1 © copyright katherine korman frey/vision forward, llc module 1: the role of small business ©...

1© Copyright Katherine Korman Frey/Vision Forward, LLC

www.VisionForward.com

Module 1:

The Role of Small Business

© Copyright Katherine Korman Frey/Vision Forward, LLC www.VisionForward.com

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Module 1 Goal:Provide the future entrepreneur with an overview of

small business and entrepreneurship, characteristics of an entrepreneur, and a general discussion of the importance of small business in America.


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Module 1 Objectives:• Understand perceptions and definitions of

entrepreneurship.• Understand the definitions of “small business” and

why this is important.• Identify major characteristics of an entrepreneur.• Learn about the role small business plays in the U.S.


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Dictionary: Entreprenedre - “To undertake”

Perception: A person of very high aptitude who pioneers change; Anyone who wants to work for himself or herself

What is an Entrepreneur?

Source: www.QuickMBA.com



"I have always thought of an entrepreneur as a person who starts a business to follow a vision, to make money, and to be the master of his/her own

soul (both financially and spiritually). Inherent in the venture is the risk of what the future may bring.

Therefore, I believe that an essential key to success is that the entrepreneur also be an

‘educated’ risk taker.... “

Linda Pinson

Ms. Pinson is an author ad software creator and has provided to the Small Business Administration much of their material about writing a business plan.

Source: www.QuickMBA.com

What is an Entrepreneur?



Exercise 1-1What is an entrepreneur?

• Write down your definition of an entrepreneur:







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Exercise 1-2 What is a small business?

• Write down an example of a small business with which you are familiar or have read about.



Definition of a Small Business

• Business Size• The Small Business Administration (SBA)

www.SBA.gov• The Small Business Act and NAICS• Rule of thumb: < 500 employees, < $6 to $8 million in

revenues. (Click for sample NAICS chart)

• Additional important notes about business size



Examples of North American Industry Classification System

Source: Small Business Administration, Small Business Size Standards matched to North American Industry Classification

System, Effective January 28, 2004.

NAI CS Code

I ndustry

Annual sales or # employees (max allowed)

111110

Soybean Farming $750,000

212221

Gold Ore Mining 500 employees

423420

Office Equipment Merchant Wholesalers 100 employees

561740

Employment Placement Agencies $6,000,000

611110

Elementary and Secondary Schools $6,000,000

621111

Offices of Physicians (except Mental Health) $8,500,000

622110

General Medical and Surgical Hospitals $29,000,000

722310

Food Service Contractors $17,500,000

(Click here: Back to Small Business Def.)



Exercise 1-2a – PART IWhy does the definition of a small business matter?

• Using the NAICS Chart, what is the maximum allowable size for these businesses?

– Company A: Employment agency.

– Company B: Food service contractor.

(Click here: Sample NAICS chart)



Exercise 1-2a – PART 2Does it matter what size the company is?

• Company A: Employment agency. – Revenues: $7 million.– Clients: Primarily other small businesses.– Client vendor / procurement policies: None.

The clients enjoy working with the placement agency because it is a small business, but there are no formal rules in place.




Exercise 1-2a – PART 2 Does it matter what size the company is?

• Company B: A food service contractor.– Revenues: $10 million.– Clients: K-12 schools and universities.– Client vendor / procurement policies: 25%

small business set-asides.








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Major Characteristics of the Entrepreneur

• Entrepreneurial traits in a text• Entrepreneurial traits when interviewing an

entrepreneur



Textbook Traits •Desire for responsibility •Preference for moderate risk•Confidence in ability to

succeed•Desire for immediate

feedback •High level of energy •Future orientation •Skill at organizing •Value of achievement over

money •High degree of commitment •Tolerance for ambiguity•Flexibility

Source: Zimmerer, Thomas W. and Scarborough, Norman S., Essentials of Entrepreneurship and Small Business Management, Prentice Hall, 2005.



Entrepreneurial Traits… What Entrepreneurs Say:

•Tenacity and drive •Opportunity “vision”•Passion •Relationships•Judgment

Source: Frey, Katherine Korman, Vision Forward, LLC case studies: The Hot MommasTM Project, Cool Daddies Project, Extreme Entrepreneurs, & Innovative

Intrapreneurs, 2004-2007.



