C OURSE INTRODUCTION SMALL BUSINESS MANAGEMENT BUSG-2309

COURSE INTRODUCTION

SMALL BUSINESS MANAGEMENTBUSG-2309

Course description• Theory and practical application of the small business

principles necessary for the operation of a successful small business.

• Designed for students who want to evaluate going into business for themselves or working for a small business.

• Sales, finance, personnel and the concepts and current practices of managing a small business.

• Start up and effective operation, includes essential ‐management skills, how to prepare a business plan, accounting, financial needs, staffing, marketing strategies, and legal issues.

Textbook

Course goalsThe goal of this course is: to inspire entrepreneurship to students, to provide them with an overview of the

concepts and processes involved in business and business operations, and

to equip them with some basic tools and techniques necessary for the establishment and management of small business.

Pedagogical method PowerPoint presentations throughout the course. Extensive discussion Working in teams Chapter quiz online and submit their result via

email after each class. http://wps.prenhall.com/bp_scarborough_esbm_9/

Students shall be asked to discuss case studies in small groups and present their findings to other groups in the class.

Coaching on building financial models for the business plan using Excel.

Course policies Attendance Academic honesty Students with disabilities Cell phones Calculator, laptop, tablet Student ID Books, tools, and supplies Dress code Classroom & Lab conduct Course withdrawal Late submission

Course activities Chapter quiz

http://wps.prenhall.com/bp_scarborough_esbm_9/

Business plan project Mid-term exam (multiple choice and

essay) Final exam (multiple choice and

essay)

GradingNo. Activities Weights

1 Chapter quiz 10%

2 Class activities, participation, attendance, group discussion, and case study

15%

3 Business Plan Project 20%

4 Mid-term exam 25%

5 Final exam 30%

Grade Final scores

A 90 – 100

B 80 – 89

C 70 – 79

D 60 – 69

F 0 – 59

Plagiarism & cheating policy Cheating Plagiarism

Time table

Exam format sampleExam Exam Type

Number of

Questions

Duration (minutes)

Grade Sheet Review

(minutes)

Possible points Proctor

Online-Multiple Choice

(on Computer)

Open book 30 45 50 60 Instructor & technical supporter

Essay (on Paper)

Open book 2 60 No 40 Instructor

SO YOU WANT TO BECOME AN

ENTREPRENUER?Toan NguyenJan 22, 2011

Who are they?

Bill GatesMichael Dell

Mark Zuckerberg

Robert Kiyosaki

Tom Szaky

Who are they?

Contents• What is an entrepreneur?• How to spot an entrepreneurial opportunities • The rewards of owning a small business• The risks• Why the boom? • The cultural diversity of Entrepreneurship • The contributions of small businesses • Putting failure into perspective • How to avoid the pitfalls • Conclusions

What is an entrepreneur?

The World of the Entrepreneur• In the U.S., entrepreneurs start more than 6

million businesses a year!• Global Entrepreneurship Monitor (GEM)

– Approximately 10% of U.S. population is actively involved in trying to start a new business

– Approximately 9.5% of people in 42 GEM countries studied are involved in starting a new business

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0.0

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10.0

15.0

20.0

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Entrepreneurial Activity Across the GlobePersons per 100 Adults, 18-64 Years Old Engaged

in Entrepreneurial Activity

TEA Index Global TEA AverageCountry

To

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What Is an Entrepreneur?

One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them

What Is an Entrepreneur?

An entrepreneur is someone who is willing to work 16 hours a day to keep from working 8 hours a day for someone else!

Characteristics of Entrepreneurs

Survey: 72% of adults in the U.S. have considered starting their own businesses

• Willingness to take initiative• Preference for moderate risk• Confidence in their ability to succeed• Self-reliance• Perseverance• Desire for immediate feedback

Characteristics of Entrepreneurs

• High level of energy• Competitiveness• Future orientation

– Serial entrepreneurs• Skilled at organizing• Value achievement over money

Entrepreneurship• One characteristic of entrepreneurs stands out:

Diversity!• Anyone – regardless of age, race, gender, color,

national origin, or any other characteristic – can become an entrepreneur (although not everyone should)

How to spot an entrepreneurial opportunity

How to Spot Entrepreneurial Opportunities

• Creativity vs. Innovation – Creativity – the ability to develop new

ideas and to discover new ways of looking at problems and opportunities

– Innovation – the ability to apply creative solutions to problems and opportunities to enhance or to enrich people’s lives

How to Spot Entrepreneurial Opportunities

• Monitor trends and exploit them early on– Starwich

• Take a different approach to an existing market– Goodwin Heart Pine

• Put a new twist on an old idea– PODS

How to Spot Entrepreneurial Opportunities

• Look for creative ways to use existing resources– Alaska Glacial Mud Company

• Realize that others have the same problem that you do– Stroller Strides

• Notice what is missing– Dogs on Wheels

The rewards

Benefits of Small Business Ownership

The opportunity to:• Control your own destiny• Make a difference

– Social entrepreneurs• Reach your full potential• Reap impressive profits• Contribute to society and to be recognized for your

efforts• Do what you enjoy and to have fun at it

The risks

Drawbacks of Small Business Ownership

• Uncertainty of income• Risk of losing your entire investment• Long hours and hard work

Source: MasterCard Global Small Business Survey, 2007.

