Management 12e richard draft chapter 06

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Chapter 6 Managing Small Business Start-Ups... May not be scanned, copied or dup

© 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 6

Managing Small Business Start-Ups

What Is Entrepreneurship?

 The process of initiating a business venture

 Organizing necessary resources: risk/reward

 An entrepreneur engages in entrepreneurship

 Recognizes a valuable idea

 Assumes financial and legal risks

 Receives the business’s profits

 Successful entrepreneurs have many different motivations

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6.1 Five Types of Small

Business Owners

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Entrepreneurship Internationally

 Global entrepreneurship has experienced a tremendous boost due to

 Advances in technology

 Rapid expansion of the middle class

The rise of female entrepreneurs

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6.2 Global Entrepreneurship by Gender

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Entrepreneurship and Small Business Today

 Vital, dynamic, crucial aspects of the U.S economy

 Represent 67% of jobs created during the latest recession

 Employs 55% of private-sector jobs

 Represent 99% of all firms

 Entrepreneurial companies are engines for job creation and

innovation

 Entrepreneurship is booming around the world

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Who Are Entrepreneurs?

 Immigrants often start businesses

 Women are embracing entrepreneurship

 Minorities show a high rate of entrepreneurship

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6.3 Racial and Ethnic Composition of Small Business

Owners

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6.4 Gender Composition of Small Business

Owners

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Personality Traits

 High importance on being free to achieve

 Want to maximize their important traits:

 Tolerance for Ambiguity

 Power and Influence

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6.5 Characteristics of Entrepreneurs

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Social Entrepreneurship

Combines the creativity, business smarts, passion, and hard

work of the traditional entrepreneur with a social mission to

change the world for the better

Combines the creativity, business smarts, passion, and hard

work of the traditional entrepreneur with a social mission to

change the world for the better

© 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Launching an Entrepreneurial Start-Up

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6.6 Sources of Entrepreneurial Motivation and New Business Ideas

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Writing a Business Plan

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1 Clear, compelling vision

2 Realistic financial projections

3 Profile target market

4 Profile the industry and competition

5 Provide an effective management team

6 Well written and formatted

7 Keep it short

8 Highlight critical risks

9 Spell out the sources of funding

10 Capture attention with a great summary

Choosing a Legal Structure

 Sole proprietorship – unincorporated business owned by an individual

 Corporation – an artificial entity created by the state and existing apart

from its owners

 Expensive and complex paperwork

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Arranging Financing

 Debt Financing, money that must be repaid:

 Family and friends

 Bank loans/Finance companies

 Personal credit cards

 Wealthy individuals

 Angel financing

 Equity Financing, money invested by owners or those purchasing stock

 Venture capital firms

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6.7 Sources of Start-up Capital

for Entrepreneurs

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Tactics for Becoming a

Business Owner

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 Start a new business

 Buy an existing business

 Buy a franchise

 Participate in a business incubator

• Franchising is an arrangement to purchase the right to distribute the product or service with the help of the owner

• Business incubators provide resources to entrepreneurs such as office space, support services, and management and

legal advice

6.8 Some of Today’s Fastest- Growing

Franchises

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Starting an Online or Mobile Business

 The Internet is aiding in the launch of new businesses and new ventures

 Starting an online business:

 Find a market niche

 Create a professional Web site

 Choose a domain name

 Know when to pivot change strategic directions

 Use social media

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