Chapter 7: SMALL BUSINESS AND ENTREPRENEURSHIP

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Chapter 7 SMALL BUSINESS AND ENTREPRENEURSHIP

• Economic Rocket Fuel

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LAUNCHING NEW VENTURES WHATS IN IT FOR ME?

1. Greater Financial Success
2. Independence
3. Flexibility
4. Challenge
5. Survival

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ENTREPRENEURS
Entrepreneurs People who risk their time,
money, and other resources to start and manage a
business.
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THE ENTREPRENEUR A DISTINCTIVE PROFILE

1. Vision
2. Energy
3. Tolerance of uncertainty
4. Self Reliance
5. Confidence
6. Tolerance of Failure

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BIG OPPORTUNITIES FOR SMALL BUSINESS

• Opportunities
• Market Niches
• Personal Customer Service
• Lower Overhead Costs
• Technology

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THREATS FOR SMALL BUSINESS

• Threats
• High Risk of Failure
• Lack of Knowledge and Experience
• Too Little Money
• Bigger Regulatory Burden

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FAILING WITH STYLE

• Walt Disney was fired from an ad agency for a
  singular lack of drawing ability.
• Ray Kroc, McDonalds founder, failed at real
  estate, he didnt discover the McDonald brothers
  hamburger stand until he was 52 years old.
• Steve Jobs, founder of Apple computer, was dumped
  by his board of directors, but returned a decade
  later to launch the iMac and the iPod.

Your failure may be your first step to the next
big thing.
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START UP/LAUNCH OPTIONS

1. Starting from scratch
2. Buying an established business
3. Buying a franchise

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1. STARTING A BUSINESS FROM SCRATCH
Key Pros Key Cons
Its all you Your concept, your decisions, your structure. You dont have to deal with the prior owners bad decisions. Its all you. Thats a lot of pressure. It can be hard to get credit. Logistics can be challenging It takes time, money, and sheer sweat to build a customer base.
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2. BUYING AN ESTABLISHED BUSINESS
Key Pros Key Cons
The concept, organizational structure, and operating practices are in place. Relationships are established. Obtaining financing is less challenging. Working with someone elses idea may not be fun. You may inherit old mistakes.
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3. BUYING A FRANCHISE
Key Pros Key Cons
Partnering with established brand Possibility of assistance with management and financing Low failure rate Less opportunity for creativity Tied to national brands mistakes Purchase price and on-going royalties can be steep
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TOOLS FOR BUSINESS SUCCESS

1. Gain Experience
2. Learn from Others
3. Educate Yourself
4. Access Resources
5. Develop a Business Plan

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BUSINESS PLANS THE ROADMAP

1. Executive Summary
2. Description of Business
3. Competitive and Industry Research
4. Marketing Strategies
5. Operating Procedures
6. Personnel
7. Financial Projections

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FINDING THE MONEY FUNDING OPTIONS

1. Personal Resources
2. Loans
3. Angel Investors
4. Venture Capital

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SMALL BUSINESS AND THE ECONOMY AN OUTSIZED IMPACT

• Creating New Jobs
• Fueling Innovation
• Creating Opportunities for Women

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ECONOMIC IMPACT

• Just 9.8 of the worlds entrepreneurs expect to
  create almost 75 of the jobs generated by new
  business ventures in the next five years.
• Source Global Entrepreneurship Monitor, special
  report, 2005.

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SOMETIMES LESS IS MORE

• Eric Truran, founder of a small New England
  manufacturing firm and retail store, eventually
  closed his retail store to focus strictly on
  online and telephone sales.
• His income dropped by about 50, but his free
  time more than quadrupled.
• He went from working 80 to 90 hours a week to
  working 15 to 20 hours a week.
• He uses his free time to pursue other passions,
  such as playing guitar with his two bands.

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THE ENTREPRENEURIAL SPIRIT
Intrapreneurs - are innovative workers who focus
on launching new products and generating new
profit streams for the company that employs them.
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THE ENTREPRENEURIAL SPIRIT
Minipreneurs individuals launching super small
scale enterprises. Include microbusiness,
freelancers, side businesses, weekend
entrepreneurs, hobbypreneurs, Web-driven
entrepreneurs, free agents and more..
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THE ENTREPRENEURIAL SPIRIT

• Mompreneurs
• Mothers (or Fathers) who start home-based
  businesses, often motivated by the wish or need
  to remain home with their children.
• Sometimes these businesses become successful
  enough to employ other family members.

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ENTREPRENEURSHIP, A WORLD OF DIFFERENCE

• Entrepreneurship has an economic impact in
  countries around the world
• Three key factors drive entrepreneurship
  globally
• Economic Welfare and Opportunity Costs
• Cultural Environment and Population Demographics
• Institutional Characteristics and the Political
  Environment