1. Exploring Business © 2009 FlatWorld Knowledge 5-1 The Challenges of Starting a Business

2. Exploring Business © 2009 FlatWorld Knowledge 5-2 Chapter Objectives 1.What Is An Entrepreneur? 2.Importance Of Small Business To The U.S. Economy 3.What Industries Are Small Businesses in? 4.Should You Start a Business? 5.Starting A Business 6.The Business Plan 7.How To Succeed In Managing A Business

3. Exploring Business © 2009 FlatWorld Knowledge 5-3 Entrepreneur “…someone who identifies a business opportunity and assumes the risk of creating and running a business to take advantage of it.”“…someone who identifies a business opportunity and assumes the risk of creating and running a business to take advantage of it.”

4. Exploring Business © 2009 FlatWorld Knowledge 5-4 Why Be An Entrepreneur? Be Own Boss Be Own Boss Financial Independence Financial Independence Creative Freedom Creative Freedom Use Own Skills & Knowledge Use Own Skills & Knowledge

5. Exploring Business © 2009 FlatWorld Knowledge 5-5 Entrepreneurs Vs. Owners Entrepreneurs Innovators Innovators New/Improved Products New/Improved Products Grow & Expand Grow & Expand Owners Provide Income Provide Income Not Innovative Not Innovative No Plan For Expansion No Plan For Expansion

6. Exploring Business © 2009 FlatWorld Knowledge 5-6 Small Business SBA Classification SBA Classification  Independent Ownership  Little Influence In Industry  Less Than 500 Employees Economic Impact  20M+ Businesses  50% Of GDP

7. Exploring Business © 2009 FlatWorld Knowledge 5-7 Small Business Importance  Job Creation  Innovative  Opportunities For Women & Minorities  Helps Big Business

8. Exploring Business © 2009 FlatWorld Knowledge 5-8 Net New Jobs By Firm Size

9. Exploring Business © 2009 FlatWorld Knowledge 5-9 Women & Minority Owned Business

10. Exploring Business © 2009 FlatWorld Knowledge 5-10 Small Business Industries 80% = Intangible Services 80% = Intangible Services – Retailing = 25% – Wholesaling = 10% – Professional/Business Services = 35% 20% = Tangible Goods 20% = Tangible Goods

11. Exploring Business © 2009 FlatWorld Knowledge 5-11 Small Business By Industry

12. Exploring Business © 2009 FlatWorld Knowledge 5-12 Small Business Ownership AdvantagesAdvantages  Independence  Financial Rewards  Lifestyle  Learning Opps.  Creative Freedom & Personal Satisfaction  Disadvantages  Financial Risk  Stress  Time Commitment  Undesirable Duties

13. Exploring Business © 2009 FlatWorld Knowledge 5-13 Entrepreneur’s Work Week

14. Exploring Business © 2009 FlatWorld Knowledge 5-14 Business Plan “…a document that identifies the goals of your proposed company and explains how they will be achieved...”“…a document that identifies the goals of your proposed company and explains how they will be achieved...”

15. Exploring Business © 2009 FlatWorld Knowledge 5-15 Blueprint for Company How Business Will be BuiltHow Business Will be Built How Intend To Make It SturdyHow Intend To Make It Sturdy Get FinancingGet Financing

16. Exploring Business © 2009 FlatWorld Knowledge 5-16 Sources For Business Idea IndustryExperienceHobbies

17. Exploring Business © 2009 FlatWorld Knowledge 5-17 Ownership Options  Start From Scratch  Buy Existing  Buy A Franchise

18. Exploring Business © 2009 FlatWorld Knowledge 5-18 Growth Of Franchising

19. Exploring Business © 2009 FlatWorld Knowledge 5-19 Franchise Franchise  Advantages  Recognized Name/Product  Help In Start-up  Advertising  Ongoing Support Disadvantages  Expensive Franchise FeeFranchise Fee Royalty FeeRoyalty Fee  Franchiser’s Rules  Franchiser May Not Follow Through

