7 small business and entrepreneurship · 2014-09-30 · 7 small business and entrepreneurship: ......

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

7 Small Business and Entrepreneurship: Economic Rocket Fuel

Explain the key reasons to launch a small

business

Describe the typical entrepreneurial mindset and

characteristics

Discuss funding options for small business

Analyze the opportunities and threats that small

businesses face

2

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7-4


7 Small Business and Entrepreneurship: Economic Rocket Fuel

Discuss ways to become a new business owner

and tools to facilitate success

Explain the size, scope, and economic

contributions of small business

3

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7-6


Reasons People Start their Own Business

￭ Greater financial success

Entrepreneurs: Risk their time, money, and

other resources to start and manage a

business

￭ Independence

￭ Flexibility

￭ Challenge

￭ Survival

4


Entrepreneurial Mindset

5

Aim to change the world through blockbuster goods or services

Deliver the best ideas, changing the economic and social landscape


Entrepreneurial Characteristics

6

￭ Vision: Bringing out new ideas and

solutions



• Internal locus of control: Deep-seated sense that the

individual is personally responsible for what happens

in his or her life

• External locus of control: Deep-seated sense that

others are responsible for what happens one’s life

Self-reliance

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•Putting in extra hours and days

Energy

•Ability to achieve and act boldly

Confidence

•Turning uncertainty into an advantage

Tolerance of uncertainty

•Viewing failure as a chance to learn

Tolerance of failure

8

Reality TV Video Slide

9©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

www.cengage.com/introbusiness/book_content/9781285187822_kelly/vid

eos/07startupjunkies.html

http://www.cengage.com/introbusiness/book_content/9781285187822_kelly/videos/07startupjunkies.html

© iStockphoto.com / DNY59


￭ Ron Wiener, founder and CEO of Earth Class Mail, is a serial entrepreneur. He founded and sold four other businesses before founding Earth Class mail. What do you think has motivated him to do this?

￭ What key entrepreneurial characteristics aptly describe Ron Wiener?

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Web-link: The Blackstone Entrepreneurship Initiative

￭ The Blackstone entrepreneurship

initiative has identified, created, and

replicated four distinct program models

with the greatest potential to create high-

growth businesses and industries most

known to ignite job growth.

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http://web1.blackstone.com/citizenship/the-blackstone-charitable-

foundation/entrepreneurship-initiative

http://web1.blackstone.com/citizenship/the-blackstone-charitable-foundation/entrepreneurship-initiative


Funding Options for Small Businesses

￭ Personal resources

Family or friends

Credit cards

￭ Loans

Commercial loans

U.S. Small Business

Administration (SBA)

Peer-to-peer

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Funding Options for Small Businesses

￭ Angel investors: Invest in start-ups with

high growth potential in exchange of

share in ownership

￭ Venture capital firms: Invest in start-up

businesses with high growth potential in

exchange for a share of ownership

13


Web-link: New York Angels

￭ One of the longest running active angel

groups in New York City, The New York

Angels typically invest $100,000-

$1,000,000 in seed/early stage

companies, and syndicate deals

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http://newyorkangels.com/aboutus.html

http://newyorkangels.com/aboutus.html


Exhibit 7.2 - New Business Survival Rates

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Opportunities for Small Businesses

￭ Gain profitable market niches

Market niche: Small segment of a market

with fewer competitors than the market as a

whole

￭ Personal customer service

￭ Lower overhead costs

￭ New opportunities fueled by the Internet

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Threats for Small Businesses

￭ High risk of failure

￭ Lack of knowledge and experience

￭ Insufficient funds

￭ Bigger regulatory burden

￭ Higher health insurance costs

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Exhibit 7.4 - Pros and Cons of Starting a Business from

Scratch versus Buying an Established Business

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Becoming an Entrepreneur

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• Learn about industry and make contacts

Gain experience

• People who have succeeded or failed provide deep insight

Learn about others

• Provides information on industry-specific statistics, general trends, and

updates on small business regulations

Access Small Business Administration (SBA) resources

• Business plan: Describes a business concept, outlines core business

objectives, and details strategies and timelines for achieving them

• Helps maintain focus and critical for obtaining outside funding

Develop a business plan


Small Business Administration (SBA)

￭ Agency of the federal government that

maintains and strengthens the nation’s

economy

Counsels, assists, and protects the interests

of small businesses

￭ Affiliates

Small Business Development Centers

(SBDCs): Provide comprehensive

management assistance to small businesses

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Small Business Administration (SBA)

SCORE (Service Corps of Retired Executives):

Provides free, comprehensive counseling for

small business owners from qualified

volunteers

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Core Questions for a Business Plan

￭ What service or product does the

business provide, and what needs does

it fill?

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Core Questions for a Business Plan

￭ Who are the potential customers for the

product or service, and why will they

purchase it from you?

￭ How will the potential customers be

reached?

￭ Where will the funding to start your

business be obtained?

￭ When can profitability be achieved?

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Components of a Business Plan

Executive summary

Description of business

Marketing

Competition

Operating procedures

Personnel

Complete financial data and plan, including sources of start-up money

Appendix

24


Small Businesses: Characteristics & Impact

￭ Small businesses play a vital role in the

U.S. economy

￭ Contribution to the economy

Create new jobs

Fuel innovation

Vitalize inner cities

25


Exhibit 7.5 - Early Phase Entrepreneurship Rates

2012

26


Factors Contributing to Difference in

Entrepreneurship Rates

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• Low-income countries have high overall level of

entrepreneurship

Per capita income

• Rates are significantly lower in countries that provide:

• High level of employment protection

• Strong unemployment insurance

Opportunity cost

• Extensive, complex regulations hinder entrepreneurship

by raising barriers

Cultural/political environment

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.28

Explain the key reasons to launch a small

business

Describe the typical entrepreneurial mindset and

characteristics

Discuss funding options for small business

Analyze the opportunities and threats that small

businesses face

7-1

7-2

7-3

7-4

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.29

Discuss ways to become a new business owner

and tools to facilitate success

Explain the size, scope, and economic

contributions of small business

7-5

7-6

7 small business and entrepreneurship · 2014-09-30 · 7 small business and entrepreneurship: ......

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