Group name

Student of presentation

Topics of presentation
Introduction of small business

Introduction of small business

Small business by its size in various industries
Advantages and disadvantages of owning a
small business
Business owners personal characteristics that
contribute to the success of a new business
Failure of small businesses and factors that
lead to success

Concept of small business

is any independently owned and operated
business, not dominant in its competitive area
We must be much more precise because size
is relative to a specific industry.
In order to establish a common basis for
discussion, the United States small business
administration guidelines are used.
Small business administration guidelines are
those characteristics of a firm that define a
small business.

Trends in Small Business Start-ups

Entrepreneurship vs. Small Business

Entrepreneur: Accepts the risks and
opportunities of creating, operating and
growing a new business
Small Business Owner: Does not have
plans for growth

Entrepreneurship
An entrepreneur is a person with the need to
build and create something new.
If his or her organization is to survive, the
entrepreneur must be a businessperson, yet not
all business people are entrepreneurs.
Entrepreneurs process a:

Strong need for control

Independence
Keen intuition
A need to build and create
An ability to simplify complex problems

Entrepreneurship
Entrepreneur
businessperson who accepts both the risks and
the opportunities involved in creating and
operating a new business venture

Entrepreneurship
the process of seeking business opportunities under
conditions of risk

 Entrepreneurs are:
Hard workers who willingly accept responsibility
Optimistic and have an exceptionally strong desire
to achieve

Not all small business people are

entrepreneurs, nor need they be.
The ability to break away from security to start
a new business depends upon not having
personal responsibilities that make it difficult
to take risks.
Being an entrepreneur requires both time and
financial flexibility.

The free-choice period for the would-be entrepreneur

Crafting a Business Plan

1. What are the entrepreneurs goals and
objectives?
2. What strategies will be used to obtain them?
3. How will these strategies be implemented?

Entrepreneurial Characteristics

Resourcefulness
Concern for good, personal customer relations
Strong desire to be their own bosses
Deal with uncertainty and risk

Starting and Operating

a New Business
Business plan
Document in which the entrepreneur describes
her or his business strategy for the new venture
and demonstrates how it will be implemented

Crafting a Business Plan

Setting Goals and Objectives
Sales Forecasting
Financial Planning

Crafting a Business Plan

1. What are the entrepreneurs goals and
objectives?
2. What strategies will be used to obtain them?
3. How will these strategies be implemented?

Starting the Small Business

Buying an Existing
Business
Franchising

Starting from
Scratch

Getting Started

Buying an
Existing
Business

Starting
From
Scratch

Franchise
an arrangement in which a buyer (franchisee)
purchases the right to sell the good or service of
the seller (franchiser)

Advantages
Proven business opportunity
Access to management expertise

Disadvantages
Start-up costs
Ongoing payments
Management rules and restrictions

Starting from Scratch

Who and where are my customers?
How much will those customers pay for my
product?
How much of my product can I expect to sell?
Who are my competitors?
Why will customers buy my product rather
than the product of my competitors?

Financing the Small Business

Personal resources
Loans from family and friends
Bank loans
Venture capital companies
Small-Business Investment Companies (SBICs)
Minority Enterprise Small-Business Investment
Companies (MESBICs)
SBA financial programs

Reasons for Success

1. Hard work, drive, and dedication
2. Market demand for the products or services
being provided
3. Managerial competence
4. Luck

Reasons for Failure

1.
2.
3.
4.

Managerial incompetence or inexperience

Neglect
Weak control systems
Insufficient capital

Three Forms of Business

. Firms in Terms of
Organization Type and Sales Revenue

Impact of Small Business

Impact of Small Business

Services
66% of the economy
Employs 70% of workforce
The Geek Squad one-man service firm,
1994

Advantages of Small Business

Ownership

Advantages of Small Business

Ownership

Costs
Flexibility
Focus
Reputation

Disadvantages of Small-Business
Ownership
High Stress Level
High Failure Rate
90% of all new businesses fail within the first 5
years

Undercapitalization
Lack of funds to operate a business normally

Managerial Inexperience or Incompetence

Inability to Cope with Growth

Small-Business Ownership

The Business Plan

Business Plan a precise statement of the rationale for the
business and a step-by-step explanation of how it will achieve
its goals. Acts as a guide and reference document.
Explanation of the business
Analysis of competition
Income/Expense estimates

Forms of Business Ownership

Sole Proprietorship
Partnership
Corporation

The Future for Small Business

Demographic Trends
Boomers, echo boomers (millennials), Generation Y
Immigrants (12% of U.S. population)

Technological & Economic Trends

Internet usage continues to increase

Increase in service exports
Economic turbulence
Deregulation of the energy market & alternative fuels

Big Businesses Acting small

1. Large firms emulate smaller ones to improve
bottom line
2. Downsizing or rightsizing
3. Acting small from inception Southwest Airlines
4. Entrepreneurs individuals in large firms who
take responsibility for the development of
innovations within the organization