© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

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© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

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© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

Small Business and Entrepreneurship:Economic Rocket Fuel

LO1 Why do entrepreneurs launch small businesses?

LO2 What is the typical entrepreneurial mindset and characteristics?

LO3 What are funding options for small business?

LO4 What are the opportunities and threats facing small businesses?

LO5 What are ways to become a business owner and facilitate success?

LO6 What is the size, scope and economic contribution of small business?

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

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Entrepreneurship Plays a Positive Role in U.S. Economy

• New business creation increased steadily from 2007 to 2009

• Interest among teenagers in launching a business is consistent at 40%

• In 2010, U.S. entrepreneurship rates reached their highest level in 15 years

• Job seekers offer hope as job creatorsSource: Despite Recession, Youth Remain Interested in Entrepreneurship, Poll Shows, November 17, 2010, Philanthropy News Digest website, http://foundationcenter.org/pnd/news/story.jhtml;jsessionid=R0ZQZFD52NZNLLAQBQ4CGW15AAAACI2F?id=314900002, accessed March 18, 2011, “Jobless Entrepreneurship” Tarnishes Steady Rate of U.S. Start-Up Activity, Kauffman Study Shows, March 7, 2011, Kauffman website, http://www.kauffman.org/newsroom/jobless-entrepreneurship-tarnishes-steady-rate-of-us-startup-activity.aspx, accessed March 18, 2011

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

Launching a New Venture: What’s in It For Me?

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Greater Financial Success Independence Flexibility Challenge Survival Opportunity Lost – there are trade-offs

Business opportunities are like buses…there’s

always another one coming.

-- Richard Branson, Virgin Enterprise

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© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

The Entrepreneur: A Distinctive Profile

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© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

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Entrepreneurship: Do You Have What it Takes?

• Do you enjoy working?

• Do you gamble?

• Can you fake it?

• Are you good on your feet?

Source: Personality Test for Entrepreneurship Success by Andy Swan, Small Biz Survival website, http://www.smallbizsurvival.com/2008/08/personality-test-for-entrepreneurship.html, posted August 4, 2008, accessed April 3, 2011.

©iStockphoto.com/Neustockimages

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

Roach Coaches Minus the Roaches

• Today’s food truck owners are tech-savvy entrepreneurs Build loyal customers via

social media Kogi BBQ truck has 28,000

Twitter followers• Lunch trucks today have

gone upscale Korean/Mexican Tacos Gourmet deserts Sustainably harvested fish tacos 7

Source: “Food Truck Nation,” by Katy McLaughlin, June 5, 2009, The Wall Street Journal website, http://online.wsj.com/article/SB10001424052970204456604574201934018170554.html , accessed June 3, 2010; “How to Open a (Successful) Food Truck,” by Christine Lagorio, May 12, 2010, Inc. website, http://preview.inc.com/guides/2010/05/opening-a-successful-food-truck.html, accessed June 3, 2010.

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

Finding the Money: Funding Options for Small Business

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Personal Resources

Loans

Angel Investors

Venture Capital

©Colin Anderson/Blend Images/Jupiterimages©Colin Anderson/Blend Images/Jupiterimages

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

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Peer-to-Peer Lending

• A new and unique funding source for start-ups

• Websites bring together borrowers and investors

• Both parties benefit financially

• Entrepreneurs find this an easier source for funding with more favorable terms

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© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

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Small Business Sustainability

• Sustainable business practices can save money• Many large corporations assess suppliers based on

environmental benchmarks• Sustainable planning:

1. Establish a benchmark2. Identify best opportunities3. Develop implementation plans4. Set deadlines5. Keep the plan active

Source: Sustainability Planning for Business Owner by Kelly Spors , May 9, 2010, Small Business Trends website, http://smallbiztrends.com/2010/05/sustainability-planning-for-business-owners.html, accessed April 3, 2011

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

Opportunities and Threats for Small Business: A Two-Sided Coin

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Threats:

• Higher Risk of Failure

• Lack of Knowledge and Experience

• Too Little Money

• Bigger Regulatory Burden

• Higher Health Insurance Costs

Opportunities:

• Market Niches

• Personal Customer Service

• Lower Overhead Cost

• Technology

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

New Business Survival Rates

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© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

Launching Options: Reviewing the Pros and Cons

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© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

Making it Happen: Tools for Success

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• Use the Small Business Administration

• Gain Experience

• Learn from Others

• Educate Yourself

• Write a Business Plan

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Source: Focus on Success, Not Failure by Rhonda Abrams, May 7, 2004, USA Today website money section, http://www.usatoday.com/money/smallbusiness/columnist/abrams/2004-05-06-success_x.htm.

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

The Business Plan

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Executive Summary Description of Business Marketing Strategies Competitive and Industry

Research Operating Procedures Personnel Financial Projections

Source: Business Plan Basics, U.S. SBA, http://www.sba.gov/starting_business/planning/basic.html, accessed February 15, 2009.

©RAGMA IMAGES/Shutterstock.com

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

Small Business and the Economy: An Outsized Impact

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• Creating New Jobs

• Fueling Innovation

• Vitalizing Inner Cities

• In 2008, 99.9% of businesses in the U.S. had less than fewer than 500 employees

• 7% of small business owners ran their business without any employees

• Small businesses generate about half the U.S. GDP

• Small businesses employ half of the nation’s private workforce

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Source: “Frequently Asked Questions,” SBA Office of Advocacy, updated September 2009, SBA website http://www.sba.gov/advo/stats/sbfaq.pde, accessed June 3, 2010.

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

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Accidental Invention

• Many great ideas happen by accident

• Penicillin was the result of not cleaning up a science workstation

• Coca-Cola resulted from efforts to develop a headache medicine

• Saccharin was discovered from a chemist not washing his hands

“Luck is what happens when preparation meets opportunity”

~ SenecaSource: Top 10 Accidental Inventions, Science Channel website, http://science.discovery.com/brink/top-ten/accidental-inventions/inventions-01.html, accessed March 22, 2011. ©haveseen/Shutterstock.com

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

Entrepreneurship Around the World

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Societies need entrepreneurs. While entrepreneurs think the environment is worse than 2009, intentions to launch a business have not declined.

People are afraid of losing their jobs and are considering entrepreneurship

Potential entrepreneurs may be more optimistic about their own ability

Potential entrepreneurs may be delaying their launch

Source: Global Entrepreneurship Monitor 2010 Report by Donna J. Kelley, Niels Bosma, José Ernesto Amorós, College and London School of Economics, file:///C:/Users/Marce/AppData/Local/Temp/GEM%20GLOBAL%20REPORT%202010rev.pdf, published March 2011, accessed March 21, 2011 Global Entrepreneurship Monitor, 2008 Executive Report by Niels Bosma, Zoltan J. Acs, Erkko Autio, Alicia Coduras, and Jonathan Levie, Babson College and London School of Economics, http://www.gemconsortium.org/article.aspx?id=76, published January 15, 2009, accessed February 17, 2009.

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© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

Entrepreneurship Rates Around the World

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© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

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World Entrepreneurship Variables

• What is the national per-capita income?

• What will the entrepreneur need to give up (opportunity costs)?

• How high is the risk of failure?

• How strongly do the national culture and political environment support business start-ups?

© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

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© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

Looking Back• Why do entrepreneurs launch small businesses?

• What is the typical entrepreneurial mindset and characteristics?

• What are funding options for small business?

• What are the opportunities and threats facing small businesses?

• What are ways to become a business owner and facilitate success?

• What is the size, scope and economic contribution of small business?