small business entry: paths to part-time entrepreneurship chapter 5 © 2014 by mcgraw-hill...

Small Business Entry: Paths to

Part-Time Entrepreneurship

Chapter 5

© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.


Learning Objectives

LO1 Describe when and why part-time entrepreneurship makes sense.

LO2 Assess the feasibility of opportunities to enter into a part-time business.

LO3 Describe the major paths to part-time entrepreneurship.

LO4 Use the BRIE model to describe what it takes to be successful in part-time entrepreneurship.

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Learning Objectives

LO5 Describe the advantages and pitfalls of delegating and outsourcing.

LO6 Explain the benefits of Bootstrapping methods for entrepreneurship.

LO7 Describe the ethical challenges of part-time entrepreneurship.

LO8 Describe the challenges of moving from part-time to full-time entrepreneurship.

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Why Part-time Businesses Are Important

Part-time self-employment working for yourself

for 35 or fewer hours a week

Full-time self-employment 35 or more hours

per week

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Why Part-time Businesses Are Important

Most entrepreneurs start out working part time on their new business

The sheer number of part-time self-employeds makes them a major force in our economy

Around half of the 27.2 million small businesses in the United States in 2007, were part-time businesses

Volatility frequency of business starts and stops

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When to Consider Part-TimeEntrepreneurship

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Figure 5.1


Key Considerations for Success inPart-Time Entrepreneurship

Cost to start-up The amount of money it takes to start a new

business.Time to start-up

How long it takes to start a new business.Permanence

The impression of long-term continuity a business gives others.

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Home-based Business

There were about 14.4 million home-based businesses in the United States in 2007, and they represented 52 percent of all firms.

Home-based business meets at least two of the three criteria for start-up.

It is inexpensive, since you are already living somewhere and you can get your business going where you live in a moment.

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Home-based Business

Zoning laws Government

specifications for acceptable use of land and buildings in particular areas.

Covenants The limitations

imposed on your property by your neighborhood group.

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Home-based Business

Variance Permission from a government organization to

act differently that the laws state.

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Issues Important to Running a Home-based Business

Choose a work location inside your home that is away from noise, distractions, and family traffic.

Be realistic about the amount of space you’ll need for your equipment.

An office door can keep business separate from family and the rest of life.

Try your location out for a day or two to check out noise, traffic patterns, lighting needs, and distractions.

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Issues Important to Running a Home-based Business

Don’t overload on hours of work, or on snacks from the refrigerator down the hall.

Setup your work day to minimize distractions from household or family chores

Consider hiring help to handle household or family chores to free up your time.

Set the ground rules early and stick with them.

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Equipment for a Home-based Business

Comfortable, usable desk and chair and adequate lighting

TelephoneHigh-capacity

Internet serviceBusiness e-mail

account

High-speed desktop computer

Fax machineCopier Appropriate

software

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Twenty Questions toAsk Before Planning

Your Home Office

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Internet Informational Websites

E-commerce The use of the Internet to conduct business

transactions.Informational Web sites

An Internet site designed to introduce and explain a business to others.

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Business-to-consumer (B2C) Business-to-consumer transactions using e-

commerce.Business-to-business (B2B)

Business-to-business transactions using e-commerce.

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E-Commerce as Percent of Total Value: 2002–2010

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Figure 5.2



The Internet’s power comes from its being a very cost-effective and efficient way to contact your customers.

Most small businesses need to have a Web site regardless of whether or not they use it for actual sales.

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Potential customers will use it to find you.If they’ve heard about you from something

other than the Internet, they will use your site to find out more information about you and to decide if they want to actually contact you.

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http://www.jelene.com/


Internet Informational Websites: Typical Pages

Home/Introduction

“About us”

Support/Customer

ServiceResources

Press/Media

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Blog A Web page in which entries are posted in

reverse chronological order (i.e., the most recent at the top of the page)

RSS feed An Internet messaging service that pushes

(sends) whatever Web material you specify to subscribers to that feed.

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Multichannel marketing The use of several different channels to reach

your customers, for example, a Web site, direct mail, and traditional retailing.

Reciprocal links A listed, live connection to a different Web site,

which in turn displays a similar link to the first Web site.

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Search engine optimization A general approach to Web site design intended

to result in the site being displayed toward the beginning of a search engine’s (e.g., Google, Yahoo!, etc.) listing for that term.

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Sponsored link A form of paid advertising that gets your

company’s website at the top of a search list.

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Search Engine RankingsFebruary 2012

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Figure 5.3


E-Commerce and eBay Websites

eBay reports over 4 million sellers in the United States alone, and seven out of every eight sellers work on eBay only part time

For part-timer entrepreneurs the online approach makes a highly attractive opportunity because it offers the advantages of a large market, 24/7 availability of your products, and a start-up which is quickly done and potentially inexpensive

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Payment Most online

transactions use a credit card or an online payment system like PayPal.

Chargebacks This is a fee the

service levels on you for any of a variety of problems related to the sale

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Reverse auction An auction in which the low bid gets the business

or wins.Reserve price

A minimum acceptable selling price in an auction. If the bidding does not exceed the price, the sale will not go through.

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The Multiple Channelsof Business Promotion

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Figure 5.5


The Next Best Things to a Home-Based Business

Home retail: parties and door-to-door Avon, Mary Kay

Success Factors hosts with good contacts, matching product to

community, closing the sale

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Home Retail

Advantages ease of setup, low

cost of start-up, ability to work away from home and employer

Disadvantages working “on the

road”, lack of a base to organize and work, variable income, finding ways for customers to reach you

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Network marketing An approach to

selling in which the salesperson recruits customers to become distributors of the product or service to others.

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Stand retail the roadside, flea market, farmers’ market, or

craft fair business one of the most ancient forms of business

Mentioned in the BibleTend to be semi-permanentSuccess Factors: location, inventory

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Stand Retail

Advantages little investment,

variety of locations, quickly established, easily ended

Disadvantages variable income,

legal requirements

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Mobile Offices

Virtual Offices, Executive Offices, and Incubators

Doing Business without a Business Organization

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Doing Business without a Business Organization

Intellectual property (IP) Property coming

from some sort of original thought, for example, patents, trade secrets, trademarks, and copyrights.

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Success Factors for Part-time Businesses

Boundary separating and balancing business and home

Time management Use a to-do list Prioritize Keep it in its own space (home based)

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Making Do When You Are Starting Out

Bootstrapping using low-cost or free techniques to minimize

your cost of doing businessUndercapitalization

not having enough money available to the business to cover shortfalls in sales or profits

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Ethics and Part-time Small Business

Moonlighting working on your

own part-time after your regular job

Aggrandizing making your

business or yourself seem more accomplished than it is

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Moving from Part-time to Full-time

Key question is usually financial Wait until there is a solid income Make use of any transition services offered by

the former employer Recognize that initially, you will spend all your

time running and marketing the business

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