing your customer (Marketing)
Managing your employees (Human resource)
Keeping records (Accounting)