20. Exploring Business © 2009 FlatWorld Knowledge 5-20 Benefits Of Business Plan  Forces You To Think Critically  Reduces Risk  Analyze Concept/Industry

21. Exploring Business © 2009 FlatWorld Knowledge 5-21 Audiences of Plan  Investors Quality of Concept Quality of Concept Ability to Manage Ability to Manage  Bankers- Ability To Repay Loan

22. Exploring Business © 2009 FlatWorld Knowledge 5-22 Business Plan: 1)Executive Summary 2)Description of Business 3)Industry Analysis 4)Mission Statement/Core Values 5)Management Plan 6)Goods/Services 7)Development & Production 8)Marketing 9)Global Issues 10)Financial Plan 11)Appendices

23. Exploring Business © 2009 FlatWorld Knowledge 5-23 Executive Summary  1-3 Page Overview  Most Important Part  Written After Plan Completed

24. Exploring Business © 2009 FlatWorld Knowledge 5-24 Description Of Business  What Will Do?  Goods/Services Provided?  Unique?  Customers?  How Sold?  Location?

25. Exploring Business © 2009 FlatWorld Knowledge 5-25 Industry Analysis  Players?  Outlook?  Total Projected Sales?  Factors of Expansion/Contraction?  Future Economic Conditions?

26. Exploring Business © 2009 FlatWorld Knowledge 5-26 Mission Statement & Core Values  Mission Statement- Purpose or mission of company  Core Values- Fundamental beliefs...what is/is not appropriate in business activities, ideals

27. Exploring Business © 2009 FlatWorld Knowledge 5-27 Management Plan o Member Qualifications Education Education Experience Experience Expertise Expertise o Legal Form Sole Proprietorship Sole Proprietorship Partnership Partnership Corporation Corporation

28. Exploring Business © 2009 FlatWorld Knowledge 5-28 Goods & Services  Description  Better Than Competitors  Market Needs  Competitive Advantage

29. Exploring Business © 2009 FlatWorld Knowledge 5-29 Development & Production  Product Design  Technology  Own Or Contract For Facilities  Where?  Equipment  Design/Layout Of Facilities  Number of Employees  Units Produced  Ensure High Quality?

30. Exploring Business © 2009 FlatWorld Knowledge 5-30Marketing  Target Market  Pricing  Distribution  Promotion

31. Exploring Business © 2009 FlatWorld Knowledge 5-31 Global Issues  Buying/Selling In Other Countries  Identify Cross Border Challenges  How Overcome Challenges  Strategies For Future

32. Exploring Business © 2009 FlatWorld Knowledge 5-32 Financial Plan  Cash Needs Start-up Start-up Operations Operations Funding Sources Funding Sources  Repay Debt  Projections Expected Sales Expected Sales Costs Costs Profits (Losses) Profits (Losses)

33. Exploring Business © 2009 FlatWorld Knowledge 5-33Appendices  Resumes  Financial Statements

34. Exploring Business © 2009 FlatWorld Knowledge 5-34 Succeeding In Business  Know Business  Know Management  Proper Attitude  Get Adequate Funding  Manage Money  Manage Time  Know People  Satisfy Customer  Know How To Compete

35. Exploring Business © 2009 FlatWorld Knowledge 5-35 SBA Assistance Assistance In: Assistance In: – Business Plan – Starting – Financing – Managing Financing Financing Management/Technical Services/Training Management/Technical Services/Training

36. Exploring Business © 2009 FlatWorld Knowledge 5-36 SBA Loan Guarantees

37. Exploring Business © 2009 FlatWorld Knowledge 5-37 SBA Programs  SBDCs Assist with  Business Problems  Free Training & Technical Info.  Service Corps of Retired Executives

38. Exploring Business © 2009 FlatWorld Knowledge 5-38 Why Businesses Fail  Bad Business Idea  Cash Problems  Inexperience or Incompetence  Lack Of Customer Focus  Inability To Handle Growth