SMALL BUSINESS
MANAGEMENT
Chapter 2
The Small Business Decision
1
The Small Business Decision
 Personal
Evaluation
2
Advantages of Small Business
Ownership
 More
personal contacts with people
 Independence
 Skill Development
 Potential Financial Rewards
 Challenge
 Enjoyment
3
Disadvantages of Small
Business Ownership
 Risk
 Stress
 Need
for Many Abilities
 Limited Financial Rewards
 People Conflicts
 Time Demands
4
Demographic Characteristics
of Entrepreneurs
 Parents
owned business
 Foreign parents
 High school degree or less
 College or more
 Age 31 and under
 Age 40 or more
5
Personality Characteristics Required
by Successful Entrepreneurs
 Achievement
Orientation
 Risk
Taking
 Independence, Self Confidence, Self
Assurance
 Innovativeness
 Strong Verbal and Numerical Skills
 Selling Skills
6
Personality Characteristics Required
by Successful Entrepreneurs
 Selling
Skills
 Problem Solving Abilities
 Strategic Planning
 Perseverance
7
The Small Business Decision
 Organizational
Evaluation
8
Small Business Successes
 Alertness
to Change
 Ability to Attract and Hold Competent
Employees
 Staying Close to the Consumer
9
Small Business Successes
 Thoroughness
with Operating Details
 Ability to Obtain Needed Capital
 Effective Handling of Laws, Rules, and
Regulations
10
Small Business Successes
 Environments
Conducive to Small Business
Success
–
–
–
Personal Attention to Daily Operation
Owner Contact with Employees
Small or Local Demand
11
Small Business Successes
–
Industries that Require Flexibility
 high
growth rates, erratic demands,
perishable products
–
–
More Labor and Less Capital Intensive
Considerable Government Encouragement
12
Small Business Failures
 Bankruptcies
13
Entrepreneurialship and Small
Business Management
 Entrepreneurial
–
Skills
Characteristics
 creativity,
innovativeness, independence, risktaking, idea-oriented
–
Situations
 generating
ideas and solutions to problems, starting
a new business, expanding or opening new products,
reaching performance objectives, maintaining
control of operations
14
Entrepreneurialship and Small
Business Management
 Managerial
–
Skills
characteristics
 develops
strategy and goal setting, prefers to know
outcomes of actions or activities, team player, works
through others, skills in finance, marketing, personnel,
operations
 situations
 generating ideas and solutions to problems, starting a new
business, expanding or opening new products, reaching
performance objectives, maintaining control of operations
15
Concept Checks
 1.
What are the major causes of business
failure?
 2. What are the characteristics of a
successful business?
 3. List the advantages of owning a small
business.
16
Concept Checks
 4.
List the disadvantages of owning a small
business.
 5. What are the characteristics of successful
small business owners?
 6. What is the difference between an
entrepreneur and a manager?
17
Concept Checks
18