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Starting YourSmall BusinessStarting Your

Small Business

Defining Small Business Trends, Challenges, Opportunities, &

Concerns of Small Business Characteristics of Successful Owners of

Small Business

Chapter

1

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Rapid SmallBusiness Growth

• 23 Million• Employment

– 75% Of New Jobs– 50% Of Private Employment– 99% Of Employers

• 97% Of Exporters

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Small Business?• Independent Management• Capital/Ownership = Few

Individuals• Operations Are Local• Business = Small But Competitors

= Large

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SBA Definition“…a small business is one that is

independently owned and operated and is not dominant

in its field of operation.”

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Classification By Size

<20 Employees Very Small

20 - 99 Small

100 – 499 Medium

500 Or More Large

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Entrepreneurial Ventures VS.

Small Business

Ventureo Profit

o Growth

o Quick Sellout

Small/Microo No New Or

Innovative Activities

o Provide Owner Living

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Unique Contributions Of Small Business

• Encourage Innovation & Flexibility– are often sources of new ideas, materials,

process, and services that larger firm may be unable or reluctant to provide.

• Close Relationship With Customers/Community– Tend to be in close touch with communities

and customers.– Attracting customers on the basis of specialty

products, quality, and personal services rather than solely on the basis of price.

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(cont…)• Force Large Firms To Be Competitive

– Encourage competition of new products and services in terms of design and efficiency.

• Provide Employees Learning Experience– Small business employees have more

freedom to make decisions, which can lend passion and interest to their work experience.

• Develop Risk Takers– Risk taking, with its consequent rewards and

punishments.

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(cont…)• New Employment

– Generate employment by creating job opportunities.

– Serve as a training ground for employees by giving more comprehensive learning experience and emphasis on risk taking.

• Greater Employee Job Satisfaction

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Major Problems For Small Business

• Inadequate Financing– is the primary cause of new business failure.– Unable to acquire and maintain facilities, hire

and reward capable employees, produce and market a product, or do the other things necessary to run a successful business.

• Inadequate Management– In the forms of limited business knowledge,

poor management, inadequate planning, and inexperience.

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Major Problems For Small Business (cont…)

• Government Regulations/Paperwork– Small firms are subject to many of the same

regulations as their larger competitors.– The regulations are often complex and

contradictory; why small business managers find it so difficult to comply with governmental requirements.

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Challenges To Small Business

• Exploding Technology• Occupational/Industry Shifts

– Reinvention– Reengineered– Downsizing/Rightsizing

• Global

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Objectives OfSmall Business Owners –

Personal Objective• Achieve Independence

– Freedom from interference or control by superiors.

– Want autonomy to exercise their initiative and ambition.

• Additional Income– To obtained needed income.– Can provide opportunity to make greater deal of

money and to take advantage of certain tax benefits.

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(cont….)

• Help Families– E.g: Students may return home to operate the

family business so their parents can retire or take life easier.

• Products Not Available– To provide products that not available

elsewhere.

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Objectives OfSmall Business Owners -

Business Objectives• Service

– The objective is to serve customers by producing and selling goods or services at a cost that will ensure a fair price to the consumer and adequate profits for the owners.

• Profit– Entering a business to make a profit, which is

the reward for taking risks.

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(cont…)• Social

– Are goals regarding assisting groups in the community and protecting the environment.

• Growth– Should select a growth objective, which will

depend on answers to questions such as “will I be satisfied for my business to remain small?” and “do I want it grow and challenge larger firms?”

• Mesh Objectives– Combine the personal and business objectives

in a small business.

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Characteristics OfSuccessful Owners

+ Desire Independence

+ Strong Sense Of Initiative

+ Personal/Family Motivation

+ Quick/Concrete Results

+ Able To React Quickly

+ Dedicated To Business

+ Enter Business By Chance And/Or Design

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Ideas For Small Business

Career Counseling Catering Computer &

Office Machine Repair

Day Care Education

Financial Planning Home Health Marketing Senior Fitness &

Recreation Specialized

Delivery