Chapter 7 Intro to Business

1. 7
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

2. 7
Small Business and
Entrepreneurship:
Economic Rocket Fuel
LO1 Why do entrepreneurs launch small
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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businesses?
LO2 What is the typical entrepreneurial
mindset and characteristics?
LO3 What are funding options for small
business?
LO4 What are the opportunities and
threats facing small businesses?
LO5 What are ways to become a business
owner and facilitate success?
LO6 What is the size, scope and economic
contribution of small business?

3. Entrepreneurship Plays a Positive Role in
U.S. Economy
• New business creation increased steadily from
2007 to 2009
• Interest among teenagers in launching a
business is consistent at 40%
• In 2010, U.S. entrepreneurship rates reached
their highest level in 15 years
• Job seekers offer hope as job creators
Source: Despite Recession, Youth Remain Interested in Entrepreneurship, Poll Shows, November 17, 2010, Philanthropy News Digest website, http://foundationcenter.org/pnd/news/story.jhtml;jsessionid=R0ZQZFD52NZNLLAQBQ4CGW15AAAACI2F?id=314900002,
accessed March 18, 2011, “Jobless Entrepreneurship” Tarnishes Steady Rate of U.S. Start-Up Activity, Kauffman Study Shows, March 7, 2011, Kauffman website, http://www.kauffman.org/newsroom/jobless-entrepreneurship-tarnishes-steady-rate-of-us-startup-activity.
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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aspx, accessed March 18, 2011

4. Launching a New Venture: What’s
in It For Me?
“
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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 Greater Financial Success
 Independence
 Flexibility
 Challenge
 Survival
 Opportunity Lost – there are trade-offs
Business opportunities
are like buses…there’s
always another one
coming.
-- Richard Branson,
Virgin Enterprise
“

5. The Entrepreneur:
A Distinctive Profile
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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6. Entrepreneurship:
Do You Have What it Takes?
• Do you enjoy working?
• Do you gamble?
• Can you fake it?
• Are you good on your feet?
©iStockphoto.com/Neustockimages
Source: Personality Test for Entrepreneurship Success by Andy Swan, Small Biz Survival website, http://www.smallbizsurvival.com/2008/08/personality-test-for-entrepreneurship.html, posted 6
August 4, 2008, accessed April 3, 2011.
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

7. Roach Coaches Minus the Roaches
• Today’s food truck owners are tech-savvy
entrepreneurs
 Build loyal customers via
social media
 KogiBBQ truck has 28,000
Twitter followers
• Lunch trucks today have
gone upscale
 Korean/Mexican Tacos
 Gourmet deserts
 Sustainably harvested fish tacos
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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Source: “Food Truck Nation,” by Katy McLaughlin, June 5, 2009, TheWall Street Journalwebsite, http://online.wsj.com/article/SB10001424052970204456604574201934018170554.html, accessed June 3, 2010; “How to Open a (Successful) Food Truck,” by Christine Lagorio, May 12, 2010, Inc. website, http://preview.inc.com/guides/2010/05/opening-a-successful-food-truck.html, accessed June 3, 2010.

8. Finding the Money:
Funding Options for Small Business
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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 Personal Resources
 Loans
 Angel Investors
 Venture Capital
©Colin Anderson/B ©Colin Anderson/Blleenndd ImImagaegse/Jsu/pJiutepriimteargiemsages

9. Peer-to-Peer Lending
• A new and unique funding source for start-ups
• Websites bring together borrowers and
investors
• Both parties benefit financially
• Entrepreneurs find this an easier source for
funding with more favorable terms
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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© The Studio Dog/Photodisc/Getty Images

10. Small Business Sustainability
• Sustainable business practices can save money
• Many large corporations assess suppliers based on
environmental benchmarks
• Sustainable planning:
1. Establish a benchmark
2. Identify best opportunities
3. Develop implementation plans
4. Set deadlines
5. Keep the plan active
10 Source: Sustainability Planning for Business Owner by Kelly Spors , May 9, 2010, Small Business Trends website, http://smallbiztrends.com/2010/05/sustainability-planning-for-business-owners.html, accessed April 3, 2011
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

11. Opportunities and Threats for Small
Business: A Two-Sided Coin
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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Opportunities:
• Market Niches
• Personal Customer Service
• Lower Overhead Cost
• Technology

12. Opportunities and Threats for Small
Business: A Two-Sided Coin
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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Threats:
• Higher Risk of Failure
• Lack of Knowledge and
Experience
• Too Little Money
• Bigger Regulatory Burden
• Higher Health Insurance Costs

13. New Business Survival Rates
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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14. Launching Options: Reviewing
the Pros and Cons
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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15. Making it Happen:
Tools for Success
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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• Use the Small Business
Administration
• Gain Experience
• Learn from Others
• Educate Yourself
• Write a Business Plan
© The Studio Dog/Photodisc/Getty Images
Source: Focus on Success, Not Failure by Rhonda Abrams, May 7, 2004, USA Today website money section, http://www.usatoday.com/money/smallbusiness/columnist/abrams/2004-05-06-success_x.htm.

16. The Business Plan
©RAGMA IMAGES/Shutterstock.com
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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 Executive Summary
 Description of Business
 Marketing Strategies
 Competitive and Industry
Research
 Operating Procedures
 Personnel
 Financial Projections
Source: Business Plan Basics, U.S. SBA, http://www.sba.gov/starting_business/planning/basic.html, accessed February 15, 2009.

17. Small Business and the Economy:
An Outsized Impact
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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• Creating New Jobs
• Fueling Innovation
• Vitalizing Inner Cities
• In 2008, 99.9% of businesses
in the U.S. had less than fewer
than 500 employees
• 7% of small business owners
ran their business without any
employees
• Small businesses generate
about half the U.S. GDP
• Small businesses employ half
of the nation’s private
workforce
© The Studio Dog/Photodisc/Getty Images
Source: “Frequently Asked Questions,” SBA Office of Advocacy, updated September 2009, SBA website
http://www.sba.gov/advo/stats/sbfaq.pde, accessed June 3, 2010.

18. Accidental Invention
• Many great ideas happen by accident
• Penicillin was the result of not cleaning up a
science workstation
• Coca-Cola resulted from efforts to develop a
headache medicine
• Saccharin was discovered from a chemist not
washing his hands
“Luck is what happens when
preparation meets opportunity”
~ Seneca 18 Source: Top 10 Accidental Inventions, Science Channel website, http://science.discovery.com/brink/top-ten/accidental-inventions/inventions-01.html, ©haveseen/Shutterstock.com accessed March 22, 2011.
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

19. Entrepreneurship Around the World
Societies need entrepreneurs. While entrepreneurs think the
environment is worse than 2009, intentions to launch a business have
not declined.
 People are afraid of losing their jobs and are considering
entrepreneurship
 Potential entrepreneurs may be more optimistic about their own
ability
 Potential entrepreneurs may be delaying their launch
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
© BSH Stock/Image Source

20. 7
Looking Back
• Why do entrepreneurs launch small businesses?
• What is the typical entrepreneurial mindset and characteristics?
• What are funding options for small business?
• What are the opportunities and threats facing small businesses?
• What are ways to become a business owner and facilitate success?
• What is the size, scope and economic contribution of small business?
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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