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

Exploring Business © 2009 FlatWorld Knowledge

5-1The Challenges of Starting a The Challenges of Starting a BusinessBusiness


5-2

Chapter ObjectivesChapter Objectives1.1. What Is An Entrepreneur?What Is An Entrepreneur?2.2. Importance Of Small Business To The U.S. EconomyImportance Of Small Business To The U.S. Economy3.3. What Industries Are Small Businesses in?What Industries Are Small Businesses in?4.4. Should You Start a Business?Should You Start a Business?5.5. Starting A BusinessStarting A Business6.6. The Business PlanThe Business Plan7.7. How To Succeed In Managing A BusinessHow To Succeed In Managing A Business


5-3

EntrepreneurEntrepreneur

• “…“…someone who identifies a someone who identifies a business opportunity and business opportunity and

assumes the risk of creating and assumes the risk of creating and running a business to take running a business to take

advantage of it.”advantage of it.”


5-4Why Be An Why Be An Entrepreneur?Entrepreneur?

Be Own BossBe Own BossFinancial IndependenceFinancial IndependenceCreative FreedomCreative FreedomUse Own Skills & KnowledgeUse Own Skills & Knowledge


5-5

Entrepreneurs Vs. OwnersEntrepreneurs Vs. Owners

EntrepreneursEntrepreneursInnovatorsInnovators

New/Improved ProductsNew/Improved ProductsGrow & ExpandGrow & Expand

OwnersOwnersProvide IncomeProvide IncomeNot InnovativeNot Innovative

No Plan For ExpansionNo Plan For Expansion


5-6Small BusinessSmall Business•SBA ClassificationSBA Classification

Independent OwnershipIndependent Ownership Little Influence In IndustryLittle Influence In Industry Less Than 500 EmployeesLess Than 500 Employees

Economic ImpactEconomic Impact 20M+ Businesses20M+ Businesses 50% Of GDP50% Of GDP


5-7

Small Business ImportanceSmall Business Importance

Job CreationJob Creation InnovativeInnovative Opportunities For Women Opportunities For Women

& Minorities& Minorities Helps Big BusinessHelps Big Business


5-8Net New JobsNet New JobsBy Firm SizeBy Firm Size


5-9Women & MinorityWomen & MinorityOwned BusinessOwned Business


5-10Small Business Small Business IndustriesIndustries

•80% = Intangible Services80% = Intangible Services

–Retailing = 25%Retailing = 25%

–Wholesaling = 10%Wholesaling = 10%

–Professional/Business Services = Professional/Business Services = 35%35%

•20% = Tangible Goods20% = Tangible Goods


5-11

Small Business By IndustrySmall Business By Industry


5-12

Small Business OwnershipSmall Business Ownership

•AdvantagesAdvantagesIndependenceIndependenceFinancial RewardsFinancial RewardsLifestyleLifestyleLearning Opps.Learning Opps.Creative Freedom & Creative Freedom & Personal SatisfactionPersonal Satisfaction

DisadvantagesDisadvantagesFinancial RiskFinancial RiskStressStressTime CommitmentTime CommitmentUndesirable DutiesUndesirable Duties


5-13Entrepreneur’s Work Entrepreneur’s Work WeekWeek


5-14Business PlanBusiness Plan

• “…“…a document that identifies the a document that identifies the goals of your proposed company goals of your proposed company

and explains how they will be and explains how they will be achieved...”achieved...”


5-15Blueprint for Blueprint for CompanyCompany

•How Business Will be BuiltHow Business Will be Built•How Intend To Make It SturdyHow Intend To Make It Sturdy•Get FinancingGet Financing


5-16Sources For Business Sources For Business IdeaIdea

IndustryIndustry

ExperienceExperience

HobbiesHobbies


5-17Ownership Ownership OptionsOptions

Start From ScratchStart From Scratch

Buy ExistingBuy Existing

Buy A FranchiseBuy A Franchise


5-18Growth Of Growth Of FranchisingFranchising


5-19 FranchiseFranchiseAdvantagesAdvantages

Recognized Recognized

Name/ProductName/Product

Help In Start-upHelp In Start-up

AdvertisingAdvertising

Ongoing SupportOngoing Support

DisadvantagesDisadvantagesExpensiveExpensive

• Franchise FeeFranchise Fee• Royalty FeeRoyalty Fee

Franchiser’s RulesFranchiser’s RulesFranchiser May Not Franchiser May Not Follow ThroughFollow Through


