Transcript Chapter 7: SMALL BUSINESS AND ENTREPRENEURSHIP

CHAPTER 7: SMALL BUSINESS
AND ENTREPRENEURSHIP
Economic Rocket Fuel
LAUNCHING NEW VENTURES: WHAT’S IN IT
FOR ME?
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Greater Financial Success
Independence
Flexibility
Challenge
Survival
On any given day in the United
States, more people are trying
to start a new business than
are getting married or having
children.
ENTREPRENEURS
Entrepreneurs – People
who risk their time,
money, and other
resources to start and
manage a business.
THE ENTREPRENEUR: A DISTINCTIVE PROFILE
OPPORTUNITIES FOR SMALL BUSINESS
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Opportunities:
 Market
Niches
 Personal Customer Service
 Lower Overhead Cost
 Technology
THREATS FOR SMALL BUSINESS
• Threats:
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Higher Risk of Failure
Lack of Knowledge and Experience
Too Little Money
Bigger Regulatory Burden
Higher Health Insurance Costs
SMALL BUSINESS FAILURE
DOT-COM DEBACLES
Webvan: the value of this early
online grocer peaked at $1.2
billion, but Webvan left 2,000
people out of work when it
closed its doors in the middle
of 2001.
Pets.com: Shutting down only
nine months after its $82.5
million IPO, Pets.com hawked
pet care products from doggie
treats to kitty litter, but lacked
a workable plan for high
shipping costs.
iSmell: The idea is to
develop a digital
scent device that lets
customers smell the
aromas of the web
(whatever those may
be!). How long do
you think it will last?
FAILING WITH STYLE
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Walt Disney was fired from an ad agency for a
“singular lack of drawing ability.”
Ray Kroc, McDonald’s founder, failed at real
estate, he didn’t discover the McDonald
brothers’ hamburger stand until he was 52 years
old.
Steve Jobs, founder of Apple computer, was
dumped by his board of directors, but returned
a decade later to launch the iMac and the iPod.
Your failure may be the first step of the next big thing.
LAUNCH OPTIONS
• Starting from scratch
• Buying an established business
• Buying a franchise
STARTING A BUSINESS FROM
SCRATCH
Key Pros:
Key Cons:
• It’s all you : Your concept,
your decisions, your
structure.
• You don’t have to deal with
the prior owner’s bad
decisions.
• It’s all you. That’s a lot of
pressure.
• It can be hard to get credit.
• Logistics can be challenging
• It takes time, money, and
sheer sweat to build a
customer base.
BUYING AN ESTABLISHED BUSINESS
Key Pros:
Key Cons:
• The concept, organizational
structure, and operating
practices are in place.
• Working with someone
else’s idea may not be fun.
• Relationships are
established.
• Obtaining financing is less
challenging.
• You may inherit old
mistakes.
BUYING A FRANCHISE
Key Pros:
Key Cons:
• Partnering with
established brand
• Less opportunity for
creativity
• Possibility of assistance
with management and
financing
• Tied to national brand’s
mistakes
• Low failure rate
• Purchase price and ongoing royalties can be
steep
TOOLS FOR BUSINESS SUCCESS
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Small Business Administration
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Gain Experience
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Learn from Others
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Educate Yourself
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Business Plan
BUSINESS PLANS: THE ROADMAP
 Executive Summary
 Description of Business
 Competitive and Industry
Research
 Marketing Strategies
 Operating Procedures
 Personnel
 Financial Projections
FINDING THE MONEY: FUNDING OPTIONS
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Personal Resources
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Loans
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Angel Investors
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Venture Capital
SMALL BUSINESS AND THE ECONOMY: AN
OUTSIZED IMPACT
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Creating New Jobs
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Fueling Innovation
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Vitalizing Inner Cities
ECONOMIC IMPACT
Just 9.8% of the world’s entrepreneurs expect to
create almost 75% of the jobs generated by new
business ventures in the next five years.
LESS IS MORE
Eric Truran, founder of a small New England manufacturing firm
and retail store, eventually closed his retail store to focus strictly
on online and telephone sales.
His income dropped by about 50%, but his free time more
than quadrupled.
 He went from working 80 to 90 hours a week to working
15 to 20 hours a week.
 He uses his free time to pursue other passions, such as
playing guitar with his two bands.
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THE ENTREPRENEURIAL SPIRIT
Intrapreneurs - are innovative
workers who focus on launching
new products and generating
new profit streams for the
company that employ them.
MINIPRENEURS
Minipreneurs – individuals launching
super small scale enterprises. Include
microbusiness, freelancers, side
businesses, weekend entrepreneurs,
web-driven entrepreneurs, free agents
and more..
ENTREPRENEURSHIP AROUND THE WORLD
ENTREPRENEURSHIP, A WORLD OF DIFFERENCE
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Entrepreneurship has an economic impact in
countries around the world
1 out of 10 adults worldwide start businesses
every year
Three key factors drive entrepreneurship globally:
Per Capita Income
 Opportunity Cost
 Cultural/Political Environment
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