Chap006 Entrep SmallBiz by xQ00vH95

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									WHAT is ENTREPRENEURSHIP?

     • Entrepreneurship
       -- Accepting the
       risk of starting and
       running a
       business.
        YOU’RE NEVER TOO YOUNG
         to be an ENTREPRENEUR
 Reasons to start your business when you’re
 young:

1.You don’t have a mortgage or kids to take
  care of, yet.
2.You can survive on little funds and work long
  hours.
3.No disruption to your career path. It hasn’t
  started yet!
4.Use your friends/family as resources.
               YOU’RE NEVER TOO OLD to be
                an ENTREPRENEUR EITHER!
• The highest rate of
  entrepreneurship activity is in the
  55-64 age group!
• Since 1996, older Americans
  have opened businesses at a
  higher rate than 20-34 year olds.
• Older entrepreneurs have
  greater experience and more
  financial resources.
   Source: U.S. News and World Report, October 2010.
      WHY TAKE the RISK?


• Opportunity
• Profit
• Independence
• Challenge
     WHAT DOES IT TAKE to be an
         ENTREPRENEUR?
• Self-directed
• Self-nurturing
• Action-oriented
• Highly energetic
• Tolerant of uncertainty
                   An IDEA is a
        GOOD OPPORTUNITY               IF…
• It fills customers’ needs.
• You have the skills and resources to start a
  business.
• You can sell the product or service at a
  reasonable price and still profit.
• You can get your product or service to customers
  before the window of opportunity closes.
• You can keep the business going.
             MICROPRENEURS

• Micropreneurs -- Entrepreneurs willing to accept
  the risk of starting and managing a business that
  remains small, lets them do the work they want to do,
  and offers a balanced lifestyle.

• About half of U.S. micropreneurs are home-
  based business owners – writers, consultants,
  video producers, architects, bookkeepers, etc.

• Nearly 60% of home-based micropreneurs are
  men.
          HOME-BASED BUSINESS
                GROWTH
• Computer technology has leveled the playing
  field.
• Corporate downsizing has led many to venture on
  their own.
• Social attitudes have
  changed.
• New tax laws have
  loosened restrictions on
  deducting expenses for
  home offices.
        BENEFITS of HOME-BASED
             BUSINESSES
• Ability to start your business
  immediately
• Minimal start-up capital needed
• No rent or excessive set-up charges
• Comfortable working conditions
• Reduced wardrobe expenses
• No commuting
• Tax benefits
• Elimination of office politics
• Low risk for trial and error
          HOME-BASED BUSINESS
               ISN’T EASY

• Getting new customers is difficult.
• Managing your time requires self-discipline.
• Work and family tasks are sometimes not
  separated.
• Government ordinances may restrict your
  business.
• Homeowner’s insurance may not cover
  business-related claims.
       DOWNSIDES of HOME-BASED
             BUSINESSES
• Difficult to establish work habits
• Limited support system
• Isolation
• Work space may be limited
• Clients may be uncomfortable coming to
  your home
• Zoning restrictions
• Success is based 100% on your efforts
         ONLINE BUSINESS

• Online sales reached
  $172.9 billion in
  2010, 7% of all retail
  sales.

• All retail sales were
  up 2.5% in 2010.
  However, online retail
  sales grew 11%.
          INTRAPRENEURS
• Intrapreneur -- A creative person who
  works as an entrepreneur within a
  corporation.
• Intrapreneurs use a company’s existing
  resources to launch new products for the
  company.
• Art Fry of 3M developed
  Post-Its when he was
  trying to mark pages of
  his hymnal without
  damage.
          SMALL BUSINESSES

• Small Business --
  Independently owned and
  operated, not dominant in
  its field of operation and
  meets certain standards of
  size.
• Businesses are “small” in
  relation to other businesses in
  their industries.

                                    6-14
        SMALL BUSINESS STATISTICS
• There are 27.8 million small businesses
  in the U.S.
• Of all nonfarm businesses in the U.S.,
  almost 97% are considered small.
• Small businesses account for over 50%
  of the GDP.
• Small businesses generate 60-80% of
  new jobs.
• About 80% of U.S. workers’ first jobs
  were in small business.
    ADVANTAGES of SMALL BUSINESS

• More personal customer service.
• The ability to respond quickly to
  opportunities.




                   Photo Courtesy of: Elliot Brown
      BUSINESS FAILURES are LOWER
      THAN the REPORTS BECAUSE…
• Owner closing a business to
  start another is reported as a
  “failure.”
• Changing forms of ownership
  is reported as a “failure.”
• Retirement is reported as a
  “failure.”

