BUS 100 & 101
Introduction to Business
Part Two – Business Ownership
Chapter 2 (6)
Entrepreneurship &
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Starting a Small Business (SME - SMB)
(Choosing a form of Business Ownership)
By Pantelis Hadjiyerou
Learning Objectives
2
1. Describe what is an “entrepreneur”, the attributes and
personality traits needed by entrepreneurs
2. Deference between an “Entrepreneur” and a
“Manager”.
3. Explain why people choose to create their own
business.
4. Describe the process of starting a new business
5. Explain the growth of “home based” and “web based”
business.
6. What are the major causes small business fail (going
out of business) or what makes them succeed.
7. Outline the advantages and disadvantages small
business have in entering the global marketplace.
8. Getting started and opening a new business.
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Introduction
Businesses such as the following, started from
very small with little money and few
employees; many years later with hard work
they became very big:
McDonald's, Amazon, Meta, Tesla, Dell,
Intel, Microsoft, Apple, Ford, Ferrari, Ikea,
Onassis, PHC, Louis Group, Lanitis, Sklavenitis,
Alpha Mega, CTC Shiakolas, etc.
They all started from some, then-unknown
entrepreneurs such as: Jeff Bezos, Bill Gates,
Ray Kroc, Elon Musk, Michael Dell, Andrew
Grove, Papaellinas, Sklavenitis, Lanitis, etc.
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Introduction
 Most large business owners, taking advantage of
their imagination, courage, dedication, hard
work, ability to copy and improve ideas from
others and – often their luck along with their
ability to see the opportunity arising – turned an
idea into a small business that under adverse
circumstances, managed to make it big and
successful.
 Their success inspires many new entrepreneurs to
open thousands of new businesses every year.
 Of course not all new ideas actually materialize
and even if they do, they don’t always succeed.
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Entrepreneurship
Entrepreneur
Enterprise
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Entrepreneurship
 Entrepreneurship is:
 Accepting the risk to start and run a
business
 Entrepreneur is:
 A person who seeks a profitable
opportunity and takes the risks to set
up and operate a business.
An Entrepreneur/ Business Person is:..
…
 The Entrepreneur is: the person who mobilizes
the necessary resources and exploits them
productively for the realization of a business
opportunity in order to achieve profit.
 A person who starts a business risking to loose
his/her investment with the goal to gain an
increase in his/her capital or to make more
money than if working for others or to have a
decent livelihood, or to have the freedom to
apply his/her ideas as he/she wishes.
 The entrepreneurs usually are distinguished for
their riskiness, energy, perceptiveness, vision
and leadership skills.
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Entrepreneurship is: …
Entrepreneurship is a way of thinking for some
people – which aims at the creation of a new
business or the purchase of an existing business.
Some people start a business because they
recognize an opportunity and take it, and
some others do it as a matter of survivor
because they can’t find a decent paying job.
The modern view of entrepreneurship is that:
It is the driving force that pushes individuals
to differentiate themselves, to chart new
paths and to provoke developments earlier
than their time or faster than others,
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regardless of the outcome.
Entrepreneurship
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Why people take the
entrepreneurship
challenge?
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Entrepreneurship
Why people take the Entrepreneurship Challenge?
Independence 72% - They want to be
independent, they want to make the
decisions by themselves, do the work the way
they see fit and report to no one.
Control 10% - They like the challenge of
managing a business and want to prove they
can do it, they get excited from taking risks.
They can put their ideas, knowledge and skills
to work as they consider is right.

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Entrepreneurship
Why people take the Entrepreneurship Challenge?
Satisfaction 10% - They have the opportunity
to make a difference in the society and deal
with what is important to them. By doing the
work they like, gives them satisfaction, helping
them reach their full potential and fulfilment.
Other 8% - They are seeking a greater profit
than what they would make from a salary or
as bank deposit interest. They can have a
higher social status and respect from their
relatives friends and society. They see an
opportunity and take it (market needs, new
innovation, creativity).
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Managers & Intrapreneur
Characteristics of a Manager
Managers - they:
Like to work for others
Like the financial security
Do not like to risk
Like to use company’s resources to achieve
goals set by others.
Might not have the resources to start their
own business but have the knowledge, ability
and communication skills to run a business.
“Intrapreneur” is a Manager who take the
challenge to launch new products and
generate new profit for the Co. (like the owner)
Characteristics of Entrepreneurs
 High Achievers: Energetic, have the drive to
excel, moderate risk takers, action oriented.
 Creative: constantly looking for something to do
 Visionaries: able to visualize new ideas and see
the end result before they are put to practice.
 Challenging: enjoy the challenge of new and
difficult situations, able to tolerate uncertainty.
 Internal locus of control: Believe they control
their own fate and their environment and that it
is up to them to succeed or fail.
