Importance of Small Business

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Chapter 10
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Importance of Small Business

• Innovation personal computer, transistor radio,
  photocopier, jet engine, Polaroid, pocket
  calculator, power setting, automatic
  transmission, air conditioning, disposable pen
• Job creation 66 of new jobs
• Contributions to big business suppliers,
  distributors

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Success Strategies

• Niche Market not currently saturated
• Distinctive competence
• New Markets Geographic, demographics,
  distinctive competence
• First Mover Advantage First in market

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Ownership Who posses assets, claims to profits?

• Sole proprietorship 70 -- Individuals
• Total freedom, simple, inexpensive
• Liability (personal assets)
• Partnerships Least common
• Accounting, law, architectural firms
• More talent
• Corporation Legal Entity Person
• Individual not liable

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Methods of Starting New Business

• Buy existing business
• Franchising Less Risk Proven
• Flat fee or percentage
• Production, sales, marketing, training, financial
  support, growth options
• Growing rapidly account for ½ of retail sales

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Financing

• Personal Most common
• Savings, friends, family
• Venture Capitalist
• Actively seeks to invest in new business
• Provides large base

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HELP

• Department of Commerce Small Business
  Administration
• Service Corps of Retired Executives SCORE
• Active Corps of Executives ACE
• Small Business Institute SBI
• Small Business Development Centers - SBDC

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Reasons for Success

• Hard Work, Drive, Dedication
• Market Demand for Products, Services
• Managerial Competence
• Luck
• Strong Control Systems
• Sufficient Capitalization
• Gods plan?

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