I

Entrepreneurship
Introducing
and
Management
Small Business
Management
Dr. Mahmoud El Damaty
Lecture FOUR

drmdamaty@gmail.com
 2

 Mobile phones SHOULD BE SILENT

Please ….read the Course Syllabus .

drmdamaty@gmail.com
Learning Objectives
At the end of this activity, participants will be
able to:
1. Small business and its importance in the
economy
2. Sole proprietorships, partnerships, and
corporations
3. Creating and managing corporations
4. Corporate trends and issues
5. Starting and funding a small business
6. Pros and cons of franchising
drmdamaty@gmail.com
“Entrepreneurs are simply
those who understand that
there is little difference
between obstacle and
opportunity and are able to turn
both to their advantage.”
Victor Kiam

drmdamaty@gmail.com
 The Many Varieties of
Entrepreneurship

 Founder (“Pure” Entrepreneur)

 A person who brings a new firm into existence.
 Administrative Entrepreneur
 An entrepreneur who overseas the operations of a ongoing
business.
 Franchisee
 An entrepreneur whose power is limited by the contractual
relationship with a franchising organization.
 Entrepreneurial Team
 Two or more people who work together as entrepreneurs.

1–5
drmdamaty@gmail.com
What Is “Small Business”?

Independently owned
and managed business
that does not
dominate its market

drmdamaty@gmail.com
Popular Areas of Small Business
Enterprise
Services
Manufacturing
 5%
Finance &
 Retailing Insurance Other
 Construction 10% 1.7%

 Financial Wholesale
8%
 Insurance
 Wholesaling
 Transportation
 Manufacturing
Construction Services
Retailing 37.6%
10%
22.7%
Transportation
5%
drmdamaty@gmail.com
 Sole Proprietorships ‫وحيد‬
‫الملكيات‬
Advantages: Disadvantages:
 Freedom  Unlimited Liability
 Simple to form Limited resources
Limited fundraising
 Low start up costs capability
 Tax benefits Lack of continuity

Unlimited Liability
Legal principle holding owners
responsible for paying off all debts of a
business
drmdamaty@gmail.com
 Partnerships

Advantages: Disadvantages:
 More talent and  Unlimited Liability
money Disagreements
 More fundraising among partners
capability Lack of continuity
 Relatively easy to
form Unlimited Liability
 Tax benefits Legal principle holding owners
responsible for paying off all debts of a
business
drmdamaty@gmail.com
Remember…
“When two men in business
always agree, one of them is
unnecessary.”
William Wrigley Jr.

But…
An exit plan is still crucial!
drmdamaty@gmail.com
What is a Corporation?

“An artificial being, invisible, intangible, and

existing only in contemplation of the law.”
drmdamaty@gmail.com
 Corporations

Advantages: Disadvantages:
 Limited Liability  Double Taxation
 Continuity  Fluid control
 Stronger  Complicated and
fundraising expensive to form
capability

drmdamaty@gmail.com
Types of Corporations

 Closely Held (Private) Corporation

 Publicly Held (Public) Corporation

 S Corporation
 Limited Liability Corporation (LLC)
 Professional Corporation
 Multinational Corporation

drmdamaty@gmail.com
Stockholders
Owners of Corporations
Stock: Share of ownership in a
corporation
 Common Stock
 Preferred Stock

drmdamaty@gmail.com
Corporate Governance Hierarchy
Stockholders

Board of Directors

Officers

drmdamaty@gmail.com
Why Corporate Governance?
Corporate Governance Framework

Chairman
Board of Directors

CEO

Owners/
Shareholders/
Stakeholders

Company
Management

drmdamaty@gmail.com
5 Principles of healthcare Corporate Governance

drmdamaty@gmail.com
Principle 1: “The Hospital implements and fosters
corporate and clinical governance practices that are both
sound and effective.”

Corresponding Guidelines and Samples

drmdamaty@gmail.com
Principle 2: "The Hospital develops its Board of Directors to
be effective, professional and independent in terms of its
composition, size and behavior as well as empowers it to
adequately discharge its responsibilities and duties.“

Corresponding Guidelines and Samples

drmdamaty@gmail.com
Principle 3: “The Hospital incorporates proper audit,
control and risk management practices with their
corresponding structures, policies and procedures.”

Corresponding Guidelines and Samples

drmdamaty@gmail.com
Principle 4: ”The Hospital applies and cultivates
responsibility, ethics and inclusiveness practices and takes
its specific social, ecological and economic environment into
account.”

Corresponding Guidelines and Samples

drmdamaty@gmail.com
Principle 5: “The Hospital integrates transparency practices
into the core of the organization and commits itself to good
disclosure.”