 Confident and self directed They believe in their
own abilities. Able to make decisions alone.
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The Entrepreneur’s Behaviour:









Takes initiatives to make things happen
Seeks the opportunity and takes it
Assumes responsibility to the end
Directs autonomously
Solves problems innovatively
Organizes work with creativity
Uses networking effectively in order to be
able to operate independently
Measures things well and uses his/her
judgment before taking a risk
Source: A. Gibb and J. Cotton
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Advise for potential Entrepreneurs
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 Decide what to do, how to do it, and how
long it would take until the business is
operational.
 Search for target markets you could serve
successfully. Make sure they are big enough
to support your business.
 Study well the situation, plan well, collect
information and the resources and be ready
with alternative plans.
 Act quickly once you find the business
opportunity before others jump on the
opportunity.
Continues
Advise for potential Entrepreneurs
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Continuing
 Learn while working for others. Start building a
new business while working for others.
 Employ people who have something to offer
to you and your business in terms of
knowledge, skills, experience and support.
 Do not overestimate your abilities and
financial resources, start moderately, look for
new opportunities and grow accordingly.
 Be ready to fail, don’t get disappointed and
discouraged, have ready - an alternative
action plan. If down get up and try again
differently.
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Entrepreneurship
An Entrepreneur Team is:
 A group of people with different
backgrounds or areas of expertise, who join
forces in order to form a managerial team
and start a new business.
 The managerial team will have the skills
needed to develop, make and market a
new product.
 People who have the same goals, but have
different knowledge and skills, which
compliment each other.
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Entrepreneurship
Home based Business owners are:
 People who have their home, as their
business address.
 They are owners such as Computer
programmers, Writers, Construction,
Transportation, Consultants,
Bookkeepers, Teachers, etc.
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Entrepreneurship
Micropreneurs are:
 Entrepreneurs willing to accept the risk of
starting & managing a new business which will
remains small, because that's how they like it.
 People willing to take the risk of losing their
money, as long as they are independent.
 They want a business that lets them do the kind
of work they want to do, but also offers them
balanced lifestyle.
 A job that allows them free time and enough
money to enjoy what goods life can offer or in
other words they want to have quality life.
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Small-Medium Business
*****
Very Small + Small + Medium-sized
Businesses
---SME - Small Medium Enterprise (EU)
SMB - Small Medium Businesses (USA)
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Introduction to
Small-Medium Business - SME / SMB
As humans and as a society, we are
constantly in direct contact with Small
Businesses either because we work in one
or own one or buy their products.
SME - Small Medium Enterprise (EU)
SMB - Small Medium Businesses (USA)
SME / SMB Include –
Very Small, Small and Medium sized
businesses
Small Business - SME / SMB
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 A Small-Medium Business is one that is:
 Independently owned and operated.
 It is not dominant in its field of operation.
 It meets certain standards of size, in terms of
number of employees and total annual
receipts (revenue).
 Business ownership formation in most
countries, is usually Sole proprietorship or
Partnership (personal business), except in
Cyprus where most of the business are
Corporations.
A Small-Medium Business is one that is:
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Commission’s Definition of an SME /
SMA - In order for an enterprise to be called:
 “Small-medium-sized enterprise” or
 “Very small /micro + Small + Medium Business"
 European
 It
should be independent.
 Independent
means that it is not owned by any
other large enterprise (large business – has more
than ≤250 employees)
 Or, its ownership does not exceed 25%
 Or, if the ownership exceeds 25% - then it
should not have an active role in management
A Small-Medium Business is one that is:
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 European
Commission’s Definition of an SME
 Very Small–sized business: Employs 0 to 10
people. Annual turnover is less than € 2.000.000
 Small-sized business: Employs 11 to 50 people.
Annual turnover is less than €10.000.000
 Medium-sized enterprise: Employs 51 - 250
people. Annual turnover is less than € 50.000.000
…………………………………………………………………………………………………..
business – Employs 250 people
or more. Annual turnover is More than
50.000.000€
 Big/Large-sized
SMEs - Number of enterprises, value added and employment
in the EU-27 NFBS by enterprise size class in 2020
Source: Eurostat, National Statistical Offices, DIW Econ
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Micro
SMEs
Small
SMEs
Medium- All SMEs
sized SMEs
Large
enterprises
All
enterprises
Enterprises
Number
%
21,044,884
93.3%
1,282,211
5.7%
199,362
0.9%
22,526,457
99.8%
40,843
0.2%
22,567,300
100.0
Value added
Value in
€ million
%
1,179,476
1,071,196
1,087,613
3,338,286
2,956,544
18.7%
17.0%
17.3%
53.0%
47.0%
82,432,093
44,358,284
65.0%
35.0%
6,294,829
100%
Employment
Number
%
36,988,539
29.2%
25,313,006
20.0%
20,130,548
15.9%
126,790,377
100.0%
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SMEs – EU - 2019
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Small-Medium Business in EUC & USA
According to the EU - European Union statistics Eurostat for SMEs:
The number of SME’s reaches around 99.8%
of the total enterprises.