1 to 39 hours10%

40 to 49 hours29%

50 to 59 hours22%

60 to 69 hours19%

More than 70 hours20%

Small Business Owners' Work WeekNumber of Hours Worked per Week

Average workweek = 54 hours

32Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

Drawbacks of Small Business Ownership

• Uncertainty of income• Risk of losing your entire investment• Long hours and hard work Lower quality of life until the business gets

established

Source: National Federation of Independent Businesses and Wells Fargo Bank, 2002.

Under 25 25-34 35-44 45-54 55-64 65+0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%

9.8%

33.5%31.1%

17.8%

6.1%

1.7%

Owner Age at Business Formation

Age

Drawbacks of Small Business Ownership

• Uncertainty of income• Risk of losing your entire investment• Long hours and hard work• Lower quality of life until the business gets established

High levels of stress Complete responsibility Discouragement

Why the boom?

Feeding the Entrepreneurial Fire

• Entrepreneurs as heroes• Entrepreneurial education• Demographic and economic factors• Shift to a service economy• Technological advancements• Independent lifestyles• E-Commerce and the World Wide

Web• International opportunities

Cultural diversity of entrepreneurship

The Cultural Diversity of Entrepreneurship

• Young entrepreneurs

Asian/Pacific Is-lander

African-American Hispanic-Amer-ican

White0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

89%86%

79%

69%

Aspiring Teenage EntrepreneursPercent Interested in Starting a Business

Source: Milken Institute, 2003.

40Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

The Cultural Diversity of Entrepreneurship

• Young entrepreneurs

Women entrepreneurs

Source: National Federation of Women Business Owners, 2003.

Number of firms Number of em-ployees

Sales0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0% 42.3%

0.4%

4.4%

23.3%

12.3%

15.6%

Growth of Women-Owned Companies1997 to 2006

Women-owned firms All firmsCategory

Gro

wth

Rat

e

The Cultural Diversity of Entrepreneurship

• Young entrepreneurs• Women entrepreneurs

Minority-owned enterprises Immigrant entrepreneurs Part-time entrepreneurs

43

The Cultural Diversity of Entrepreneurship

• Home-based business owners• Family business owners• Copreneurs• Corporate castoffs• Corporate dropouts• Retired baby Boomers

Source: Kauffman Foundation, Kauffman Index of Entrepreneurial Activity, 2006.

20-34 35-44 45-54 55-64 65 and older0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.35%

0.26%

0.30% 0.29%

0.34%

0.21%

Entrepreneurial Activity by Age Group

Age Group

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of

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Source: Small Business Administration, 2006.

Construction; 12.81%

Manufacturing; 4.74%Wholesale; 5.63%

Retail; 12.47%

Finance & Real Estate; 9.05%

Services; 49.77%

Other; 5.53%

Small Businesses by Industry

Contributions of small business

Small Businesses...

• Make up 99.7% of all the 29.3 million businesses in the U.S.

• Employ 52% of the nation’s private sector workforce

• Pay 45% of total private payroll• Create more jobs than big businesses

– 1996 to 2006: Between 60% and 80% of all net new jobs in the U.S.

• Are leaders in offering training and advancement opportunities to workers– Provide 67% of workers with their first jobs

• Produce 51% of the nation’s private GDP• Account for 47% of business sales• Key role in innovation:

– Produce 13X to 14X more patents per employees than large companies

Small Businesses...

New 1 2 3 4 5 6 7 8 9 100%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

100%

81%

65%

54%46%

40%36%

32% 29% 27% 25%

Small Business Survival Rate

# of Years in Business

% o

f S

mal

l F

irm

s S

urv

ivin

g

Source: National Federation of Independent Businesses Business Policy Guide, 2003.

Putting failtures into perspective

51Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

Putting Failure into Perspective

• Median age of U.S. companies = 12 years • Entrepreneurs are not paralyzed by the prospect of

failure• Failure – a natural part of the creative process • Successful entrepreneurs learn to fail intelligently

How to avoid the pitfalls

53Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

Avoiding the Pitfalls of Small Business Failure

• Know your business in depth• Prepare a business plan• Manage financial resources• Understand financial statements

54Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall

Avoiding the Pitfalls of Small Business Failure

• Learn to manage people effectively• Set your business apart from the

competition• Maintain a positive attitude