1. 1-1 Starting Your Small Business Defining Small Business Defining Small Business Trends, Challenges, Opportunities, & Concerns of Small Business Trends, Challenges, Opportunities, & Concerns of Small Business Characteristics of Successful Owners of Small Business Characteristics of Successful Owners of Small Business Chapter 1

2. 1-2 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 2 Rapid Small Business Growth 23 Million Employment –75% Of New Jobs –50% Of Private Employment –99% Of Employers 97% Of Exporters

3. 1-3 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 3 Small Business? Independent Management Capital/Ownership = Few Individuals Operations Are Local Business = Small But Competitors = Large

4. 1-4 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4 SBA Definition “…a small business is one that is independently owned and operated and is not dominant in its field of operation.”

5. 1-5 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 5 Classification By Size <20 EmployeesVery Small 20 - 99Small 100 – 499Medium 500 Or MoreLarge

6. 1-6 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 6 Entrepreneurial Ventures VS. Small Business Venture oProfit oGrowth oQuick Sellout Small/Micro oNo New Or Innovative Activities oProvide Owner Living

7. 1-7 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 7 Unique Contributions Of Small Business Encourage Innovation & Flexibility –are often sources of new ideas, materials, process, and services that larger firm may be unable or reluctant to provide. Close Relationship With Customers/Community –Tend to be in close touch with communities and customers. –Attracting customers on the basis of specialty products, quality, and personal services rather than solely on the basis of price.

8. 1-8 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 8 (cont…) Force Large Firms To Be Competitive –Encourage competition of new products and services in terms of design and efficiency. Provide Employees Learning Experience –Small business employees have more freedom to make decisions, which can lend passion and interest to their work experience. Develop Risk Takers –Risk taking, with its consequent rewards and punishments.

9. 1-9 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 9 (cont…) New Employment –Generate employment by creating job opportunities. –Serve as a training ground for employees by giving more comprehensive learning experience and emphasis on risk taking. Greater Employee Job Satisfaction

10. 1-10 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 10 Major Problems For Small Business Inadequate Financing –is the primary cause of new business failure. –Unable to acquire and maintain facilities, hire and reward capable employees, produce and market a product, or do the other things necessary to run a successful business. Inadequate Management –In the forms of limited business knowledge, poor management, inadequate planning, and inexperience.

11. 1-11 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 11 Major Problems For Small Business (cont…) Government Regulations/Paperwork –Small firms are subject to many of the same regulations as their larger competitors. –The regulations are often complex and contradictory; why small business managers find it so difficult to comply with governmental requirements.

12. 1-12 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 12 Challenges To Small Business Exploding Technology Occupational/Industry Shifts –Reinvention –Reengineered –Downsizing/Rightsizing Global

13. 1-13 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 13 Objectives Of Small Business Owners – Personal Objective Achieve Independence –Freedom from interference or control by superiors. –Want autonomy to exercise their initiative and ambition. Additional Income –To obtained needed income. –Can provide opportunity to make greater deal of money and to take advantage of certain tax benefits.

14. 1-14 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 14 (cont….) Help Families –E.g: Students may return home to operate the family business so their parents can retire or take life easier. Products Not Available –To provide products that not available elsewhere.

15. 1-15 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 15 Objectives Of Small Business Owners - Business Objectives Service –The objective is to serve customers by producing and selling goods or services at a cost that will ensure a fair price to the consumer and adequate profits for the owners. Profit –Entering a business to make a profit, which is the reward for taking risks.

16. 1-16 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 16 (cont…) Social –Are goals regarding assisting groups in the community and protecting the environment. Growth –Should select a growth objective, which will depend on answers to questions such as “will I be satisfied for my business to remain small?” and “do I want it grow and challenge larger firms?” Mesh Objectives –Combine the personal and business objectives in a small business.

17. 1-17 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17 Characteristics Of Successful Owners + Desire Independence + Strong Sense Of Initiative + Personal/Family Motivation + Quick/Concrete Results + Able To React Quickly + Dedicated To Business + Enter Business By Chance And/Or Design

18. 1-18 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. 18 Ideas For Small Business  Career Counseling  Catering  Computer & Office Machine Repair  Day Care  Education  Financial Planning  Home Health  Marketing  Senior Fitness & Recreation  Specialized Delivery