Small Business Management 17e - Cengage

1. Explain the importance of small business and entrepreneurship in our society. 2. Distinguish between the terms small business and entrepreneurial opportunity. 3. Explain the basic characteristics of entrepreneurs, and describe different kinds of entrepreneurship. 4. Discuss the importance of understanding your motivations and perceptions related to owning a small business. 5. Describe five potential competitive advantages of small entrepreneurial companies over large firms. 6. Explain the concept of an entrepreneurial legacy and its challenges. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12 The Contributions of Small Business Small Businesses: Represent 99.7% of all firms.

Employ over 50% of employees in the private sector. Account for 43% of private payrolls. Outperform larger companies in net job creation. Hire 43% of high-tech employees Represent 97.3% of all exporters. Provide increased business ownership opportunities for minorities and self-employed degreed individuals. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13 1.1 Number of Firms with Fewer than 500 Employees by Industry (2009) 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

14 Small Business Growth Potential and Profits High-Potential Venture (Gazelle) Has great prospects for growth Attractive Small Firm Provides substantial profits to its owner Microbusiness Provides minimal profits to its owner Lifestyle Business

Permits the owner to follow a desired pattern of living 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15 What Is a Small Business? Criteria for Defining Smallness in Business 1. Small in size relative to larger competitors (fewer than 100 employees) 2. Localized business operations (except marketing) 3. Financing supplied by one person or small group 4. Has the potential to become more than a one-person show 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

16 Entrepreneurial Opportunities Entrepreneurial Opportunity An economically attractive and timely opportunity that creates value for interested buyers or end users. Bootstrapping Doing more with less in terms of resources invested in a business, and, where possible, controlling the resources without owning them. Success Stories Table Occasions (El Paso, TX) Blank Label (Boston, MA) Tender Greens (Pasadena, CA) 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

17 Who Are Entrepreneurs? Entrepreneurs are: A person who starts and/or operates a business. Individuals who discover market needs and launch new firms to meet those needs. Risk takers who provide an impetus for change, innovation, and progress. All active owner-managers (founders and/or managers of small businesses). 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

18 Entrepreneurial Characteristics (Timmons and Spinelli) Commitment Commitment and and Determination Determination Motivation Motivation to to Excel Excel Creativity, Creativity, Self-Reliance, Self-Reliance,

and and Adaptability Adaptability Attitudes Attitudes and and Behaviors Behaviors of of Entrepreneu Entrepreneu rs rs Leadership Leadership

Opportunity Opportunity Obsession Obsession Tolerance Toleranceof of Risk, Risk, Ambiguity, Ambiguity, and and Uncertainty Uncertainty 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

19 Strong Strong Commitment Commitment to to the the Business Business (Tenacity) (Tenacity) Strong Strong Locus Locus of of Control Control (Self-Reliance)

(Self-Reliance) Characteristics Characteristics of of Successful Successful Entrepreneurs Entrepreneurs Moderate Moderate Risk Risk Takers Takers (Financial, (Financial, Career, Career, Psychic Psychic Risks)

Risks) 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 110 How to Fail as an Entrepreneur 1. Overestimate what you can do 2. Lack an understanding of the market 3. Hire mediocre people 4. Fail to be a team player, which is usually the result of taking oneself too seriously 5. Be a domineering manager 6. Fail to share ownership in the business in an equitable way 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

111 Varieties of Entrepreneurship Founder (Pure Entrepreneur) A person who brings a new firm into existence Second Stage Entrepreneur An administrative entrepreneur who overseas the operations of a ongoing business Franchisee An entrepreneur whose power is limited by the contractual relationship with a franchising organization Entrepreneurial Team Two or more people working together as entrepreneurs Is becoming more common 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 112 New Forms of Entrepreneurship Social Entrepreneurship Is entrepreneurial activity whose goal is to find innovative solutions to societys most pressing needs, problems, and opportunities. Social Entrepreneur Seeks ways to solve societal and environmental problems that incorporate the triple bottom line of people, profits, and the planet. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

113 Women Entrepreneurs More Women Entrepreneurs More women than men are starting new businesses Many businesses are now majority female-owned Movement of women into nontraditional industries Problems Facing Female Entrepreneurs Discrimination and difficulties related to gender Lack of access to credit Lack of networking connections Balancing work and family life 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 114

The Importance of Mentors Mentors Are knowledgeable persons who can offer guidance from their experience in a given field. Teach entrepreneurs what and how to do. Show them how to avoid mistakes. Provide entrepreneurs encouragement when needed. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 115 Your Motivations for Owning a Business Being an entrepreneur: Is extremely challenging.

