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Chapter 7: SMALL BUSINESS AND ENTREPRENEURSHIP

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CHAPTER 7: SMALL BUSINESS AND ENTREPRENEURSHIP Economic Rocket Fuel LAUNCHING NEW VENTURES: WHAT S IN IT FOR ME? Greater Financial Success Independence Flexibility ... – PowerPoint PPT presentation

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Title: Chapter 7: SMALL BUSINESS AND ENTREPRENEURSHIP


1
Chapter 7 SMALL BUSINESS AND ENTREPRENEURSHIP
  • Economic Rocket Fuel

2
LAUNCHING NEW VENTURES WHATS IN IT FOR ME?
  • 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.
3
THE ENTREPRENEUR A DISTINCTIVE PROFILE
Self-Reliance
Vision
Confidence
Energy
Tolerance of Failure
Tolerance of Uncertainty
4
OPPORTUNITIES FOR SMALL BUSINESS
  • Opportunities
  • Market Niches
  • Personal Customer Service
  • Lower Overhead Cost
  • Technology

5
THREATS FOR SMALL BUSINESS
  • Threats
  • Higher Risk of Failure
  • Lack of Knowledge and Experience
  • Too Little Money
  • Bigger Regulatory Burden
  • Higher Health Insurance Costs

6
SMALL BUSINESS FAILURE
Year in Business Survival Rate Change vs. Prior Year ()
Year 1 81 19
Year 2 66 15
Year 3 54 12
Year 4 44 10
Year 5 38 6
Year 6 34 4
Year 7 31 3
7
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.

Arrangeonline.com, Funeral.com, Heavenly-Door.com
and Plan4ever.com marketed funeral arrangements
and related services
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.
Petstore.com offered a fish delivery service.
They were bought out by Pets.com for 13 million
in stock
8
FAILING WITH STYLE
  • Walt Disney was fired from an ad agency for a
    singular lack of drawing ability.
  • Ray Kroc, McDonalds founder, failed at real
    estate, he didnt 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, the iPod and the iPad.

Your failure may be the first step of the next
big thing.
9
LAUNCH OPTIONS
  • Starting from scratch
  • Buying an established business
  • Buying a franchise

10
STARTING A BUSINESS FROM SCRATCH
Key Pros Key Cons
Its all you Your concept, your decisions, your structure. You dont have to deal with the prior owners bad decisions. Its all you. Thats 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.
11
BUYING AN ESTABLISHED BUSINESS
Key Pros Key Cons
The concept, organizational structure, and operating practices are in place. Relationships are established. Obtaining financing is less challenging. Working with someone elses idea may not be fun. You may inherit old mistakes.
12
BUYING A FRANCHISE
Key Pros Key Cons
Partnering with established brand Possibility of assistance with management and financing Low failure rate Less opportunity for creativity Tied to national brands mistakes Purchase price and on-going royalties can be steep
13
TOOLS FOR BUSINESS SUCCESS
  • Small Business Administration
  • Gain Experience
  • Learn from Others
  • Educate Yourself
  • Business Plan

14
The Business Plan
  • Executive Summary
  • Description of Business
  • Competitive and Industry Research
  • Marketing Strategies
  • Operating Procedures
  • Personnel
  • Financial Projections

15
FINDING THE MONEY FUNDING OPTIONS
  • Personal Resources
  • Loans
  • Angel Investors
  • Venture Capital

16
SMALL BUSINESS AND THE ECONOMY AN OUTSIZED IMPACT
  • Creating New Jobs
  • Fueling Innovation
  • Vitalizing Inner Cities

17
ECONOMIC IMPACT
  • Just 9.8 of the worlds entrepreneurs expect to
    create almost 75 of the jobs generated by new
    business ventures in the next five years.
  • 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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