Corresponding Guidelines and Samples

drmdamaty@gmail.com
Special Issues in Corporate Ownership

Joint Ventures &

Strategic Alliances

Employee Stock
Ownership Programs
(ESOPS)

Institutional
Ownership

drmdamaty@gmail.com
 Special Issues in Corporate Ownership
‫عمليات االندماج واالستحواذ‬

Mergers &
Acquisitions
(M&As)

Divestitures
& Spin-offs

drmdamaty@gmail.com
‫تجريدات والفوائد العرضية‬
Entrepreneurship vs. Small Business

Entrepreneur: Accepts
the risks and
opportunities of
creating, operating and
growing a new business

Small Business Owner:

Does not have plans for
growth
drmdamaty@gmail.com
Trends in Small Business Start-ups
Emergence of
E-commerce

Crossovers From
Big Business

Opportunities for Minorities &

Women

Global
Opportunities

Increased
Survival Rates

drmdamaty@gmail.com
Reasons for Success and Failure
Reasons for Failure
Reasons for Success
 Poor management
 Hard work,
 Neglect drive, dedication
 Weak control  Market demand
systems
 Strong
 Insufficient capital management
 Luck!!!

drmdamaty@gmail.com
Getting Started

Buying an Starting
Existing From
Business Scratch

drmdamaty@gmail.com
 FINANCING THE SMALL BUSINESS
 Types of financing
 Start-up financing
 Short-term financing
 Long-term financing

 Sources of financing
 Owner-supplied funds
 Borrowed funds

29
drmdamaty@gmail.com
Financing the Small Business
 Personal resources
 Loans
 Venture capital companies
 Small-business investment companies
 Small Business Association (SBA)
 Financial aid and management advice

drmdamaty@gmail.com
FRANCHISING
An Ownership Opportunity

Advantages Disadvantages
 Proven  Start-up costs
business  On-going
opportunity payments
 Access to  Management
management rules and
expertise restrictions
drmdamaty@gmail.com
 COMMON REASONS FOR SMALL
BUSINESS FAILURE
1. Not keeping adequate records
2. Not having enough start-up money
3. Lack of management experience
4. Lack of experience with the type of
business
5. Not controlling operating expenses
6. Poor location for the business
7. Failure to manage credit offered to
customers
32
drmdamaty@gmail.com
 Artisan Entrepreneurs ‫الحرفيين رجال األعمال‬
 Artisan Entrepreneur
A person with primarily technical skills and little
business knowledge who starts a business.
 Characteristics:
 Technical training
 Paternalistic approach
 Reluctance to delegate
 Few sources of capital
 Narrow view of strategy
 Personal sales effort
 Short planning horizon
1–33 drmdamaty@gmail.com
 Opportunistic Entrepreneurs ‫انتهازية رجال‬
‫األعمال‬
 Opportunistic Entrepreneur
 A person with both sophisticated managerial skills
and technical knowledge who starts a business.
 Characteristics:
 Broad-based education
 Scientific approach to problems
 Willing to delegate
 Broad view of strategy
 Diversified marketing approach
 Longer planning horizon
 Sophisticated accounting
and financial control

1–34
drmdamaty@gmail.com
 Women Entrepreneurs
 More Women Entrepreneurs
 The number of women-owned firms grew nearly
twice as fast as that of all firms from 1997 to 2006.
 Females owned 30% of all businesses as of 2006.
 Women are moving into nontraditional industries.
 Problems Facing Female Entrepreneurs
 Newness of entrepreneurial role
 Lack of access to credit
 Lack of networking
connections
 Discrimination

1–35
drmdamaty@gmail.com
 Getting Started
 Age and Entrepreneurial Opportunity

Early Career Concerns Late Career Concerns

1. Getting an education 1. Fulfilling family
responsibilities
2. Gaining work experience
2. Attaining seniority
3. Acquiring financial in employment
resources 3. Earning investment in
a retirement program

20 25 35 45
Age

1–36
drmdamaty@gmail.com
 Getting Started (cont’d)
 Taking the Plunge ‫اتخاذ يغرق‬
 Precipitating event
 An event, such as losing a job,
that moves an individual to
become an entrepreneur.

 Finding “Go-To” Persons

 Mentors for advice and counsel
 Growing and Managing the
Business

1–37
drmdamaty@gmail.com
 WHAT IS A
BUSINESS PLAN?

 A business plan is a written

description of the business idea and
how it will be carried out, including all
major business activities to ask for
fund.

