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CHAPTER 6
Entrepreneurship and
Small Business Management
6-1
Becoming an Entrepreneur
6-2
6-3
SLIDE
Intro to Business, 7e
6-1 Becoming an
Entrepreneur
Goals
Identify characteristics of successful
entrepreneurs.
Recognize the importance of entrepreneurship
in the economy.
Describe opportunities and risks of
entrepreneurship.
SLIDE
Intro to Business, 7e
Chapter 6
Key Terms
entrepreneur
entrepreneurship
venture capital
innovation
improvement
SLIDE
Intro to Business, 7e
CHARACTERISTICS OF
ENTREPRENEURS
Chapter 6
SLIDE
Intro to Business, 7e
ENTREPRENEURS
IN ACTION
Chapter 6
Pankaj Arora
Rich Stachowski
Jeffrey Rodriguez and John Serrano
Abbey Fleck
SLIDE
Intro to Business, 7e
Chapter 6
self-confident
creative
reliable
competitive
SLIDE
Intro to Business, 7e
Chapter 6
(continued)
Entrepreneurs have
problem-solving skills
tolerance for ambiguity
strong integrity
personal initiative
ability to secure resources
capability to learn from failure
willingness to work hard
2009 South-Western, Cengage Learning
SLIDE
Intro to Business, 7e
Chapter 6
Checkpoint >>
What personal characteristic are common to most
successful entrepreneurs?
Answer
Any characteristics listed in Figure 6-1 are acceptable, such
as persistence, inquisitiveness, self-confidence, creativity,
and so forth.
SLIDE
Intro to Business, 7e
ENTREPRENEURSHIP
AND THE ECONOMY
Chapter 6
Employment
Financing
Productivity
SLIDE
Intro to Business, 7e
Chapter 6
SLIDE
10
Intro to Business, 7e
Chapter 6
Checkpoint >>
What are the sources of financing that entrepreneurs
use for their new businesses?
Answer
personal savings
friends and family
venture capital
bank loans
SLIDE
11
Intro to Business, 7e
Chapter 6
OPPORTUNITIES
Innovation
Improvement
SLIDE
12
Intro to Business, 7e
Chapter 6
RISKS
Recognizing risks
Lack of adequate capital
Low sales
Higher than expected expenses
Competitive pressure
An owner unprepared to manage a growing
business
Operations requiring more time than the owner
is willing to commit
2009 South-Western, Cengage Learning
SLIDE
13
Intro to Business, 7e
Chapter 6
Checkpoint >>
Where do entrepreneurship opportunities begin?
Answer
Opportunities begin with innovations (ideas about new
products and services) or improvements (ideas for changes to
existing products, services, or processes).
SLIDE
14
Intro to Business, 7e
Goals
Identify important characteristics of small
businesses.
Recognize the competitive advantages of
small businesses.
Identify problems faced by many small
businesses.
SLIDE
15
Intro to Business, 7e
Chapter 6
Key Terms
small business
Small Business Administration (SBA)
SLIDE
16
Intro to Business, 7e
SMALL BUSINESS
OWNERSHIP
Chapter 6
SLIDE
17
Intro to Business, 7e
Chapter 6
COMMON TYPES OF
SMALL BUSINESSES
Common
Types of
Small
Businesses
SLIDE
18
Intro to Business, 7e
Chapter 6
Checkpoint >>
What percentage of employees in the United States
work for small businesses?
Answer
Nearly 50 percent of the American workforce is employed by
small businesses.
Small businesses are also responsible for 6080 percent of all
new jobs.
SLIDE
19
Intro to Business, 7e
SMALL BUSINESS
ADVANTAGES
Chapter 6
SLIDE
20
Intro to Business, 7e
Chapter 6
Checkpoint >>
How can small businesses compete successfully with
larger businesses?
Answer
Smaller businesses are able to provide more personalized
products and services to their customers.
