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Business 100. Introduction to Business Dr. Kathy Broneck. Review. Types of business owners Mergers Franchises Cooperatives. Preview. Entrepreneurship Small businesses Economic impact Operations Start up. Entrepreneurship. Accept the risks of starting and running a small business
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Business 100 Introduction to Business Dr. Kathy Broneck
Review • Types of business owners • Mergers • Franchises • Cooperatives
Preview • Entrepreneurship • Small businesses • Economic impact • Operations • Start up
Entrepreneurship • Accept the risks of starting and running a small business • Micropreneurs and Home based Businesses • Businesses remain small • Intrapreneur • Work inside of corporations in an entrepreneurial role
Why Entrepreneurship? • Opportunity • Profit • Independence • Challenge
Why People Start Their Own Businesses Source: BFIB/VISA Card Primer
Hours per Week Entrepreneurs Worked 1st Year 1 - 39 hours 8% 40 - 49 hours 15% 50 - 59 hours 23% 60 - 69 hours 28% 70 - 79 hours 13% 80 + hours 12%
Entrepreneur Characteristics • Self-directed • Self-nurturing • Action-oriented • Highly energetic • Tolerant of uncertainty
Government Encouragement • Immigration Act of 1990 • Encouragement of entrepreneurs to come to the US • Enterprise Zones • Geographic Areas • Lower taxes and incentives • Incubators • Centers of low-cost offices • Basic business services
What is Small Business? • Independent • Not Dominant in Field of Operation • < 500 Employees • “Small” is dependent on relation to other businesses’ size in its industry
U.S. Small Businesses • 20 Million Full/Part-Time Businesses • 75% of New Jobs • 45% of Gross Domestic Product • Jobs • 80% of Americans = 1st Job in Small Business • 75% of New Jobs = Small Business • Women-Owned Growing Rapidly
Small Business Revival • Shift to Services • Computer Aided Design (CAD)/Computer Aided Manufacturing (CAM) • Lessening Advantages of Big Manufacturing • Maturation of Baby Boomers • More Women in Workforce
Advantages Personalized Service/ Personal Contact Flexibility Lower Costs Innovation Opportunities Disadvantages Limited Experience Long Hours Insufficient Capital High Failure Rate Small Business
Focus Find Opportunity Results vs. Routine Profit vs. Paycheck New Ideas Long Term vs. Short Term Challenges New Customers Time Management Work vs. Family City Ordinances Risk Home Office Owners (Subset of Small Businesses)
Successful Business Management Requirements • Business Plan • Adequate Funding • Lenders/Investors • “Angels” • Venture Capitalists (VCs) • Professional Advice/Help • Know Your Customer • Manage Human Resources • Keep Good Records
Small Business Collaborators • Small Business Administration (SBA) • Government Agency assisting small businesses • Microloan program • Small loans from $100 up to $35,000 • Small Business Investment Company (SBICs) Program • Private investment companies to lend money. • SBICs must have $1 million in capital • Can borrow up to $4 million per $1 million they have from SBA
Small Business Collaborators • Small Business Development Center (SBDCs) • Funded by both National and State Government • Free services (normally in colleges and universities) • Evaluates feasibility • Helps develop business plans • Helps complete your funding application
PCC Community Campus • SBDC Services • Consulting is available at no cost • Financial support: PCC & SBA • Confidential; never shared outside of the SBDC without your authorization. • Assist at all business stages • Start-up • Growth • Survival • http://www.pima.edu/business/
PCC Community Campus • Small Business Development Center PCC Community Campus401 N. Bonita Ave.Tucson, AZ 85709-5900 • General Information: 520-206-6404Fax: 520-206-6550Email: sbdc@pima.eduHours: 8:00am - 5:00pm
Small Business Collaborators • Service Corps of Retired Executives (SCORE) • SBA office staffed with volunteers retired from business • Help at no cost • 1-800-634-0245 • Active Corps of Executives (ACE) • Volunteers still in business • Help at no cost
Capital Sources of Successful Entrepreneurs SOURCE:FSB, March 2001
I don’t know enough about you or your business. You haven’t clearly stated why you need the money. Your numbers don’t support the loan request. Your collateral is lacking. Your business does not support the loan on its own merits. Reasons for aBanker To Say “No”
Ways to Improve Banking Relationships • Provide Bank With Business Plan, Brochures, Business Cards, etc. • Describe Business, Financial Situation, Plans • Ask About Scope of Bank Services • Express Interest In Banker’s Background- Family, Hobbies, etc. • Follow Up With Phone Calls, Visits Source: St. Louis Business Monthly, August 2002
Small Business Strategies • Examine Marketing & ID Areas for Growth • Profile Best Customers & Market to Similar Prospects • Invest in Sales Training & Technology • Refresh Business Perspective With Outside Views • Streamline Business & Eliminate Waste
React/Not Overreact Understand Financial Situation Find Professional Help Develop “Recovery Plan” Be Visible Confident Leader Remind Employees of Stake in Business Don’t Get Stung By Killer “Bankruptcy” Saving A Business In Trouble
Positives World Market Absorb Excess Inventory Soften U.S. Downturns Extend Product Life Negatives Financing Difficult How to Get Started? Lack of Cultural Understanding Paperwork Small Business & International Prospects
Advantages Deal With Individuals Faster Shipping Variety of Suppliers Professional Service Information Dept. of Commerce- www.bxa.doc.gov SBA- International- www.sba.gov/hotlist/internat.html International Small Business