38
drmdamaty@gmail.com
 What is a business plan
‫خطة األعمال‬/‫ما هي خطة المشروع‬
 Similar to a strategic plan
 Describes what your business is
about and its potential growth
 Useful for planning; necessary for
borrowing
 ‫ضرورية للحصول على تمويل‬

drdamaty@aucegypt.edu
39
Introduction Laboratory Quality Management System-Module 1 40
 Business Plan Outline
‫األعمال‬/‫مخطط خطة المشروع‬
 Executive summary ‫ملخص تنفيذي‬
 Table of contents ‫جدول المحتويات‬
 Market analysis ‫تحليل السوق‬
 Company description ‫وصف الشركة‬
 Organization and management
‫التنظيم واإلدارة‬
 Marketing and sales strategies
‫استراتيجيات التسويك‬
‫والمبيعات‬
 Service line
‫خط الخدمات‬
 Funding request
‫طلب التمويل‬
 Financial statements ‫البيانات المالية‬
 Appendix ‫ملحك‬

drdamaty@aucegypt.edu 41
Executive Summary
 Concise overview of the entire plan along with a
history of your company; tells your reader where
your company is and where you want to take it
and why you think your business idea will be
successful.

 Contents (no more than 4 pages, details in other

parts of the plan)
 The Mission Statement - explains what your business is all about
 Date business began
 Names of founders and the functions they perform
 Number of employees
 Location of business and any branches or subsidiaries
 Description of plant or facilities
 Services rendered
 Banking relationships and information regarding current investors
 Summary of company growth including financial or market highlights
 Summary of management's future plans

drdamaty@aucegypt.edu
42
Executive Summary ( Cont.)
 If
you're just starting, focus on
your experience and background
as well as the decisions that led
you to start this particular
enterprise. Include information
about the problems your target
market has and what solutions you
provide.
 Include a table of contents
directly following the executive
summary
drdamaty@aucegypt.edu
Market Analysis
 Present general highlights and
conclusions of any marketing
research data you have collected.
Specific details of your marketing
research studies should be included
in the appendix section.
 Contents
Industry description and outlook
Identifying your target market
Competitive analysis
Regulatorydrdamaty@aucegypt.edu
restrictions 44
Company Description

 Contents
The nature of your business (or
why you're in business)
Marketplace needs that you are
trying to satisfy
Ways in which you plan to satisfy
these needs
Primary success factors

drdamaty@aucegypt.edu 45
Organization and Management

 Content
Organizational structure
Ownership information
Management profiles
Board of Directors' (or Advisory
Board) qualifications

drdamaty@aucegypt.edu 46
Marketing and Sales Strategies
 Marketing is the process of creating
patients; sales is actually selling the
service.
 Contents
 Strategy for growing your business
 Communication strategy - how are you going to
reach your patients?
 Once you have defined your marketing
strategy, define your sales strategy - how do
you plan to actually sell your services?

47
drdamaty@aucegypt.edu
 Service Line
 Describe your service,
emphasizing the benefits to
potential and current patients
 Contents
Detailed description of your services
(from your patients' perspective).
Include information about the
specific benefits of your service
drdamaty@aucegypt.edu 48
Funding Request

 In this section, you will request the amount of

funding you will need to start or expand your
business

 Content
 Current funding requirement
 Future funding requirements over the next five years
 How you will use the funds you receive
 Any long-range financial strategies that you are planning
that would have any type of impact on your funding
request
drdamaty@aucegypt.edu 49
 Financial Statements
 The financials should be developed
after you've analyzed the market and
set clear objectives
 Contents
 Historical Financial Data
(prior 3-5 years)
 Company's income statements, balance sheets,
and cash flow statements for each year you
have been in business

drdamaty@aucegypt.edu 50
Financial Statements(Cont.)
 Prospective Financial Data (next 5 years)
 Each year's documents should include
forecasted income statements, balance sheets,
cash flow statements, and capital expenditure
budgets.
 Clearly state your assumptions
 Make sure that your projections match your
funding requests
 Analysis of your financial information - a
ratio and trend analysis for all of your
financial statements (both historical and
prospective)

drdamaty@aucegypt.edu
 Appendices
 Provided to readers on an as-needed basis
 Contents
 Credit history (personal & business)
 Resumes of key managers
 Letters of reference
 Details of market studies
 Relevant magazine articles or book references
 Licenses or permits
 Legal documents
 Copies of leases
 Building permits
 Contracts
 List of business consultants, including attorney and accountant
 Copies of your business plan should be controlled; keep a
distribution record. This will allow you to update and maintain
your business plan on an as-needed basis.

drdamaty@aucegypt.edu 52
References
 U.S. Small Business Administration
http://www.sba.gov/smallbusinessplanner/plan/writeabusines
splan/SERV_ESSENTIAL.html
http://www.sba.gov/smallbusinessplanner/plan/writeabusines
splan/SERV_WRRITINGBUSPLAN.html

drdamaty@aucegypt.edu
53
 Thank you
Dr. Mahmoud Mohamed El Damaty
01222 850 959
drmdamaty@gmail.com

drmdamaty@gmail.com