1. Defining Terms Closely-held Business Family Business “Small-Business”

2. Closely-held Business –Not publicly-traded Family Business – Ownership or involvement of two or more family members in the business

3. “Small-Business” – Relatively arbitrary distinctions based on sales or number of employees, usually based on SBA guidelines –Typical limits 500 employees 3.5 million in sales

4. Small Business is Big Business 98% of the 20 million U.S. Businesses are classified as “small” 5 million businesses with one or more employees Employ 35% of workforce 38% of gross domestic product

5. Employment Engine? Small Business is believed to be the largest source of new jobs in the past 15+ years

6. What Industries Favor Small Businesses?

7. What Industries Favor Small Business? Those that are not capital intensive –Service –Retail

8. Three Challenges to Small Businesses 1. Growth of superstores 2. Expansion of information technology and the Internet 3. Emergence of a global economy

9. You Make the Call Situation 3 - P. 24 A third generation sporting goods store in an old downtown area of a small town just learned that a Wal-mart is being considered for the southern edge of town. Dover, the owner, feels that this is unfair, and wonders if he can compete successfully. 1. Is the feeling of unfairness justified? 2. How should Dover plan to compete?

10. Owning Your Own Business

11. Start-up from scratch Purchase an existing business Franchise Inherit family business

12. The Downside Small businesses have high failure rates

13. Defining Failure Business continues with negligible profits Operation end; no losses to creditors; you lost most of your investment Operations end; losses to creditors and investors

14. Business continues with negligible profits (my definition) –Need to consider value of your investment of time and money Operation end; no losses to creditors; you lost most of your investment Operations end; losses to creditors and investors (traditional definition)

15. Factors Contributing to High Failure Rate

16. Insufficient Sales – Failure to assess market – Did not consider competition Insufficient Capital – Shoe-string financing – Failure to allow for contingencies, start-up losses Poor Management – Lack of relevant experience – Failure to seek out help

17. Family Businesses 1 in 3 make it to 2nd generation 1 in 2 make it to 3rd generation Issues – Family conflict – Ownership and succession issues

18. Family Business “My son is now an ‘entrepreneur.’ That’s what you’re called when you don’t have a job.” Ted Turner, on son Ted Turner IV after he laid him off from Turner Broadcasting Corp.