itb chap 06
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Introduction to Business© Thomson South-Western
ChapterChapterChapterChapter
Entrepreneurship and Small Business Management
6-16-1 Becoming an Entrepreneur
6-26-2 Small Business Basics
6-36-3 Starting a Small Business
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Introduction to Business© Thomson South-Western
Chapter 6
Slide 2
LESSON 6-1LESSON 6-1
Becoming an Entrepreneur
Goals Identify characteristics of successful
entrepreneurs. Recognize the importance of
entrepreneurship in the economy. Describe opportunities and risks of
entrepreneurship.
Introduction to Business© Thomson South-Western
Chapter 6
Slide 3
Key Terms
entrepreneur entrepreneurship venture capital innovation improvement
Introduction to Business© Thomson South-Western
Chapter 6
Slide 4
CHARACTERISTICS OF ENTREPRENEURS Desire to be your own boss Special skills and abilities
Introduction to Business© Thomson South-Western
Chapter 6
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ENTREPRENEURS IN ACTION Pankaj Arora Rich Stachowski Jeffrey Rodriguez and John Serrano Abbey Fleck
Introduction to Business© Thomson South-Western
Chapter 6
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WHAT DOES IT TAKE?
Entrepreneurs are more persistent inquisitive energetic goal oriented independent
self-confident creative reliable competitive
Introduction to Business© Thomson South-Western
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WHAT DOES IT TAKE?Entrepreneurs have problem-solving skills tolerance for ambiguity strong integrity personal initiative ability to secure resources capability to learn from failure willingness to work hard
(continued)
Introduction to Business© Thomson South-Western
Chapter 6
Slide 8
>> C H E C K P O I N T
What personal characteristic are common to most successful entrepreneurs?
Introduction to Business© Thomson South-Western
Chapter 6
Slide 9
ENTREPRENEURSHIP AND THE ECONOMY Employment Financing Productivity
Introduction to Business© Thomson South-Western
Chapter 6
Slide 10
NUMBER OF EMPLOYEESIN NEW BUSINESSES
Introduction to Business© Thomson South-Western
Chapter 6
Slide 11
>> C H E C K P O I N T
What are the sources of financing that entrepreneurs use for their new businesses?
Introduction to Business© Thomson South-Western
Chapter 6
Slide 12
OPPORTUNITIES
Innovation Improvement
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Chapter 6
Slide 13
RISKS
Recognizing risks Lack of adequate capital Low sales Higher than expected expenses Competitive pressure An owner unprepared to manage a growing
business Operations requiring more time than the owner is
willing to commit
Introduction to Business© Thomson South-Western
Chapter 6
Slide 14
>> C H E C K P O I N T
Where do entrepreneurship opportunities begin?
Introduction to Business© Thomson South-Western
Chapter 6
Slide 15
LESSON 6-2LESSON 6-2
Small Business Basics
Goals Identify important characteristics of
small businesses. Recognize the competitive advantages
of small businesses. Identify problems faced by many small
businesses.
Introduction to Business© Thomson South-Western
Chapter 6
Slide 16
Key Terms
small business Small Business Administration (SBA)
Introduction to Business© Thomson South-Western
Chapter 6
Slide 17
SMALL BUSINESS OWNERSHIP Description of a small business
Owner is usually the manager Operates in one or very few locations Typically serves a small market Not dominant in its field
Small business employment Ownership diversity
Introduction to Business© Thomson South-Western
Chapter 6
Slide 18
COMMON TYPES OF SMALL BUSINESSES
Introduction to Business© Thomson South-Western
Chapter 6
Slide 19
>> C H E C K P O I N T
What percentage of employees in the United States work for small businesses?
Introduction to Business© Thomson South-Western
Chapter 6
Slide 20
SMALL BUSINESS ADVANTAGES Meeting customer needs Providing unique services
Introduction to Business© Thomson South-Western
Chapter 6
Slide 21
>> C H E C K P O I N T
How can small businesses compete successfully with larger businesses?
Introduction to Business© Thomson South-Western
Chapter 6
Slide 22
COMMON REASONS FOR SMALL BUSINESS FAILURE Not keeping adequate records Not having enough start-up money Lack of management experience Lack of experience with the type of business Not controlling operating expenses Poor location for the business Failure to manage credit offered to customers
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SMALL BUSINESS ASSISTANCE Faculties of universities and colleges Local groups of business people Small Business Administration (SBA)
Introduction to Business© Thomson South-Western
Chapter 6
Slide 24
>> C H E C K P O I N T
List common reasons for small business failure.
Introduction to Business© Thomson South-Western
Chapter 6
Slide 25
LESSON 6-3LESSON 6-3
Starting a Small Business
Goals Recognize important factors to be
considered when starting a business. Describe the elements of a business
plan. Identify types and sources of financing
for a small business.
Introduction to Business© Thomson South-Western
Chapter 6
Slide 26
Key Terms
business plan start-up financing short-term financing long-term financing
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Chapter 6
Slide 27
THE BUSINESS DECISION
An idea plus experience Right place and time Team approach Preparation and research
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Chapter 6
Slide 28
>> C H E C K P O I N T
Why is it important to use a team approach when starting a new business?
Introduction to Business© Thomson South-Western
Chapter 6
Slide 29
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.
Introduction to Business© Thomson South-Western
Chapter 6
Slide 30
ELEMENTS OF A BUSINESS PLAN Description of the Business
The business idea Major products and services Ownership structure Strengths/weaknesses Long- and short-term goals
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ELEMENTS OF A BUSINESS PLAN Description of Competition
Characteristics of the industry Condition of the economy Strengths and weaknesses of major
competitors
(continued)
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ELEMENTS OF A BUSINESS PLAN Customer Analysis
Description of customers Location, number, and resources of
customers Sales forecasts
(continued)
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ELEMENTS OF A BUSINESS PLAN Operations Plan
Organization of the company Description of major operations Analysis of resources needed Human resource plans
(continued)
Introduction to Business© Thomson South-Western
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ELEMENTS OF A BUSINESS PLAN Marketing Plan
Description of major marketing activities Description of resources needed Schedule of marketing activities
(continued)
Introduction to Business© Thomson South-Western
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ELEMENTS OF A BUSINESS PLAN Financial Plans
Start-up costs Short- and long-term financial needs Sources of financing Budgets and financial statements
(continued)
Introduction to Business© Thomson South-Western
Chapter 6
Slide 36
STEPS IN DEVELOPING THE BUSINESS PLAN Gather and review information Develop the “game plan” Write the plan Ask an expert to review the plan
Introduction to Business© Thomson South-Western
Chapter 6
Slide 37
>> C H E C K P O I N T
What is the “game plan” in a business plan?
Introduction to Business© Thomson South-Western
Chapter 6
Slide 38
FINANCING THE SMALL BUSINESS Types of financing
Start-up financing Short-term financing Long-term financing
Sources of financing Owner-supplied funds Borrowed funds
Introduction to Business© Thomson South-Western
Chapter 6
Slide 39
>> C H E C K P O I N T
In addition to owner-supplied capital, what are several other sources of financing for a small business?