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Entrepreneurship & Small Business

The process of creating and managing a business to achieve desired objectives is our working definition for entrepreneurship.

Entrepreneurship

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Entrepreneurship & Small Business

Ability to see emerging trends & create company that satisfies those consumer needs. (Dell Computers)

Create new markets (Amazon.com)

Improve or re-package existing products (Starbucks)

Entrepreneurship & Entrepreneurs

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Entrepreneurship & Small Business

“Smallness” is relative. Defined, small business is any independently owned and operated business, not dominant in its competitive area, employing less than 500 people.

What is a Small Business?

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Impact of Small Business

60-80% of all new jobs, annually, created by small business in the last 10 years.

55% of all innovations•Double-knit fabric•Fiber-optic examining equipment•Optical scanner•Personal computer•Soft contact lenses

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Small Business

Retailing and wholesaling, services, manufacturing and high technology are especially attractive to entrepreneurs.

Industries that Attract Small Business

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Retailing & Wholesaling

Selling directly to the consumer

• Music stores• Sporting-goods shops• Dry cleaners• Boutiques• Drugstores• Restaurants• Hardware stores

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Small Business

•66% of the economy•Employs 70% of workforce

Services

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Small Business

Small business advantage over large firms –product customization

Artwork, clothing, jewelry, clothing, furniture

Manufacturing

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Small Business

Businesses that depend heavily on advanced scientific and engineering knowledge.•39% of high-tech jobs are in small business

High Technology

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Advantages of Small Business Ownership

•Independence•Costs•Flexibility•Focus•Reputation

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Disadvantages of Small-Business Ownership

•High Stress Level•High Failure Rate

•90% of all new businesses fail within the first 5 years

•Undercapitalization•Lack of funds to operate a business normally

•Managerial Inexperience or Incompetence•Inability to Cope with Growth

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Starting the Small Business

•Start with a concept or general idea•Devise a strategy to guide planning & development•Make Decisions

• Form of ownership• Financial resources needed • Start a new business /Acquire existing business/ Buy

a franchise

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The Business Plan

Business Plan – a precise statement of the rationale for the business and a step-by-step explanation of how it will achieve its goals. Acts as a guide and reference document.

•Explanation of the business•Analysis of competition•Income/Expense estimates

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A license to sell another’s products or to use another’s name in business, or both

Franchising

Starting a Small Business

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Franchiser – the company that sells a franchise (e.g. McDonald’s, Subway, Re/Max)

Franchisee – the purchaser of a franchise

Franchising

Starting a Small Business

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Franchise – Advantages & Disadvantages

Advantages Disadvantages

Training & support Fees and profit sharing

Brand name appeal Standardized operations

National advertising Restrictions on purchasing

Financial assistance Limited product line

Proven products Possible market saturation

Greater chance for success Less freedom in decisions