Professional Documents
Culture Documents
Starting A Business
Exploring Business
Chapter 2
© 2007 Prentice-Hall, Inc. 2-1
Chapter Objectives
Exploring Business
2-3
© 2007 Prentice-Hall, Inc.
Why Entrepreneurship?
Exploring Business
Entrepreneurs
Innovators
New/Improved Products
Grow & Expand
Owners
Provide Income
Not Innovative
No Plan For Expansion
2-5
© 2007 Prentice-Hall, Inc.
Small Business
Exploring Business
SBA Classification
• Independently Owned
• Little Influence In Industry
• Less Than 500 Employees
Economic Impact
• 20+ Million Businesses
• About 50% Of GDP
2-6
© 2007 Prentice-Hall, Inc.
Small
Business Founders
Exploring Business
Creates Jobs
Sparks Innovation
Provides Opportunities
• Women & Minorities
• Financial Success &
Independence
Supports Big Business
2-8
© 2007 Prentice-Hall, Inc.
Net New Jobs
Exploring Business
2-9
© 2007 Prentice-Hall, Inc.
Innovations From
Small Business
Exploring Business
Airplane
Personal Computer
Tape Recorder
Pacemaker
Soft Contract Lenses
2-10
© 2007 Prentice-Hall, Inc.
Small Business
Advantages In Innovation
Exploring Business
Attract Talent
Faster Decision
Making
Focused Research
Compensation Incentives
2-11
© 2007 Prentice-Hall, Inc.
Women/Minority
Owned Business
Exploring Business
2-12
© 2007 Prentice-Hall, Inc.
Small Business
Supports Big Business
Exploring Business
Suppliers Of Goods
Suppliers Of Services
–Accounting
–Legal Work
–Insurance
Outsourcing
Sales Agents
2-13
© 2007 Prentice-Hall, Inc.
Industries Of Small Business
Exploring Business
80% = Services
–Retailing = 25%
–Wholesaling = 10%
–Professional/Business
Services = 35%
20% = Goods-Producing
2-14
© 2007 Prentice-Hall, Inc.
Small Business By Industry
Exploring Business
2-15
© 2007 Prentice-Hall, Inc.
Small Business Ownership
Exploring Business
Advantages Disadvantages
Independence
Financial – Financial Risk
Rewards – Stress
Lifestyle
Learning Opps. – Time
Creative Commitment
Freedom & – Undesirable
Personal
Satisfaction Duties
2-16
© 2007 Prentice-Hall, Inc.
Entrepreneur’s Work Week
Exploring Business
2-17
© 2007 Prentice-Hall, Inc.
Decisions For
Starting A Business
Exploring Business
Type of business?
oManufacturer, retailer, wholesaler
oProfessional/Personal services
oHome?
Innovate?
Idea? Feasible?
New, existing, franchise?
Self or others?
Business form?
2-18
© 2007 Prentice-Hall, Inc.
Business Plan
Exploring Business
2-21
© 2007 Prentice-Hall, Inc.
Ownership Options
Exploring Business
Buy Existing
Get A
Franchise
2-22
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Growth Of Franchising
Exploring Business
2-23
© 2007 Prentice-Hall, Inc.
Franchise
Exploring Business
Advantages Disadvantages
Recognized ✤Expensive
Name/Product – Franchise Fee
– Royalty Fee
Help In Start-up ✤Franchiser’s Rules
Advertising ✤Franchiser May
Not Follow Through
Ongoing Support
2-24
© 2007 Prentice-Hall, Inc.
Exploring Business
Business Plan:
I. Business Concept
II. Management Qualifications
III. Legal Form Of Business
IV. Explain Goods/Services
V. ID Customers/Competitors
VI. Product Development
VII. Production Methods
VIII. Marketing
IX. Projected Profits &
Borrowing Needs
2-25
© 2007 Prentice-Hall, Inc.
Benefits Of
Business Plan
Exploring Business
Management
Staffing
Production
Marketing
Finance
2-27
© 2007 Prentice-Hall, Inc.
Plan Audiences
Exploring Business
Investors
• Quality of Concept
• Management
Ability
Bankers—Ability
To Repay Loan
2-28
© 2007 Prentice-Hall, Inc.
Executive Summary
Exploring Business
2-29
© 2007 Prentice-Hall, Inc.
Description Of Business
Exploring Business
Mission Statement—
Purpose or mission of
company
Core Values—Fundamental
beliefs about what is/is not
appropriate in conducting
business activities, ideals
2-32
© 2007 Prentice-Hall, Inc.
Management Plan
Exploring Business
Member Qualifications
–Education
–Experience
–Expertise
Legal Form
–Sole Proprietorship
–Partnership
–Corporation
2-33
© 2007 Prentice-Hall, Inc.
Goods & Services
Exploring Business
Description
Better Than
Competitors
Market Needs
Competitive Advantage
2-34
© 2007 Prentice-Hall, Inc.
Exploring Business Development & Production
Obtain/Make Products
Product Design
Design/Manufacture
Technology
Own Or Contract For
Facilities
Where?
Equipment
Design/Layout Of Facilities
Number of Employees
Units Produced
Ensure High Quality?
2-35
© 2007 Prentice-Hall, Inc.
Marketing
Exploring Business
Target Market
Pricing
Distribution
Promotion
2-36
© 2007 Prentice-Hall, Inc.
Global Issues
Exploring Business
Buying/Selling In
Other Countries
Identify Cross-
Border Challenges
How To Overcome Challenges
Strategies For Future
2-37
© 2007 Prentice-Hall, Inc.
Financial Plan
Exploring Business
Cash Needs
– Start-up
– Operations
– Funding Sources
Repay Debt
Projections
– Expected Sales
– Costs
– Profits (Losses)
2-38
© 2007 Prentice-Hall, Inc.
Appendices
Exploring Business
Resumes
Financial Statements
2-39
© 2007 Prentice-Hall, Inc.
Succeeding In Business
Exploring Business
Assistance In:
– Business Plan
– Starting Business
– Obtaining Financing
– Managing
Financing
Management/Technical
Services/Training
2-41
© 2007 Prentice-Hall, Inc.
SBA Loan Guarantees
Exploring Business
2-42
© 2007 Prentice-Hall, Inc.
Exploring Business
SBA Providers
Small Business
Development Centers
(SBDC)—Assists with
–Business Problems
–Free Training/Technical Info.
Service Corps of Retired
Executives
2-43
© 2007 Prentice-Hall, Inc.
Why Businesses Fail
Exploring Business