partner training: the small business sector
DESCRIPTION
A short training presentation on the small business sector for BizCentral & CharityNet USA partners.TRANSCRIPT
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The Small Business Sector
Partner Service & Sales Training
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Introduction to Small Business
I. Introduction to Small BusinessesII. Why People Start Their Own BusinessesIII. Current Small Business ConditionsIV. Positioning for SuccessV. Wrap Up
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What is a Small Business?
• The Small Business Administration uses standards, such as the number of employees or the average annual receipts when defining a small business:
• SBA’s size standards are based on the North American Industry Classification Systems (NAICS).
• A small firm is typically allowed to hire up to 500 workers and still qualifies for various SBA and federal government procurement programs for small businesses.
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What is a Small Business?
• There really is no single, official definition of what constitutes a small business.
• Overall, a small business is privately owned and operated, with a small number of employees and relatively low volume of sales.
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How Important are Small Businesses?
• Small businesses drive the U.S. economy in a variety of ways:
• Small firms represent 99.7% of all employer firms.
• They employ about half of all private sector employees.
• Pay nearly 45% of total U.S. private payroll
• Have generated 60 to 80 percent of net new jobs annually over the last decade.
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How Many Small Businesses are There?
• In 2007, there were 27.2 million businesses in the United States, according to the Office of Advocacy estimates.– 6.0 million firms had employees
– 20.4 million firms were without employees
• The latest data also shows that in 2002:– Women owned 6,492,795 firms
– African Americans owned 1,197,988 firms
– Hispanics owned 1,574,159 firms
– Asians owned 1,105,329 firms
– American Indians and Alaskan Natives owned 206,125 firms.
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Opening & Closing
• How many businesses open and close each year?
• The number of non-employer firms has risen steadily in this decade, from 16.5 million in 2000 to an estimated 21.1 million in 2007.
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Small Business Survival Rate
• According to a recent study:– Two-thirds of new employer establishments survive at
least two years.
– 44% survive at least four years
– 31% survive at least seven years
• The study found that businesses that survive four years have a better chance of surviving long-term.– After the fourth year, the rate of firms closing declines
considerably.– Source: “Business Employment Dynamics Data: Survival and Longevity, II,” by Amy E. Knaup and Merissa C.
Piazza, Monthly Labor Review, vol. 30, no. 9 (Sept. 2007), pp. 3-10; “Redefining Business Success: Distinguishing Between Closure and Failure” by Brian Headd, Small Business Economics, vol. 21, no. 1 (August 2003), pp. 51-61.
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Why People Start their Own Businesses
I. Introduction to Small BusinessesII. Why People Start Their Own
BusinessesIII. Current Small Business ConditionsIV. Positioning for SuccessV. Wrap Up
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People Start Businesses for a Variety of Reasons
• They want financial freedom
• They want to set their own hours
• They are tired of working for a boss
• They want to apply their experience and knowledge to a new endeavor
• They want flexibility
• They want recognition
• They want to build or create something
• They want a change from their everyday routine or current job
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People Start Businesses for a Variety of Reasons
• They want to make a difference
• They want to leave a legacy
• They want the challenge and excitement
• They want to feel intellectually stimulated
• They want to exercise their entrepreneurial instincts
• They want to combine their competitive spirit with their creative inclinations
• They want to be the boss
• They want to take control of their life
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Current Conditions Also Contribute to Business Startup
• Economic conditions can open the door to entrepreneurship opportunities that one may not have considered before-hand. For Example:
• Lay-offs have opened the door for new beginnings• Recent graduates are coming into the workforce with
nowhere to go• Veterans are looking to transition back into work life • Seniors cannot depend on retirement
• History has shown that recessions can be the birthing grounds for some of hardest working, most successful and creative entrepreneurs today.
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Current Small Business Conditions
I. Introduction to Small BusinessesII. Why People Start Their Own BusinessesIII. Current Small Business ConditionsIV. Positioning for SuccessV. Wrap Up
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Small Business & the Economy
• Like the rest of the economy, small businesses were affected by the depth of the recession in late 2008.
• If the past is an indicator, small businesses are vital to the economic recovery.
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Small Business & the Economy
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Current Small Business Hurdles
• Health Care
• Costs remain a constant issue for small firms.
• High Competition with Benefits
• Results in greater turnover rate.
• Financing
• Total business borrowing decreased from $1.228 trillion in 2007 to $507 billion in 2008.
• Lenders exhibited widening interest rate spreads and tightening terms of lending.
• Some surveys found small firms expressing less willingness to spend, hire or invest in the near future.
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Positioning for Success
I. Introduction to Small BusinessesII. Why People Start Their Own BusinessesIII. Current Small Business ConditionsIV. Positioning for SuccessV. Wrap Up
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Factors That Increase a Business’ Chance for Success
Business• Demographic Research
• Market Accessibility (product/service)
• Ability to reach your target market
• Business plan (with financial projections)
• Capital / Financial Back-up
• Goal setting and achievement
• Planning and preparation
• Location
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Factors The Increase A Business’ Chance for Success
Entrepreneur • Passion • Capitalize on your strengths• Patience• Perseverance and
determination• Positive, change-oriented
attitude• Focused• Communication, (especially
the vision)
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Planning is Critical
• Planning, research and more planning is critical now more than ever!
• Loans and financing are becoming harder and harder to come by, therefore:
• Banks, financers and investors have to see a clearly defined and well-thought business plan that proves your idea is strong and worthy of funding.
• They must see research that proves the potential for success.
• No longer can just anyone with an idea walk into a bank and come out a business owner. Plan, Plan, Plan!
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Factors That Increase a Business’ Chance for Success
• Remember, once you get your business operational and you have an established client base, you can expand your business. Loans and financing are becoming harder and harder to come by, therefore:
• This will likely increase your financial rewards
• There are many more factors that impact a business’ potential and probability of success.
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Wrap-Up
• Starting a business can be a great way to re-enter the workforce, increase flexibility in your schedule, achieve financial freedom and serve your community.
• There are a variety of options for budget business ideas, so you don’t need to invest your entire savings.
• Choosing the business opportunity that’s right for you and getting started can be challenging, so you may want to find a mentor or consultant.
• Starting a business can be done alone, with a partner, or as a contractor for a larger company.
• Startups are risky; you should minimize your risks as much as possible to give your business the best possible chance.
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Where Does BizCentral USA Come In?
• Startups often have big dreams with small funds.
• This is where we come in with an advantage:
• BizCentral USA is a one-stop-shop for all entrepreneur’s needs!
– Business plan development, startup resources and tools, research tools, loan referrals, incorporation, marketing and more.
• We offer value pricing for professional quality products and services!
• Our staff is comprised of experts in a variety of fields and specialty areas, ready to assist entrepreneurs in achieving their goals!