Business a changing world 7e by ferrell chap006

6-1 Business in a Changing World Chapter Small Business, Entrepreneurship, and Franchising McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc All rights 6-3 Cato Corner Farm Farmstead Cheeses Great demand for new, unique artisan cheeses A mother-son operation in Connecticut is serving that need 6-4 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 6-5 Entrepreneurship & Small Business Entrepreneurship The process of creating and managing a business to achieved desired objectives is our working definition for entrepreneurship 6-6 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) 6-7 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 6-8 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 6-9 Impact of Small Business 6-10 Financial Resources •Provide your own personal capital (money) •Obtain capital (Financing options) 6-29 Financial Resources Equity Financing – selling or borrowing against the value of an asset (automobile, insurance policy, savings account) to obtain funds to operate a business 6-30 Financial Resources Venture Capitalists– persons/organizations that agree to provide funding for a new business in exchange for an ownership interest or stock Usually requires a sharing of ownership/control 6-31 Financial Resources Debt financing– borrowing financial resources typically from a bank or lending institution The SBA (Small Business Administration) offers financial assistance to qualifying businesses 6-32 Financial Resources Line of credit– an agreement by which a financial institution promises to lend a business a predetermined sum on demand 6-33 Starting a Small Business Do I start from scratch? Do I buy an existing business? Do I buy a franchise? 6-34 Starting a Small Business Franchising A license to sell another’s products or to use another’s name in business, or both 6-35 Starting a Small Business Franchising Franchiser – the company that sells a franchise (e.g Dunkin’ Donuts, McDonald’s, Jiffy Lube) Franchisee – the purchaser of a franchise Visit the International Franchise Association 6-36 Franchise – Advantages & Disadvantages Advantages Disadvantages Training & support Fees and profit sharing Brand name appeal Standardized operations National advertising Restrictions on purchasing Financial assistance Limited product line Proven products Possible market saturation Greater chance for success Less freedom in decisions 6-37 Small-Business Franchises Fastest Growing & Hottest New Franchises 6-38 Entrepreneurs – Going Green Eco-responsible entrepreneurial companies – viable new products utilizing recycling in some way Recycline – products from recycled materials 6-39 The Future for Small Business •Demographic Trends •Boomers, echo boomers (millennials), Generation Y •Immigrants (12% of U.S population) 6-40 The Future for Small Business •Technological & Economic Trends •Internet usage continues to increase •Increase in service exports •Economic turbulence •Deregulation of the energy market & alternative fuels 6-41 Future for Small Business Top Large U.S Cities for Entrepreneurs 6-42 Big Businesses Acting “small” Common Approaches 1.Large firms emulate smaller ones to improve bottom line 2.Downsizing or rightsizing 3.Acting small from inception – Southwest Airlines 4.Intrapreneurs – individuals in large firms who take responsibility for the development of innovations within the organization 6-43 ... federal government that offers managerial and financial assistance to small businesses 6-9 Impact of Small Business 6-10 Impact of Small Business 60-80% of all new jobs, annually, created by small... 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... Concerns, and Goals of Small and Medium Businesses 6-24 Small -Business Ownership Most Common Mistakes Made by Startup Businesses 6-25 Starting the Small Business •Start with a concept or general idea