Entrepreneurship and Small Business Managementhespinosa.weebly.com/uploads/2/3/5/5/23554876/pob_ch06.pdf · Principles of Business, 8e C H A P T E R 6 SLIDE 16 Checkpoint Where do

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e

C H A P T E R 6 SLIDE 1

6-1 Becoming an Entrepreneur

6-2 Small Business Basics

6-3 Starting a Small Business

6 C H A P T E R

Entrepreneurship and

Small Business Management

© 2012 Cengage Learning. All Rights Reserved. SLIDE 2

6-1 Becoming an

Entrepreneur

Goal 1 Identify characteristics of successful

entrepreneurs.

Goal 2 Recognize the importance of

entrepreneurship in the economy.

Goal 3 Describe opportunities and risks of

entrepreneurship.



KEY TERMS

● entrepreneur

● entrepreneurship

● venture capital

● innovation

● improvement


C H A P T E R 6 SLIDE 4 CHARACTERISTICS OF

ENTREPRENEURS

● Desire to be your own boss

● Special skills and abilities


C H A P T E R 6 SLIDE 5 ENTREPRENEURS

IN ACTION

● Joshua Moore

● Ben Cathers

● Rich Stachowski

● Abbey Fleck



WHAT DOES IT TAKE?

● Not all business owners and managers are

entrepreneurs.

● Entrepreneurs have unique skills and

personal characteristics.



ENTREPRENEURS ARE MORE

● Persistent

● Inquisitive

● Energetic

● Goal-oriented

● Independent

● Self-confident

● Creative

● Reliable

● Competitive



ENTREPRENEURS HAVE

● Problem-solving skills

● Tolerance for ambiguity

● Strong integrity

● Personal initiative

● Ability to secure resources

● Capability to learn from failure

● Willingness to work hard



Checkpoint

● What personal characteristic are

common to most successful

entrepreneurs?

● Any characteristics listed in Figure 6-1 are

acceptable, such as persistence,

inquisitiveness, self-confidence, creativity,

and so forth.


C H A P T E R 6 SLIDE 10 ENTREPRENEURSHIP

AND THE ECONOMY

● Employment

● Financing

● Productivity


C H A P T E R 6 SLIDE 11 Employment Growth by

Business Size, 1990–2005

24.9%

20.1%

18.7%

36.3%

1-9 employees

20-99 employees

100-499 employees

500 or more employees



Checkpoint

● What are the sources of financing that

entrepreneurs use for their new

businesses?

● Personal savings

● Friends and family

● Venture capital

● Bank loans



OPPORTUNITIES AND RISKS

● Before deciding to start a business, you

need to think about the opportunities and

risks.


C H A P T E R 6 SLIDE 14 NEW BUSINESS

OPPORTUNITIES

● Innovation

● Improvement



RECOGNIZING RISKS

● Lack of adequate capital

● Low sales

● Higher than expected expenses

● Competitive pressure

● An owner unprepared to manage a growing business

● Operations requiring more time than the owner is willing to commit



Checkpoint

● Where do entrepreneurship

opportunities begin?

● Opportunities begin with innovations (ideas

about new products and services) or

improvements (ideas for changes to

existing products, services, or processes).


6-2 Small Business

Basics

Goal 1 Identify important characteristics of

small businesses.

Goal 2 Recognize the competitive

advantages of small businesses.

Goal 3 Identify problems faced by many

small businesses.



KEY TERMS

● small business

● Small Business Administration (SBA)


C H A P T E R 6 SLIDE 19 SMALL BUSINESS

OWNERSHIP

● Description of a small business

● Owner is usually the manager

● Operates in one or very few locations

● Typically serves a small market

● Not dominant in its field

● Small business employment

● Ownership diversity


C H A P T E R 6 SLIDE 20 Common Types of Small Businesses

as Percent of All Small Businesses



Checkpoint

● Beyond the formal definition of a small business, what four points can be used to describe a small business?

