© 2012 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 Five

Small Business, Entrepreneurship,

and Franchises

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Learning Objectives

1. Define what a small business is and recognize the fields in which small businesses are concentrated

2. Identify the people who start small businesses and the reasons why some succeed and many fail

3. Assess the contributions of small businesses to our economy

4. Judge the advantages and disadvantages of operating a small business

5. Explain how the Small Business Administration helps small businesses

6. Appraise the concept and types of franchising7. Analyze the growth of franchising and franchising’s

advantages and disadvantages

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Small Business

Be able to define Small Business • What are some of the key statistics regarding

small businesses from the textbook?• What are the advantages and downsides of

owning a small business? Know the Small Business Administration

standards for what is considered a “small” business

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Industries That Attract Small Businesses

Know the key characteristics that make owning a small business attractive

What are the main industries that attract small businesses?• Why are these industries appealing to small

business?

What are the advantages and disadvantages of smallness?

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Entrepreneurs

Define Entrepreneur

• What are the key characteristics and personal factors of most entrepreneurs?

• What motivates entrepreneurs? • How old to entrepreneurs tend to be?• What are the principal reasons why some

entrepreneurs and small businesses fail?• What are the main sources of capital for

entrepreneurs?

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Entrepreneurs (cont’d)

Be able to discuss Women and entrepreneurship• How many small businesses do women own?• How many jobs do women-owned businesses provide

in the U.S.?

What role do Teenagers play in entrepreneurship?• What has helped fuel a boom in teen entrepreneurs?• What pressures do teen businesspeople face? • What skills do young entrepreneurs require?

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The Importance of Small Businesses in Our Economy

Why are small businesses important to the economy?

Be able to discuss the following in relation to small businesses

• Technological innovation• Providing employment• Providing competition• Filling needs of society and other

businesses

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Developing a Business Plan

Define Business Plan

Know the components of a business plan

What are the three basic purposes of a business plan?

What are the questions key stakeholders (like investors and banking officials) might ask about a small business?

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The Small Business Administration

What is the Small Business Administration (SBA)? • What does the SBA do?• What services and organizations does it

offer to help businesses?

How does the SBA provide financial assistance to businesses?• Regular business loans• Small-business investment companies

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The Small Business Administration (cont’d)

Be able to discuss how the most recent economic recession affected small businesses• What were the hardest-hit sectors?

What did the government do to help the struggling economy?• How did government assistance help improve

market conditions?

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Franchising

Define• Franchise• Franchising• Franchisor• Franchisee

Know the different types of franchises

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The Growth of Franchising

Be able to discuss the growth of franchising• Why have franchises expanded?

What are the advantages and disadvantages?• From the perspective of the franchisor• From the perspective of the franchisee

What kind of person is attracted to the idea of owning a franchise?

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Franchising Success and Failure

On average, how successful are franchises?• How does the franchise success rate

compare to small businesses in general?

What can cause a franchise to fail?

What are dual-branded franchises?

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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Global Perspectives in Small Business

Be prepared to discuss small business from a global perspective• How has globalization affected small businesses?

• How have communications and technology changed?

• What role does the Internet play in small businesses?

• How have changes in trade barriers and international legislation affected the international business climate?

• How can the SBA help a business that wants to market overseas?

• In what ways must small businesses adapt when entering the world marketplace?

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