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Entrepreneurship and Small Business Management

6. Entrepreneurship and Small Business Management. CHARACTERISTICS OF ENTREPRENEURS. Entrepreneur One who takes a risk in starting a business to earn a profit Desire to be your own boss Special skills and abilities. ENTREPRENEURS IN ACTION. Barbers – Cabin Coffee Creative Graphics

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Entrepreneurship and Small Business Management

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  1. 6 Entrepreneurship and Small Business Management

  2. CHARACTERISTICS OF ENTREPRENEURS • Entrepreneur • One who takes a risk in starting a business to earn a profit • Desire to be your own boss • Special skills and abilities Chapter 6

  3. ENTREPRENEURS IN ACTION • Barbers – Cabin Coffee • Creative Graphics • Schroeder Plumbing Chapter 6

  4. Entrepreneurs are more persistent inquisitive energetic goal oriented independent self-confident creative reliable competitive WHAT DOES IT TAKE? Chapter 6

  5. WHAT DOES IT TAKE? (continued) 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 Chapter 6

  6. ENTREPRENEURSHIP AND THE ECONOMY • Employment • 1/10 involved in some type of entrepreneurship • 60% of these have hired employees • Financing • Comes from entrepreneurship • 50% also get help from family • May use Venture Capital • Money provided by large investors Chapter 6

  7. ENTREPRENEURSHIP AND THE ECONOMY • Productivity • Account for over $600 billion in sales • Responsible for nearly half of GDP Chapter 6

  8. NUMBER OF EMPLOYEESIN NEW BUSINESSES Chapter 6

  9. OPPORTUNITIES • Innovation • Invention or creation that is brand new (IPOD, IPAD) • Improvement • Design change that increase the usefulness of a product (Post its – to wall hooks) Chapter 6

  10. RISKS • 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 Chapter 6

  11. 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 • Employees nearly 50 of all workers Chapter 6

  12. SMALL BUSINESS OWNERSHIP • Ownership diversity • Women own over ¼ of all small business • 16% owned by Ethnic backgrounds • Most over 40 years old • High School diploma, 30% have college degree • Half are operated out of their homes. Chapter 6

  13. COMMON TYPES OF SMALL BUSINESSES Chapter 6

  14. SMALL BUSINESS ADVANTAGES • Meeting customer needs • Serve those with specific needs • Providing unique services • Plan a wedding, design a sound system Chapter 6

  15. 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 Chapter 6

  16. SMALL BUSINESS ASSISTANCE • Faculties of universities and colleges • Local groups of business people • Small Business Administration (SBA) Chapter 6

  17. THE BUSINESS DECISION • An idea plus experience • Right place and time • Team approach • Preparation and research Chapter 6

  18. 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. Chapter 6

  19. 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 Chapter 6

  20. ELEMENTS OF A BUSINESS PLAN (continued) 2. Description of Competition • Characteristics of the industry • Condition of the economy • Strengths and weaknesses of major competitors Chapter 6

  21. ELEMENTS OF A BUSINESS PLAN (continued) 3. Customer Analysis • Description of customers • Location, number, and resources of customers • Sales forecasts Chapter 6

  22. ELEMENTS OF A BUSINESS PLAN (continued) • Operations Plan • Organization of the company • Description of major operations • Analysis of resources needed • Human resource plans Chapter 6

  23. ELEMENTS OF A BUSINESS PLAN (continued) • Marketing Plan • Description of major marketing activities • Description of resources needed • Schedule of marketing activities Chapter 6

  24. ELEMENTS OF A BUSINESS PLAN (continued) • Financial Plans • Start-up costs • Short- and long-term financial needs • Sources of financing • Budgets and financial statements Chapter 6

  25. STEPS IN DEVELOPING THE BUSINESS PLAN • Gather and review information • Develop the “game plan” • Write the plan • Ask an expert to review the plan Chapter 6

  26. FINANCING THE SMALL BUSINESS • Types of financing • Start-up financing - $ to start • Short-term financing - $ for current operations • Long-term financing - $ for capital resources • Sources of financing • Owner-supplied funds • Borrowed funds Banks – Family – Angel Investors Chapter 6

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