Chapter 6 Entrepreneurship and Small Business Management

Introduction to Business

© Thomson South
-
Western

Chapter

Entrepreneurship and

Small Business Management

6
-
1

Becoming an Entrepreneur

6
-
2

Small Business Basics

6
-
3

Starting a Small Business

6

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
2

LESSON 6
-
1

Becoming an Entrepreneur

Goals


Identify characteristics of successful
entrepreneurs.


Recognize the importance of
entrepreneurship in the economy.


Describe opportunities and risks of
entrepreneurship.

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
3

Key Terms


entrepreneur


entrepreneurship


venture capital


innovation


improvement

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
4

CHARACTERISTICS OF
ENTREPRENEURS


Desire to be your own boss


Special skills and abilities


Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
5

ENTREPRENEURS

IN ACTION


Pankaj Arora


Rich Stachowski


Jeffrey Rodriguez and John Serrano


Abbey Fleck

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
6

WHAT DOES IT TAKE?

Entrepreneurs are more


persistent


inquisitive


energetic


goal oriented


independent


self
-
confident


creative


reliable


competitive


Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
7

WHAT DOES IT TAKE?

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



(continued)

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
8

>>

C H E C K P O I N T

What personal characteristic are common
to most successful entrepreneurs?

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
9

ENTREPRENEURSHIP

AND THE ECONOMY


Employment


Financing


Productivity

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
10

NUMBER OF EMPLOYEES

IN NEW BUSINESSES

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
11

>>

C H E C K P O I N T

What are the sources of financing that
entrepreneurs use for their new
businesses?

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
12

OPPORTUNITIES


Innovation


Improvement

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
13

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

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
14

>>

C H E C K P O I N T

Where do entrepreneurship opportunities
begin?

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
15

LESSON 6
-
2

Small Business Basics

Goals


Identify important characteristics of
small businesses.


Recognize the competitive advantages
of small businesses.


Identify problems faced by many small
businesses.

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
16

Key Terms


small business


Small Business Administration (SBA)

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
17

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

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
18

COMMON TYPES OF

SMALL BUSINESSES

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
19

>>

C H E C K P O I N T

What percentage of employees in the
United States work for small businesses?

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
20

SMALL BUSINESS
ADVANTAGES


Meeting customer needs


Providing unique services

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
21

>>

C H E C K P O I N T

How can small businesses compete
successfully with larger businesses?

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
22

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

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
23

SMALL BUSINESS
ASSISTANCE


Faculties of universities and colleges


Local groups of business people


Small Business Administration (SBA)

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
24

>>

C H E C K P O I N T

List common reasons for small business
failure.

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
25

LESSON 6
-
3

Starting a Small Business

Goals


Recognize important factors to be
considered when starting a business.


Describe the elements of a business
plan.


Identify types and sources of financing
for a small business.

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
26

Key Terms


business plan


start
-
up financing


short
-
term financing


long
-
term financing

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
27

THE BUSINESS DECISION


An idea plus experience


Right place and time


Team approach


Preparation and research

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
28

>>

C H E C K P O I N T

Why is it important to use a team
approach when starting a new business?

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
29

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.

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
30

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

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
31

ELEMENTS OF A

BUSINESS PLAN


Description of Competition


Characteristics of the industry


Condition of the economy


Strengths and weaknesses of major
competitors

(continued)

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
32

ELEMENTS OF A

BUSINESS PLAN


Customer Analysis


Description of customers


Location, number, and resources of
customers


Sales forecasts

(continued)

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
33

ELEMENTS OF A

BUSINESS PLAN


Operations Plan


Organization of the company


Description of major operations


Analysis of resources needed


Human resource plans

(continued)

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
34

ELEMENTS OF A

BUSINESS PLAN


Marketing Plan


Description of major marketing activities


Description of resources needed


Schedule of marketing activities

(continued)

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
35

ELEMENTS OF A

BUSINESS PLAN


Financial Plans


Start
-
up costs


Short
-

and long
-
term financial needs


Sources of financing


Budgets and financial statements

(continued)

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
36

STEPS IN DEVELOPING
THE BUSINESS PLAN


Gather and review information


Develop the “game plan”


Write the plan


Ask an expert to review the plan

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
37

>>

C H E C K P O I N T

What is the “game plan” in a business
plan?

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
38

FINANCING

THE SMALL BUSINESS


Types of financing


Start
-
up financing


Short
-
term financing


Long
-
term financing


Sources of financing


Owner
-
supplied funds


Borrowed funds

Introduction to Business

© Thomson South
-
Western

Chapter 6

Slide
39

>>

C H E C K P O I N T

In addition to owner
-
supplied capital, what
are several other sources of financing for
a small business?