They employ around 67% of employees in EU.
They create the largest Gross Value Added
(GVA & GDP), at ~ 53% (2020), ~ 57% (2010)
In USA the SMBs / SMEs are around 99% of
the total enterprises and those that are
Family Businesses are ~ 90%
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Small-Medium Business
In Cyprus according to the official data of the
business census conducted by the Department
of Statistics and Research in 2005:
The Cyprus SMEs (less than 250 employees)
constitute 99% of Cypriot enterprises which in
total amount to 62,715 and employ 198,078
people.
Of this total, (very small) micro and small
enterprises, (less than 50 employees),
represent 90.83% of all SMEs and amount to
57,066, employing 107,442 people.
Small Business - SME / SMB
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Small Business Succeed Because or if:
 They give personal service and attention to
their customers,
 The products made by small business can’t
be mass produced,
 Total sales or the location is not that
attractive to larger businesses
 The business has a new idea in a growing
industry with growing demand
Small Business - SME / SMB
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Small
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Businesses Fail Because or if:
 They use Wrong Pricing Policy
 The owner does not have the knowledge or
skills or experience to operate / manage
correctly. Does not use professional systems.
 Has Financial difficulties, can’t borrow
 Overexpansion, looses control
 Insufficient record keeping or Information
 Not enough control of all the resources
 The owner is not there when needed to help
or solve problems when they arise. Or the
owner has no replacement if absent.
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Today’s Trends for SMEs
There is an increasing interest from all ages, for
self-employment and opening an SME (small
business) - The main reasons are:
The employment conditions, from large
organizations, are constantly getting worse in
terms of salaries, benefits. Working hours,
conditions and security. Numbers and skills of
employees. Management behaviour, etc.
Many experienced managers, working in
companies or in government, retire earlier in
order to get involved in their own business (to
fulfil their dreams or to make more money).
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Today’s Trends for SMEs
55% of young people want to be masters
of themselves / independent and want to
open their own small business.
The owners are 1.9 men to 1 Woman,
The owners are from different nationalities.
The majority of people who open new
SMEs are of ages of 25 to 34 years old.
Big investors invest in others SMEs, above
5% of their money
Continues
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Today’s Trends for SMEs
The Technological Developments help in the
SMEs opening and growth, because:
Today we have small portable machines,
electronics, Internet, programming,
information technology and information
banks.
Less staff is needed, some work can be done
from home or on the go.
Communication and delivery (logistics) of
products is easier and faster.
Through the internet we can buy and sell
internationally.
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Starting a New Business
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Getting Started in a New Business
 The steps in Starting a new business
 Plan, Finance, Set up a business
ownership, Organize, Staff, Market,
Control and R&D
1. Select a business idea
2. Decide on one of the options for starting
3. Create a Feasibility Study
4. Create a business plan
5. Apply the business plan
6. Run the business
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Getting Started in a New Business
1. Select a Business Idea
 Find something you enjoy doing
 Something you are good at and
makes you happy doing it
 Satisfy a market niche
 Look for potential customers that are
not satisfied by someone else (by
another product or business)
Getting Started in a New Business
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2. Options for starting a new business
Create a completely new business from
scratch - Find and modify an empty space,
buy the equipment, hire and train the
employees, issue the licenses, advertise,
deliver the product, and control the business.
Buy an existing business – Buy a running
business, with its employees, customers,
facilities and products. Calculate how much
a business is worth: (a) Business assets, (b)
Business Sales, (c) any desired unique
features, etc.
Getting Started in a New Business
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2. Options for starting a new business
Management Contract - You can make an
agreement with the business owner to manage
their business for a % from the gross sales (e.g.
5%) or a % of the net income/ profit (e.g. 30%)
Franchising (buy all copyrights) or Licensing
(buy some copyrights) - Sign an agreement,
pay the license fees and royalties. Receive
assistance in all facets of creating and
operating the business, including a feasibility
study and a business plan. Invest in
construction and equipment, set up the
business, market, train and trade your products.
Getting Started in a New Business
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3. Feasibility Study –
 Contact a Research to find out whether your
idea will be feasible – It could be applied and
if applied will be profitable.
4. Business Plan - Create a detailed written plan:
Mission statement - Specify the nature of the
business, the target market, the advantages
of your business compared to the competition
The Resources and Qualifications of the owner
The Strategic Plan for opening and running
the business
5 & 6 Apply the business plan + Run the business