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Business a changing world 7e by ferrell chap006

6-1


Business in a
Changing World

Chapter 6

Small Business, Entrepreneurship, and
Franchising
2
McGraw-Hill/Irwin

Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights


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Cato Corner Farm
Farmstead Cheeses


Great demand for new, unique artisan cheeses.
A mother-son operation in Connecticut is
serving that need.

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Small Business, Entrepreneurship & Franchising

Join a small business? Start my own business?
Choices that you will be available to you.

Business students have many options upon
graduation – some choose to start their own
businesses, find employment in small
businesses, or perhaps, join a franchise.
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Entrepreneurship & Small Business

Entrepreneurship

The process of creating and managing a
business to achieved desired objectives is
our working definition for entrepreneurship.
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Entrepreneurship & Small Business

Entrepreneurship & Entrepreneurs

Ability to see emerging trends & create company that
satisfies those consumer needs. (Dell Computers)
Create new markets (Amazon.com)
Improve or re-package existing products (Starbucks)
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Entrepreneurship & Small Business

What is a Small Business?

“Smallness” is relative. Defined, small
business is any independently owned and
operated business, not dominant in its
competitive area, employing less than 500
people.

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Entrepreneurship & Small Business

Supporting Small Business

The Small Business Administration (SBA) is
an independent agency of the federal
government that offers managerial and
financial assistance to small businesses.
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Impact of Small Business

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Impact of Small Business

60-80% of all new jobs, annually, created by
small business in the last 10 years.

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Small Business & Innovation
55% of all innovations
•Airplane
•Audio tap recorder
•Double-knit fabric
•Fiber-optic examining equipment
•Heart valve
•Optical scanner
•Personal computer
•Soft contact lenses
•Zipper
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Small Business
Industries that Attract Small Business

Retailing and wholesaling, services,
manufacturing and high technology are
especially attractive to entrepreneurs.
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Retailing & Wholesaling
Selling directly to the consumer








Music stores
Sporting-goods shops
Dry cleaners
Boutiques
Drugstores
Restaurants
Hardware stores

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Small Business – retailers/wholesalers

The “Boppy” www.boppy.com
•Annual sales $50 million
•2007 #1 baby product in the
nation

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Small Business

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

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Small Business

Manufacturing

Small business advantage over large firms –
product customization
Artwork, clothing, jewelry, clothing, furniture
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Small Business
High Technology

Businesses that depend heavily on advanced
scientific and engineering knowledge.
•39% of high-tech jobs are in small business
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Small Business Ownership
ADVANTAGES

•Personal advantages
•Business advantages
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Advantages of Small Business Ownership

Traits Needed to Succeed in
Entrepreneurship
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Advantages of Small Business Ownership

•Costs
•Flexibility
•Focus
•Reputation

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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

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Disadvantages of Small-Business Ownership
•Managerial Inexperience or Incompetence
•Inability to Cope with Growth

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Small-Business Ownership

Top Five Biggest Challenges, Concerns, and
Goals of Small and Medium Businesses.

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Small-Business Ownership

Most Common Mistakes Made by Startup
Businesses

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