Chapter Objectives
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9/30/2010 The Challenges of Starting a Business Chapter Objectives 5-1 1. 2. 3. 4. 5 5. 6. 7. Exploring Business © 2009 FlatWorld Knowledge What Is An Entrepreneur? Importance Of Small Business To The U.S. Economy What Industries Are Small Businesses in? Should You Start a Business? Starting A Business The Business Plan How To Succeed In Managing A Business Exploring Business © 2009 FlatWorld Knowledge Entrepreneur 5-3 • “…someone who identifies a business opportunity and assumes the risk of creating and running a business to take advantage of it.” Exploring Business © 2009 FlatWorld Knowledge Why Be An Entrepreneur? 5-4 9Be Own Boss 9Financial Independence 9Creative Freedom 9Use Own Skills & Knowledge Exploring Business © 2009 FlatWorld Knowledge Entrepreneurs Vs. Owners 5-5 Entrepreneurs 9Innovators 9New/Improved Products 9Grow G &E Expand d Owners 9Provide Income 9Not Innovative 9No Plan For Expansion Exploring Business © 2009 FlatWorld Knowledge 5-2 Small Business 5-6 •SBA Classification Independent Ownership Little Influence In Industry Less Than 500 Employees p y Economic Impact 20M+ Businesses 50% Of GDP Exploring Business © 2009 FlatWorld Knowledge 1 9/30/2010 Small Business Importance 5-7 Net New Jobs By Firm Size 5-8 &Job Creation &Innovative &Opportunities For Women & Minorities &Helps Big Business Exploring Business © 2009 FlatWorld Knowledge Women & Minority Owned Business Exploring Business © 2009 FlatWorld Knowledge 5-9 Small Business Industries 5-10 •80% = Intangible Services – Retailing = 25% – Wholesaling = 10% – Professional/Business Services = 35% •20% = Tangible Goods Exploring Business © 2009 FlatWorld Knowledge Small Business By Industry Exploring Business © 2009 FlatWorld Knowledge 5-11 Small Business Ownership •Advantages Independence Financial Rewards Lifestyle Learning Opps. Opps Creative Freedom & 5-12 wDisadvantages Financial Risk Stress Time Commitment Undesirable Duties Personal Satisfaction Exploring Business © 2009 FlatWorld Knowledge Exploring Business © 2009 FlatWorld Knowledge 2 9/30/2010 Entrepreneur’s Work Week 5-13 Business Plan 5-14 • “…a document that identifies the goals of your proposed company and explains how they will be achieved... achieved ” Exploring Business © 2009 FlatWorld Knowledge Exploring Business © 2009 FlatWorld Knowledge Blueprint for Company 5-15 • How Business Will be Built • How Intend To Make It Sturdy • Get Financing Sources For Business Idea Hobbies 5-16 Industry Experience Exploring Business © 2009 FlatWorld Knowledge Exploring Business © 2009 FlatWorld Knowledge Ownership Options 5-17 Growth Of Franchising 5-18 Start From Scratch Buy Existing Buy A Franchise Exploring Business © 2009 FlatWorld Knowledge Exploring Business © 2009 FlatWorld Knowledge 3 9/30/2010 Franchise wAdvantages 5Recognized Name/Product 5Ongoing Support • Franchise Fee • Royalty Fee 7Franchiser’s Rules 7Franchiser May Not Follow Through Exploring Business © 2009 FlatWorld Knowledge 5-21 1Investors •Quality of Concept •Ability to Manage To Repay Exploring Business © 2009 FlatWorld Knowledge Executive Summary 1-3 Page Overview Most Important Part Written After Plan Completed Exploring Business © 2009 FlatWorld Knowledge Reduces R d Risk Ri k Analyze Concept/Industry Exploring Business © 2009 FlatWorld Knowledge Audiences of Plan Loan 5-20 Critically 7Expensive 1Bankers Bankers-- Ability Benefits Of Business Plan Forces You To Think Disadvantages 5Help In StartStart-up 5Advertising 5-19 Business Plan: 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 5-22 Executive Summary Description of Business Industry Analysis Mission Statement/Core Values Management Plan Goods/Services Development & Production Marketing Global Issues Financial Plan Appendices Exploring Business © 2009 FlatWorld Knowledge 5-23 Description Of Business 5-24 What Will Do? Goods/Services Provided? Unique? Customers? C ? How Sold? Location? Exploring Business © 2009 FlatWorld Knowledge 4 9/30/2010 Industry Analysis 5-25 "Players? "Outlook? "Total Projected Sales? "Factors F off E Expansion/Contraction? i /C i ? "Future Economic Conditions? mission of company ¾Core Values Values-- Fundamental beliefs...what is/is not appropriate in business activities, ideals Exploring Business © 2009 FlatWorld Knowledge 5-27 o Member Qualifications o Legal Form • Sole Proprietorship • Partnership • Corporation Exploring Business © 2009 FlatWorld Knowledge Product Design Technology Own Or Contract For Facilities Where? Equipment Design/Layout Of Facilities Number of Employees Units Produced Ensure High Quality? Exploring Business © 2009 FlatWorld Knowledge Goods & Services 5-28 #Description #Better Than Competitors #Market Needs #Competitive Advantage • Education • Experience • Expertise Development & Production 5-26 ¾Mission StatementStatement- Purpose or Exploring Business © 2009 FlatWorld Knowledge Management Plan Mission Statement & Core Values Exploring Business © 2009 FlatWorld Knowledge 5-29 Marketing 5-30 Target Market Pricing Distribution Promotion Exploring Business © 2009 FlatWorld Knowledge 5 9/30/2010 Global Issues 5-31 • Start Start--up • Operations • Funding Sources ÁRepay Debt ÁProjections • Expected Sales • Costs • Profits (Losses) Exploring Business © 2009 FlatWorld Knowledge Exploring Business © 2009 FlatWorld Knowledge 5-33 Succeeding In Business 5-34 qKnow Business qKnow Management qProper Attitude qGet Adequate Funding qManage Money qManage Time qKnow People qSatisfy Customer qKnow How To Compete wResumes wFinancial Statements Exploring Business © 2009 FlatWorld Knowledge SBA Assistance 5-32 ÁCash Needs ßBuying/Selling In Other Countries ßIdentify Cross Border Challenges ßHow Overcome Challenges ßStrategies For Future Appendices Financial Plan Exploring Business © 2009 FlatWorld Knowledge 5-35 SBA Loan Guarantees 5-36 9Assistance In: – Business Plan – Starting – Financing – Managing 9Financing 9Management/Technical Services/Training Exploring Business © 2009 FlatWorld Knowledge Exploring Business © 2009 FlatWorld Knowledge 6 9/30/2010 SBA Programs SBDCs Assist with à Business Problems à Free Training & Technical Info. Service Corps of Retired Executives Exploring Business © 2009 FlatWorld Knowledge 5-37 Why Businesses Fail 5-38 ØBad Business Idea ØCash Problems ØInexperience or Incompetence ØLack Of Customer Focus ØInability To Handle Growth Exploring Business © 2009 FlatWorld Knowledge 7