Takes undying love and passion to keep going. Can run in a family. Can help make the world a better place. Can make meaning in your life. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 116 Is Owning a Small Business a Good Fit for You? 1. Am I passionate about my product or service? 2. What is my tolerance for risk? 3. Am I effective in making decisions? 4. Am I willing to take on numerous responsibilities? 5. Will I be able to avoid burnout? 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 117 Why People Become Entrepreneurs Reluctant Entrepreneur A person who becomes an entrepreneur as a result of some severe hardship. Refugee A person who becomes an entrepreneur to escape an undesirable situation. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 118

Artisan Entrepreneurs Artisan Entrepreneur A person with primarily technical skills and little business knowledge who starts a business Characteristics: Take a paternalistic approach Are reluctant to delegate Use few sources of capital Have a traditional marketing strategy Focus on personal sales effort Have a short planning horizon 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 119 Opportunistic Entrepreneurs

Opportunistic Entrepreneur A person with both sophisticated managerial skills and technical knowledge who starts a business Characteristics: Broad-based education Scientific approach to problems Willing to delegate Broad view of strategy Diversified marketing approach Longer planning horizon Sophisticated accounting and financial control 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 120 Millennial Entrepreneurs (Gen-Y) Have no fear of technology

Are idealistic and optimistic Are more collaborative Build elements of community in the business Start companies while studying entrepreneurship Fail fast, learn a lot, and keep going 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 121 1.2 Entrepreneurial Motivations 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

122 1.3 Understanding Your Business Paradigm 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 123 1.4 Understanding Your Business Paradigm 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 124

The Competitive Edge of Entrepreneurs Customer Customer Focus Focus Niche Niche Markets Markets Innovation Innovation and and Globalization Globalization Competitive Competitive

Advantages Advantages of of Entrepreneur Entrepreneur ial ial Firms Firms Quality Quality Performance Performance Integrity Integrity and and Responsibility Responsibility

2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 125 Resources Every small business owner should take advantage of the following websites: U.S. Small Business Administration: www.sba.gov National Federation of Independent Business: www.nfib.com Global Entrepreneurship Monitor: http://gemconsortium.org/docs Marion Ewing Kauffman Foundation and the U.S. Commerce Department: www.entrepreneurship.org SCORE, a network of more than 360 offices nationwide where veteran small business executives offer free confidential advice and mentoring: www.score.org 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

126 Building an Entrepreneurial Legacy Looking Back At An Entrepreneurial Life Proper values and actions lead to a good exit. Evaluating accomplishments Winning the Wrong Game The nature of the entrepreneurial endeavor reflects personal goals and values. Crafting a Worthy Entrepreneurial Legacy The tangible items and intangible qualities passed on to both heirs and society. Satisfaction and Fulfillment Achieving balance with what do I want to do.

2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 127 Key Terms attractive small firm bootstrapping corporate refugee entrepreneur entrepreneur personality entrepreneurial legacy entrepreneurial opportunity entrepreneurial team founder franchisee high-potential venture (gazelle) lifestyle business

manager personality mentor microbusiness microloans niche market paradigm shift reluctant entrepreneur small business social entrepreneurship technician personality 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 128

Recently Viewed Presentations

  • 2515 Army Cadets - Where Friendship, Fun and Adventure Begins

    2515 Army Cadets - Where Friendship, Fun and Adventure Begins

    Cadets form a national organization with a . history dating back to 1862. ... The two major partners in the Army Cadet program are the Department of National Defence and the Army Cadet League of Canada (a civilian non-profit corporation)....
  • Mechanical engineering department Graduation project PLATERING WALL MACHINE

    Mechanical engineering department Graduation project PLATERING WALL MACHINE

    Literature review. The first machines to be developed were automated mixers which made the task of manual plaster mixing obsolete. The introduction of plastering machines such as RUMA 1,Putzmeister KS 1 and PutzmeisterGipsomat in the sixties was considered revolutionary and...
  • The Power of Using Artificial Intelligence Preston Faykus

    The Power of Using Artificial Intelligence Preston Faykus

    Advanced Digital Signal Processing can create features directly from unstructured customer/agent conversation. End result: a decision-making policy to take in new data (e.g. calls) and associate them with anticipated business outcome.
  • Joint Position Sense Improves with External Load

    Joint Position Sense Improves with External Load

    Shoulder Joint Position Sense Improves with External Load ... Paul van Donkelaar, PhD ... Only in direction of load Role of musculotendinous receptors Injury prevention under high forces Thank you Shoulder Joint Position Sense Improves with External Load David N....
  • Unit Rechartering David Mitchko Mercer Area District Commissioner

    Unit Rechartering David Mitchko Mercer Area District Commissioner

    The BSA is unique in that it does not own or operate Scouting units. It grants charters to community organizations that adopt the program and operate units. ... Schools/PTA's/Home School Organizations, Service Clubs and Businesses and labor unions Rechartering is...
  • Fall of Berlin - Mr. myers

    Fall of Berlin - Mr. myers

    Berlin formally and unconditionally surrenders to the Soviet legions and Western Allies. General Jodl signs for the defeated Germans and Generals Bedell Smith and Susloparov for the Allies. 1945 May 2nd: The Fall of Berlin is complete - Soviet forces...
  • ORACLE Security Solution Overview Ray Shih Principal Sales

    ORACLE Security Solution Overview Ray Shih Principal Sales

    Ray Shih Principal Sales Consultant Oracle Corporation Database Vendor Comparison Data Security Components Data Security: Oracle Products Overview : Oracle IAM Products Network Encryption Encrypts all communications with the database AES RSA RC4 (40-, 56-, 128-, 256-bit keys) DES (40-,...
  • Study Aids - mrsjenostendorf.weebly.com

    Study Aids - mrsjenostendorf.weebly.com

    Silly Sheet. On the LEFT SIDE of the red margin line, you are going to list each literary device. Spread the words out evenly by skipping 2-3 spaces between words.