                                    6-17
                                  THEY DID WHAT?
                                        Famous Business Failures

• Tommy Hilfiger – First store went bankrupt

• Milton Hershey – First confectionery failed

• H.J. Heinz – Company went bankrupt six years after start

• Walt Disney – First film company went
  bankrupt
• Henry Ford – First 2 car companies
  failed
• L.L. Bean – Almost went bankrupt in
  first year
    Source: World Features Syndicate.
             LEARNING ABOUT
             SMALL BUSINESS
• Learn from Others – Investigate your local
  colleges for classes on small business and
  entrepreneurship; talk to and work for successful
  local entrepreneurs.

• Get Some Experience – Gain three years
  experience in the field; then start a part-time small
  business.

• Take Over a Successful Firm – Serve as an
  apprentice and eventually take over once the owner
  steps down.
    MAJOR BUSINESS FUNCTIONS

• Planning
• Financing
• Knowing
  customers
• Managing
  employees
• Keeping records
            BUSINESS PLANS
• Business Plan -- A detailed written
  statement that describes the nature of the
  business, the target market, the
  advantages the business will have over
  competition, and the resources and
  owners’ qualifications.
• A business plan forces potential owners to think
  and to be specific about what they will offer.
• A business plan is mandatory for talking with
  bankers or investors.
       WRITING a BUSINESS PLAN
• A good plan takes a long time to
  prepare.
• A good executive summary catches
  interest and tempts potential investors to
  read on.
• Getting the plan into the
  right hands is almost as
  important as getting the
  right information in it.
         SOURCES of CAPITAL

• Personal savings
• Relatives
• Former employers
• Banks & finance companies
• Government agencies
• Venture capitalists
        The SMALL BUSINESS
          ADMINISTRATION

• Small Business Administration
  (SBA) -- A U.S. government agency
  that advises and assists small
  businesses by providing management
  training and financial advice.
                                  HELP PLEASE!
                 More SBA Resources and Other Helpful Groups


•   Small Business
    Investment Companies

•   The Office of
    Innovation &
    Entrepreneurship

•   SCORE

•   Entrepreneurship.org

    Source: Inc., October 2010.
                The MARKET

• Market -- Consumers with unsatisfied
  wants and needs who have both
  resources and willingness to buy.
• Set out to fill the market’s needs by offering top
  quality and great service at a fair price.
• One of the great advantages of small
  businesses is the ability to know the market and
  quickly adapt to market needs.
           MANAGING EMPLOYEES

• Hiring, training and motivating
  employees is critical.
•   Employees of small companies are often more
    satisfied with their jobs – they feel challenged
    and respected.
•   Entrepreneurs best serve themselves and the
    business if they recruit and groom employees
    for management positions.
      ACCOUNTING ASSISTANCE
• A good accountant can help in:
  - Deciding whether to buy or lease
     equipment.
  - Deciding whether to own or rent a
     building.
  - Tax planning.
  - Financial forecasting.
  - Choosing sources of financing.
  - Writing requests for funds.
               LEGAL HELP
• A competent lawyer can help with:
  - Leases
  - Contracts
  - Partnership agreements
  - Protection against liabilities

• Owners need outside consulting advice early in
  the process.
• Small and medium-sized firms cannot afford to
  hire experts as employees.
         MARKETING RESEARCH

• Marketing decisions need to be made long before
  introducing a product or opening a store.

• A market research study can help you:
  - Determine where to locate.
  - Whom to select as your target market.
  - What is an effective strategy for
     reaching the market.
          OTHER FORMS OF HELP
• A commercial loan officer can help:
  -   Design an acceptable business plan.
  -   Give financial advice.
  -   Lend money.
• An insurance agent can help you:
  -   Know the risks associated with the business.
  -   How to cover risks with insurance.
  -   How to prevent risks with safety devices.
• Service Corps of Retired Executives
  -   More than 10,500 volunteers from industry, trade
      associations, and education who counsel small
      business at no cost. (SCORE)
       SMALL BUSINESS PROSPECTS
               ABROAD

• Small- and medium-sized businesses accounted
  for 99% of recent export growth.

• Advantages of global trade for small businesses:
  -   Overseas buyers enjoy dealing with individuals.
  -   Small companies can usually begin shipping
      much faster.
  -   They provide a wide variety of suppliers.
  -   They can give more personal service and
      attention.

								
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