7 Small Business & Entrepreneurship: Economic Rocket Fuel

BUSN ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 7 Small Business and
Entrepreneurship:
Economic Rocket Fuel

• Why do entrepreneurs launch small businesses?

• What is the typical entrepreneurial mindset and
characteristics?
• What are funding options for small business?
• What are the opportunities and threats facing small
businesses?
• What are ways to become a business owner and facilitate
success?
• What is the size, scope and economic contribution of small
business?

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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

Launching a New Venture: What’s in It For Me?

 Greater Financial Success

 Independence

 Flexibility

 Challenge

 Survival
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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

The Entrepreneur: A Distinctive Profile

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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

The Entrepreneurial Mindset:

A Matter of Attitude

• Not every small businessperson starts as an entrepreneur

• The difference is a matter of attitude

• 70% of small business owners say they don’t want to grow

any larger

• Classic entrepreneurs’ ideas can dramatically change the

world

Henry Ford, Walt Disney, Bill Gates, Martha Stewart……..

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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

Finding the Money:

Funding Options for Small Business

 Personal Resources

 Loans

 Angel Investors

 Venture Capital

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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

Opportunities and Threats for Small Business:

A Two-Sided Coin

Opportunities: Threats:
• Market Niches • Higher Risk of Failure

• Personal Customer • Lack of Knowledge and

Service Experience

• Lower Overhead • Too Little Money

Cost
• Bigger Regulatory Burden
• Technology
• Higher Health Insurance
Costs
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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

Opportunities and Threats for Small Business:

A Two-Sided Coin

Source: Business Employment Dynamics data: survival and longevity, II by Amy E. Knaup and Merissa C. Piazza, September 2007, Monthly Labor Review, Bureau of Labor Statistics
website, http://www.bls.gov/opub/mlr/2007/09/art1full.pdf, accessed February 15, 2009.

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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

Launch Options: Reviewing the Pros and Cons

• Starting from scratch

• Buying an established business
• Buying a franchise

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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

Starting a Business from Scratch

Key Pros: Key Cons:

• It’s all you : Your concept, • It’s all you. That’s a lot of
your decisions, your pressure.
structure • It can be hard to get credit.
• You don’t have to deal with • Logistics can be challenging
the prior owner’s bad • It takes time, money, and
decisions. sheer sweat to build a
customer base.

Source: Five Reasons Why Franchises Flop by Steve Strauss, February 28, 2005, USA Today Money website, http://www.usatoday.com/money/smallbusiness/columnist/strauss/2005-02-28-
franchise_x.htm

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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

Buying an Established Business

Key Pros: Key Cons:

• The concept, organizational • Working with someone
structure, and operating else’s idea may not be fun
practices are in place
• You may inherit old mistakes
• Relationships are
established
• Obtaining financing is less
challenging

Source: Five Reasons Why Franchises Flop by Steve Strauss, February 28, 2005, USA Today Money website, http://www.usatoday.com/money/smallbusiness/columnist/strauss/2005-02-
28-franchise_x.htm

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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

Buying a Franchise

Key Pros: Key Cons:

• Partnering with • Less opportunity for
established brand creativity
• Possibility of assistance • Tied to national brand’s
with management and mistakes
financing
• Purchase price and on-
• Low failure rate going royalties can be
steep

Source: Five Reasons Why Franchises Flop by Steve Strauss, February 28, 2005, USA Today Money website, http://www.usatoday.com/money/smallbusiness/columnist/strauss/2005-02-28-
franchise_x.htm

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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

Making it Happen: Tools for Success

• Small Business Administration

• Gain Experience
• Learn from Others
• Educate Yourself
• Business Plan

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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

The Business Plan

 Executive Summary

 Description of Business

 Competitive and Industry

Research

 Marketing Strategies

 Operating Procedures

 Personnel

 Financial Projections
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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

Small Business and the Economy:

An Outsized Impact

• Creating New Jobs

• Fueling Innovation

• Vitalizing Inner Cities

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 7 Small Business & Entrepreneurship: Economic Rocket Fuel

Entrepreneurship around the World

Entrepreneurship around
the word depends on:
 Per Capita Income
 Opportunity Cost
 Cultural/Political
Environment

Source: Global Entrepreneurship Monitor, 2008 Executive Report by Niels Bosma, Zoltan J. Acs, Erkko Autio, Alicia Coduras, and Jonathan Levie, Babson College and
London School of Economics, http://www.gemconsortium.org/article.aspx?id=76 , published January 15, 2009, accessed February 17, 2009.

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 7 Looking Back

• Why do entrepreneurs launch small businesses?

• What is the typical entrepreneurial mindset and
characteristics?
• What are funding options for small business?
• What are the opportunities and threats facing small
businesses?
• What are ways to become a business owner and facilitate
success?
• What is the size, scope and economic contribution of small
business?

BUSN ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17