● Owner is usually the manager

● Business operates in one or very few locations

● Business typically serves a small market

● Business is not dominant in its field



ADVANTAGES

● Meeting customer needs

● Providing unique services



Checkpoint

● How can small businesses compete

successfully with larger businesses?

● Smaller businesses are able to provide more

personalized products and services to their

customers.

● They are able to provide products and services

where smaller orders and projects are required

and tend to fill unique customer needs, which

larger companies do not provide.


C H A P T E R 6 SLIDE 24 COMMON REASONS FOR

SMALL BUSINESS FAILURE

● Not keeping adequate records

● Not having enough start-up money

● Lack of management experience

● Lack of experience with the type of business

● Not controlling operating expenses

● Poor location for the business

● Failure to manage credit offered to customers



ASSISTANCE

● University and college faculty members

● Local groups of business people

● Small Business Administration (SBA)



Checkpoint

● List common reasons for small business failure. ● Not keeping adequate records

● Insufficient start-up money

● Lack of management experience

● Lack of experience with the type of business

● Not controlling operating expenses

● Poor location

● Failure to manage credit


6-3 Starting a Small

Business

Goal 1 Recognize important factors to be

considered when starting a business.

Goal 2 Describe the elements of a business

plan.

Goal 3 Identify types and sources of financing

for a small business.



KEY TERMS

● business plan

● start-up financing

● short-term financing

● long-term financing



THE BUSINESS DECISION

● An idea plus experience

● Right place and time

● Team approach

● Preparation and research



Checkpoint

● Why is it important to use a team approach

when starting a new business?

● A team approach allows employees to feel valued

and motivated to take personal responsibility for

the benefit of the business.

● Owners cannot expect to be able to do everything

alone. Building a team will allow the business to

increase productivity and, ultimately, profits.


C H A P T E R 6 SLIDE 31 WHAT IS A

BUSINESS PLAN?

● A business plan is a written description of

the business idea and how it will be

carried out, including all major business

activities.


C H A P T E R 6 SLIDE 32 ELEMENTS OF A

BUSINESS PLAN

● Description of the Business

● The business idea

● Major products and services

● Ownership structure

● Strengths/weaknesses

● Long- and short-term goals



BUSINESS PLAN

● Description of Competition

● Characteristics of the industry

● Condition of the economy

● Strengths and weaknesses of major

competitors

(continued)



BUSINESS PLAN

● Customer Analysis

● Description of customers

● Location, number, and resources of

customers

● Sales forecasts

(continued)



BUSINESS PLAN

● Operations Plan

● Organization of the company

● Description of major operations

● Analysis of resources needed

● Human resource plans

(continued)



BUSINESS PLAN

● Marketing Plan

● Description of major marketing activities

● Description of resources needed

● Schedule of marketing activities

(continued)



BUSINESS PLAN

● Financial Plans

● Start-up costs

● Short- and long-term financial needs

● Sources of financing

● Budgets and financial statements

(continued)


C H A P T E R 6 SLIDE 38 STEPS IN DEVELOPING THE

BUSINESS PLAN

● Gather and review information

● Develop the strategic alternatives

● Write the plan

● Ask an expert to review the plan



Checkpoint

● What are the “strategic alternatives” in a

business plan?

● Strategic alternatives are alternative plans for

production, staffing, financing, and so on.

● Even the best business plan cannot predict every

possible circumstance.

● An alternate plan allows a business to be prepared

for the unforeseeable.


C H A P T E R 6 SLIDE 40 FINANCING

THE SMALL BUSINESS

● Types of financing

● Start-up financing

● Short-term financing

● Long-term financing

● Sources of financing

● Owner-supplied funds

● Borrowed funds



Checkpoint

● In addition to owner-supplied capital,

what are several other sources of

financing for a small business?

● Borrowed money may come from banks,

finance companies, or other individuals,

such as friends and family.

● Some suppliers may also be willing to

extend credit.

Documents

Entrepreneurship and Small Business Managementhespinosa.weebly.com/uploads/2/3/5/5/23554876/pob_ch06.pdf · Principles of Business, 8e C H A P T E R 6 SLIDE 16 Checkpoint Where do