Exercise 1-3 Major Characteristics of an Entrepreneur

• Pick a “top three” traits with which you identify.

2. Next, pick up to three traits where you would like to develop stronger skills.

3. Pick ONE trait from #1. Provide an example.

4. Pick ONE trait from #3. Brainstorm on how you can improve that trait.



Exercise 1-3a Your Future Entrepreneurial Passion

1. List one to three areas about which you are passionate. Explain why.

2. KEEP THIS LIST.







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Exercise 1-4The Role of Small Business in America

Which of the below is/are FALSE? 1. Employ more than half of all private

sector employees.

2. Create more than 50 percent of nonfarm private gross domestic product (GDP).

3. Produce 13 to 14 times more patents per employee than large patenting firms.

4. Are employers of 39 percent of high tech workers (such as scientists, engineers, and computer workers).

5. Made up 97 percent of all identified exporters and produced 29 percent of the known export value in FY 2001.

6. Provide 83% of the world’s steel.



The Role of Small Business in AmericaYesterday:

One product at a time

The Industrial Revolution & economies of scale

Today:

Current climate for business growth

Small business ability to compete

Universities and entrepreneurship



Exercise 1-5: Culture of Entrepreneurship

“Those associations only which are formed in civil life, without reference to political objects, are here adverted to. The political associations which exist in the United States are only a single feature in the midst of the immense assemblage of associations in that country. Americans of all ages, all conditions, and all dispositions, constantly form associations. They have not only commercial and manufacturing companies, in which all take part, but associations of a thousand other kinds — religious, moral, serious, futile, extensive, or restricted, enormous or diminutive. The Americans make associations to give entertainments, to found establishments for education, to build inns, to construct churches, to diffuse books, to send missionaries to the antipodes; and in this manner they found hospitals, prisons, and schools…. I have often admired the extreme skill with which the inhabitants of the United States succeed in proposing a common object to the exertions of a great many men, and in getting them voluntarily to pursue it. The Americans form associations for the smallest undertakings.”

Alexis De Tocqueville, Democracy In America



The Role of Small Business in America

•Number of small businesses•Role in economy - small firms•Industry types and breakdowns (Click for Figure 1)•Women and minority-owned small businesses•The US - A culture of entrepreneurship

•Opportunity•Culture•Future Orientation•Public Support

Key Facts:




Types of Sole Proprietorships by Industry and Receipts (Revenues) 2003.

Figure 1:

Source: www.bizstats.com

Industry

Number of sole-

proprietorships %Receipts (in thousands) %

Professional, scientific & technical services 4,226,056 24% $ 148,359,796 15%

Other services 3,047,639 17% $ 85,381,003 9%

Retail trade 2,309,270 13% $ 185,175,310 19%

Construction 2,283,929 13% $ 154,225,367 16%

Health care and social assistance 1,520,435 9% $ 82,760,451 9%

(Click for previous slide)




Sources: SBA and NFIB

Thinking ahead….

Should I start a business?

Just starting out:•66% expect the venture to be full time•33% expect the venture to be part time•82.5% seek credit of some type



Exercise 1-6:

Thinking Ahead – Motivations of Future Entrepreneurs

Source: www.bizstats.com (Click for previous slide)

•Refer to the NFIB 2003 Small-Business Policy Guide (Chapter 4, Exhibit 3.4) http://www.nfib.com/object/2753115.html

•Comment on which of the motivations listed (see link) link might apply to you if you were to start your own business.







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Brought to you by:Entrepreneur-in-the-Classroom brought to you by:

Curriculum developed by:• Katherine Korman Frey

– Founder, Vision Forward & The Hot Mommas® Project.– Associate Director Center & Adjunct Professor, The George Washington University Center for Entrepreneurial Excellence.

• Contributing content provided by: Dr. George Solomon, Dr. Susan Duffy, Dr. Ayman Tarabishy and Professor Janet Nixdorff.

Co-presenting Sponsor In Conjunction With

1 © copyright katherine korman frey/vision forward, llc module 1: the role of small business ©...

Documents

definitions of small

importance of small

overview of small business

small business administration

role small business

business plan

future entrepreneur

major characteristics