They are able to provide products and services where smaller
orders and projects are required and tend to fill unique
customer needs, which larger companies do not provide.
2009 South-Western, Cengage Learning
SLIDE
21
Intro to Business, 7e
Chapter 6
SLIDE
22
Intro to Business, 7e
SMALL BUSINESS
ASSISTANCE
Chapter 6
SLIDE
23
Intro to Business, 7e
Chapter 6
Checkpoint >>
List common reasons for small business failure.
Answer
not keeping adequate records
insufficient start-up money
lack of management experience
lack of experience with the type of business
not controlling operating expenses
poor location
failure to manage credit
2009 South-Western, Cengage Learning
SLIDE
24
Intro to Business, 7e
Goals
Recognize important factors to be considered
when starting a business.
Describe the elements of a business plan.
Identify types and sources of financing for a
small business.
SLIDE
25
Intro to Business, 7e
Chapter 6
Key Terms
business plan
start-up financing
short-term financing
long-term financing
SLIDE
26
Intro to Business, 7e
Chapter 6
SLIDE
27
Intro to Business, 7e
Chapter 6
Checkpoint >>
Why is it important to use a team approach when
starting a new business?
Answer
A team approach allows employees to feel valued and
motivated to take personal responsibility for the benefit of
the business.
Owners cannot expect to be able to do everything alone.
Building a team will allow the business to increase
productivity and, ultimately, profits.
2009 South-Western, Cengage Learning
SLIDE
28
Intro to Business, 7e
WHAT IS A
BUSINESS PLAN?
Chapter 6
SLIDE
29
Intro to Business, 7e
ELEMENTS OF A
BUSINESS PLAN
Chapter 6
SLIDE
30
Intro to Business, 7e
ELEMENTS OF A
BUSINESS PLAN
Chapter 6
(continued)
Description of Competition
Characteristics of the industry
Condition of the economy
Strengths and weaknesses of major
competitors
SLIDE
31
Intro to Business, 7e
ELEMENTS OF A
BUSINESS PLAN
Chapter 6
(continued)
Customer Analysis
Description of customers
Location, number, and resources of
customers
Sales forecasts
SLIDE
32
Intro to Business, 7e
ELEMENTS OF A
BUSINESS PLAN
Chapter 6
(continued)
Operations Plan
Organization of the company
Description of major operations
Analysis of resources needed
Human resource plans
SLIDE
33
Intro to Business, 7e
ELEMENTS OF A
BUSINESS PLAN
Chapter 6
(continued)
Marketing Plan
Description of major marketing activities
Description of resources needed
Schedule of marketing activities
SLIDE
34
Intro to Business, 7e
ELEMENTS OF A
BUSINESS PLAN
Chapter 6
(continued)
Financial Plans
Start-up costs
Short- and long-term financial needs
Sources of financing
Budgets and financial statements
SLIDE
35
Intro to Business, 7e
STEPS IN DEVELOPING
THE BUSINESS PLAN
Chapter 6
SLIDE
36
Intro to Business, 7e
Chapter 6
Checkpoint >>
What is the strategic alternatives in a business plan?
Answer
Strategic alternatives are alternative plans for production,
staffing, financing, and so on.
Even the best business plan cannot predict every possible
circumstance.
An alternate plan allows a business to be prepared for the
unforeseeable.
2009 South-Western, Cengage Learning
SLIDE
37
Intro to Business, 7e
FINANCING
THE SMALL BUSINESS
Chapter 6
Types of financing
Start-up financing
Short-term financing
Long-term financing
Sources of financing
Owner-supplied funds
Borrowed funds
2009 South-Western, Cengage Learning
SLIDE
38
Intro to Business, 7e
Chapter 6
Checkpoint >>
In addition to owner-supplied capital, what are several
other sources of financing for a small business?
Answer
Borrowed money may come from banks, finance companies,
or other individuals, such as friends and family.
Some suppliers may also be willing to extend credit.
SLIDE
39