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Nickels McHugh McHugh With help from Timothy

Nickels Cover. Nickels McHugh McHugh With help from Timothy. 6. Chapter. Entrepreneurship and Starting a Small Business. 6- 2. Learning Goals. Entrepreneurship Small businesses’ role in the economy How to learn and avoid early mistakes What it takes to start a small business

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Nickels McHugh McHugh With help from Timothy

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  1. Nickels Cover Nickels McHugh McHugh With help from Timothy

  2. 6 Chapter Entrepreneurship and Starting a Small Business 6-2

  3. Learning Goals • Entrepreneurship • Small businesses’ role in the economy • How to learn and avoid early mistakes • What it takes to start a small business • Small businesses selling outside the USA

  4. 1. Entrepreneurship • Entrepreneurship- Accepting the risk of starting and running a business. • Entrepreneurial teams: group of experienced managers from different skills/fields • Intrapreneurs: working as an entrepreneur but inside a large company • Micropreneurs: home-based business, no less job security than working for large firm

  5. Entrepreneurship • Definition • Characteristics of Successful Entrepreneurs • Intrapreneur • Micropreneur vs. Home-Based Corporation Entrepreneur

  6. Entrepreneurial Attributes • Self-Directed & Self-Disciplined • Self-Nurturing • Action-Oriented • Highly Energetic • Tolerant of Uncertainty

  7. Why People StartTheir Own Businesses Source: BFIB/VISA Card Primer

  8. Reasons Women Leave Jobs in Big Companies to Start Business Source: FSB, March 2001

  9. Who StartsNew Businesses? 18 - 24 8% 25 - 34 71% 35 - 44 13% 45 - 54 6% 55+ 2% AGE AT START-UP

  10. Hours per WeekEntrepreneurs 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%

  11. Government Support • Good legal and economic environment (Ch2) • SBA • Enterprise zones • Incubators

  12. Government Efforts • Immigration Act of 1990- Investor Visa • Enterprise Zones • Incubators

  13. 2. Small Business’s Role In The Economy • Create 75% of the new jobs in the US • Generate 45% of GDP (Ch2) • Offer more personalized customer-service than large companies, so fill niches in markets

  14. What is Small Business? • Independent • Not Dominant • ( Except in • small niche market) • < 500 Employees

  15. 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

  16. Small Business- Advantages • Personalized Service/ Personal Contact • Flexibility • Lower Costs • Innovation Opportunities

  17. Small Business-Disadvantages • Limited Experience • Long Hours • Insufficient Capital • High Failure Rate

  18. 3. How to learn and avoid early mistakes • Classes like this one and those more oriented to small business practicalities • Talk to experienced small business owners and gain from their experiences • Gain experience in same field working fro someone else

  19. Learn from Others Get Experience Take Over Successful Firm Small Business Success

  20. 4. What it Takes to Start a Small Business • Business Plan (see page 191): • Nature of business: what good or service you will provide • Target market: what need you will fill • Advantages over competition • Resources available: money, capital, people • Skills available

  21. What it takes (part 2) • Financing: • Bank loan • Venture Capitalist: part-ownership as condition of financing • Venture Capitalists: Individuals or companies that invest in new business in exchange for partial ownership of those businesses.

  22. Capital Sources ofSuccessful Entrepreneurs SOURCE:FSB, March 2001

  23. What it takes (part 3) • Define Your Market: People with unsatisfied needs who have both the resources and willingness to buy. • Keep track of how you are doing(profit/loss): record keeping and accounting • Staff: pick people you can trust and make it worth their while

  24. Successful BusinessManagement Requirements • Business Plan • Adequate Funding • Lenders/Investors • “Angels” • Venture Capitalists • Professional Advice/Help • Know Your Customer • Manage Human Resources • Keep Good Records

  25. Advantages of Working for a Small Firm • More empowerment to use own ideas and take initiative, as boss has to rely on you for more tasks and a more important proportion of all work done (than in a large company)-> boss shows more respect and job is more challenging

  26. Help From: • Small Business Administration • SCORE: Service Corps of Retired Executives

  27. Small Business Collaborators • Small Business Administration (SBA) • Microloan program • SBICs • SBDCs • Service Corps of Retired Executives (SCORE) • Active Corps of Executives (ACE)

  28. Small Business Administration (SBA): • A U.S. government agency that advises and assist small businesses by providing management training and financial advice and loans.

  29. 5) Small Businesses Selling Outside the USA • World market is many times larger than US • Internet allows small businesses to reach potential customers all over the globe

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