Chapter 6 Entrepreneurship and Starting a Small Business The Age of the Entrepreneur Entrepreneurship accepting the risk of starting and running a business The Job Creating Power of Entrepreneurs in the USA Employ thousands and help the country prosper Why People Take the Entrepreneurial Challenge Opportunity Profit Challenge Characteristics in an entrepreneur self directed self nurturing action Independence oriented highly energetic tolerant of uncertainty Your business idea must fill customers needs you must have the skills and resources to start the business you are selling the product service at a price that customers are willing and able to pay while still making a profit you can get your product service to customers before competitors do you can keep the business going Entrepreneurial team a group of experienced ppl from different areas of business who join together to form a managerial team with the skills needed to develop make and market a new product Micropreneurs entrepreneurs willing to accept the risk of starting and managing the type of business that remains small lets them do the kind of work they want to do and offers them a balanced lifestyle o Many are home based business owners o Reasons for growth in home based businesses computer technology has leveled the playing field corporate downsizing has led many to venture out on their own social attitudes have changed new tax laws o Challenges of home based businesses getting new customers managing time keeping work and family tasks separate abiding by city ordinances managing risk Affiliate marketing an internet based marketing strategy in which a business rewards individuals or other businesses affiliates for each visitor or customer the affiliate sends to its website Intrapreneurs creative ppl who work as entrepreneurs within corporations Encouraging entrepreneurship o Part of the Immigration Act passed in 1990 was intended to encourage more entrepreneurs to come to the US created investor visas that allows 10 000 pppl to come each year if they invest 1 million in an enterprise that creates or preserves 10 jobs o Enterprise zones specific geographic areas to which governments try to attract private business investment by offering lower taxes and other government support aka empowerment zones or enterprise communities o Incubators centers that offer new businesses low cost offices with basic business services purpose is to lower start up capital needs Getting Started in Small Business Small businesses a business that is independently owned and operated is not dominant in its field of operation and meets certain standards of size in terms of employees or annual receipts More personal customer service ability to respond quickly to opportunities create 60 80 of the new jobs each year Causes of small business failure o Plunging in underpricing overpricing underestimating how much time it takes starting with too little capital little experience ect Factors that contribute to success o Product not easily made by mass production sales not large enough to appeal to a large firm business is in a growth industry Learning About Small Business Operations Learn from others location important capital needed retain good workers keep good records Get some experience Take over a successful firm Managing a Small Business Business plan a detailed written statement that describes the nature of the business the target market the advantages the business will have in relation to competition and the resources and qualifications of the owners o Executive summary company background management team financial plan capital required marketing plan location analysis manufacturing plan appendix Sources of capital personal savings relatives former employers banks finance companies venture capitalists government agencies o Angel investors are private individuals who invest their own money in potentially hot new companies before they go public individual investing is called peer to peer lending P2P o Venture capitalists individuals or companies that invest in new businesses in exchange for partial ownership of those businesses Small Business Administration SBA a US government agency that advises and assist small businesses by providing management training and financial advice and loans Small Business Investment Company Program SBIC a program through which private investment companies licensed by the Small Business Administration lend money to small businesses Small Business Development Center SBDC funded jointly by the federal gov and individual states can help you evaluate the feasibility of your idea develop your business plan and complete your funding application Market people with unsatisfied wants and needs who have both the resources and the willingness to buy need to know your customers o Offer top quality at a fair price with great service Hiring training and motivating employees is critical o Employee relation is important Need good accounting Outside aid competent and experienced lawyer commercial loan officer insurance agent Service Corps of Retired Executives SCORE an SBA office with volunteers from industry trade associations and education who counsel small businesses at no cost Going International Small Business Prospects Technological advances have helped increase small business exporting However financing is difficult to find don t understand cultural differences Exporting can absorb excess inventory soften downturns in the domestic bureaucratic paperwork is a lot market and extend product lives
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