Management 11e John Schermerhorn

1
Management 11e John Schermerhorn

• Chapter 6
• Entrepreneurship and
• New Ventures

2
Planning Ahead Chapter 6 Study Questions

1. What is entrepreneurship?
2. What is special about small business
   entrepreneurship?
3. How do entrepreneurs start and finance new
   ventures?

3
Study Question 1 What is entrepreneurship?

• Entrepreneurship
• Risk-taking behavior that results in new
  opportunities
• Serial entrepreneur
• Starts and runs business and nonprofits over and
  over again
• First-mover advantage
• First to exploit a niche or enter a market
• Entrepreneurs
• Display entrepreneurial behavior as employees of
  larger firms

4
Study Question 1 What is entrepreneurship?

• Characteristics of entrepreneurs

5
Study Question 1 What is entrepreneurship?

• Diversity and Entrepreneurship
• Women and minority entrepreneurs are growing in
  numbers
• Necessity-based entrepreneurship
• People start a business because no other
  employment opportunities exist
• Social entrepreneurship
• Unique form of ethical entrepreneurship that
  seeks new ways to solve pressing social problems
• Social entrepreneurs
• Take risks to find new ways to solve pressing
  social problems such as poverty, literacy,
  illness,homelessness

6
Study Question 2 What is special about small
business entrepreneurship?

• Small business have fewer than 500 employees

7
Study Question 2 What is special about small
business entrepreneurship?

• Starting a small business
• Startup
• New and temporary venture that is trying to
  establish a profitable business model
• Franchise
• One business owner sells to another the right to
  operate the same business in another location
• Lean startups
• Use free software and web services while staying
  small and keeping operations simple

8
Study Question 2 What is special about small
business entrepreneurship?

• Options for starting a small business

9
Study Question 2 What is special about small
business entrepreneurship?

• Types of internet business models

10
Study Question 2 What is special about small
business entrepreneurship?

• Family owned businesses
• Largest percentage of businesses worldwide
• Feuds result when family members disagree over
  how the business is run
• Possible succession problems
• Who will run the business when the current head
  leaves?
• Succession plan outlines leadership transition
  and financial matters

11
Study Question 2 What is special about small
business entrepreneurship?

• Why small businesses fail
• SBA reports as many as 60 80 fail

12
Study Question 2 What is special about small
business entrepreneurship?

• Small business development
• Business incubator
• Offers space, shared services and advice to get
  small businesses started
• Small Business Development Centers
• Founded with U.S. Small Business Administration
  to provide advice to new and existing small
  businesses

13
Study Question 3 How do entrepreneurs start and
finance new ventures?

• Life cycles of entrepreneurial firms

14
Study Question 3 How do entrepreneurs start and
finance new ventures?

• Business plan
• Describes goals, operating plans and financing
  for a new business
• Banks want to see a well-developed business plan
  before loaning money
• Forms of ownership
• Sole Proprietorship
• An individual or married couple pursuing business
  for a profit

15
Study Question 3 How do entrepreneurs start and
finance new ventures?

• Forms of ownership
• Partnership
• Two or more people agree to contribute resources
  to start and operate a business together

16
Study Question 3 How do entrepreneurs start and
finance new ventures?

• Forms of ownership
• Corporation
• A legal entity that exists separately from its
  owners
• Limited Liability Company (LLC)
• A combination of sole proprietorship,
  partnership, and corporation
• Protects owners against personal loss other than
  what is invested in the company
• Treated as a proprietorship or partnership for
  tax purposes

17
Study Question 3 How do entrepreneurs start and
finance new ventures?

• Financing
• Debt Financing
• involves borrowing money from another person, a
  bank, or a financial institution
• Equity Financing
• involves exchanging ownership shares for outside
  investment monies
• Venture Capitalists
• Involves making large investments in new ventures
  in return for an equity stake in the business
• Financing
• Angel Investor
• A wealthy individual willing to invest in return
  for equity in a new venture
• Initial Public Offering (IPO)
• An initial selling of shares of stock to the
  public at large

18
Chapter 6 Case

• Sprinkles Leading a sweet trend