5-20

Benefits Of Business PlanBenefits Of Business Plan

Forces You To Think Forces You To Think CriticallyCritically

Reduces RiskReduces RiskAnalyze Analyze

Concept/IndustryConcept/Industry


5-21

Audiences of PlanAudiences of Plan InvestorsInvestors

•Quality of ConceptQuality of Concept

•Ability to ManageAbility to Manage

Bankers- Ability To Bankers- Ability To Repay LoanRepay Loan


5-22Business Plan:Business Plan:1)1) Executive SummaryExecutive Summary2)2) Description of BusinessDescription of Business3)3) Industry AnalysisIndustry Analysis4)4) Mission Statement/Core ValuesMission Statement/Core Values5)5) Management PlanManagement Plan6)6) Goods/ServicesGoods/Services7)7) Development & ProductionDevelopment & Production8)8) MarketingMarketing9)9) Global IssuesGlobal Issues10)10) Financial PlanFinancial Plan11)11) AppendicesAppendices


5-23Executive Executive SummarySummary

1-3 Page Overview1-3 Page Overview

Most Important PartMost Important Part

Written After Plan CompletedWritten After Plan Completed


5-24

Description Of BusinessDescription Of Business

What Will Do?What Will Do? Goods/Services Provided?Goods/Services Provided? Unique?Unique? Customers?Customers? How Sold?How Sold? Location?Location?


5-25Industry Industry AnalysisAnalysis

Players?Players?Outlook?Outlook?Total Projected Sales?Total Projected Sales?Factors of Expansion/Contraction?Factors of Expansion/Contraction?Future Economic Conditions?Future Economic Conditions?


5-26Mission Statement & Core Mission Statement & Core ValuesValues

Mission Statement- Purpose or Mission Statement- Purpose or mission of companymission of company

Core Values- Fundamental Core Values- Fundamental beliefs...what is/is not beliefs...what is/is not appropriate in business activities, appropriate in business activities, idealsideals


5-27

Management PlanManagement PlanoMember QualificationsMember Qualifications

•EducationEducation•ExperienceExperience•ExpertiseExpertise

oLegal FormLegal Form•Sole ProprietorshipSole Proprietorship•PartnershipPartnership•CorporationCorporation


5-28

Goods & ServicesGoods & Services

DescriptionDescription

Better Than CompetitorsBetter Than Competitors

Market NeedsMarket Needs

Competitive AdvantageCompetitive Advantage


5-29Development & Development & ProductionProduction

Product DesignProduct DesignTechnologyTechnologyOwn Or Contract For FacilitiesOwn Or Contract For FacilitiesWhere?Where?EquipmentEquipmentDesign/Layout Of FacilitiesDesign/Layout Of FacilitiesNumber of EmployeesNumber of EmployeesUnits ProducedUnits ProducedEnsure High Quality?Ensure High Quality?


5-30MarketingMarketing Target MarketTarget Market

PricingPricing

DistributionDistribution

PromotionPromotion


5-31Global IssuesGlobal Issues Buying/Selling In Other CountriesBuying/Selling In Other Countries

Identify Cross Border ChallengesIdentify Cross Border Challenges

How Overcome ChallengesHow Overcome Challenges

Strategies For FutureStrategies For Future


5-32Financial PlanFinancial Plan Cash NeedsCash Needs

• Start-upStart-up• OperationsOperations• Funding SourcesFunding Sources

Repay DebtRepay Debt ProjectionsProjections

• Expected SalesExpected Sales• CostsCosts• Profits (Losses)Profits (Losses)


5-33AppendicesAppendicesResumesResumesFinancial StatementsFinancial Statements


5-34Succeeding In Succeeding In BusinessBusiness Know BusinessKnow Business

Know ManagementKnow Management Proper AttitudeProper Attitude Get Adequate FundingGet Adequate Funding Manage MoneyManage Money Manage TimeManage Time Know PeopleKnow People Satisfy CustomerSatisfy Customer Know How To CompeteKnow How To Compete


5-35SBA AssistanceSBA AssistanceAssistance In:Assistance In:

– Business PlanBusiness Plan– StartingStarting– FinancingFinancing– ManagingManaging

FinancingFinancingManagement/Technical Management/Technical

Services/TrainingServices/Training


5-36SBA Loan SBA Loan GuaranteesGuarantees


5-37SBA ProgramsSBA ProgramsSBDCs Assist withSBDCs Assist with

Business ProblemsBusiness Problems

Free Training & Technical Info.Free Training & Technical Info.

Service Corps of Retired Service Corps of Retired ExecutivesExecutives


5-38Why Businesses Why Businesses FailFail

Bad Business IdeaBad Business IdeaCash ProblemsCash ProblemsInexperience or IncompetenceInexperience or IncompetenceLack Of Customer FocusLack Of Customer FocusInability To Handle GrowthInability To Handle Growth

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