Part 1: Dynamic Role of Small Business

1.1. Starting Your Small BusinessStarting Your Small Business2.2. Family-Owned BusinessesFamily-Owned Businesses3.3. Forms of Ownership of Small Forms of Ownership of Small

BusinessBusiness4.4. Maintaining Good Government Maintaining Good Government

Relations and Business EthicsRelations and Business EthicsCopyright © 2009 McGraw-Hill

Companies, Inc.: BE 322 Ms

Tabinda Zabin

Part I: Chapter 1• Chapter 1 covers material to help you decide

whether pursuing a career in small business is the right course of action for you

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Ms Tabinda Zabin

Chapter 1• Starting Your Small

Business

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Learning Objectives

Define ‘business’ Contributions of small business Current problems small business face Current trends challenging entrepreneurs & small

business Why do people start small business? Characteristics of ‘entrepreneurs’ Opportunities & concerns of small business

Ch

ap

ter

11

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Business classification by size

Under 20 employeesUnder 20 employees Very SmallVery Small

20 - 9920 - 99 SmallSmall

100 – 499100 – 499 MediumMedium

500 Or More500 Or More LargeLarge

Terms in SBA: small business administrationpg. 9

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• Small business (micro business)• Small business owner

– Establishes a business to further personal goals, such as profitability and fame

• Entrepreneur:– Business owner whose goals include achievement,

profit, growth, achieved through innovation and strategic management

• Entrepreneurial venture:– Business owner’s principal objectives are profitability

and growth

Define ‘Small Business’• It is independently owned and operated

and is not dominant in its field of operation.• Independent Management• Capital/Ownership = Few Individuals• Operations are primarily local but market

may have global branches• Business is small compared to its

competitors

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Why interest in Small Business? pg.4-8– Number of small businesses are growing rapidly– 23 million small business in USA– Small firms generate new private employment– Public favors small business– Interest increased at high schools, colleges, and

universities– Trend towards self employment– Entrepreneurship is attractive to all ages– Real world example 1.1, 1.2, 1.3

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Contributions of Small Business pg.9-12

• Encourage innovation & flexibility• Maintain close relationship with customers &

community• Keep larger firms competitive• Provide employees with comprehensive learning

experience• Develop risk takers• Generate new employment• Greater employee job satisfaction• Real world example 1.4, 1.5, 1.6

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Most CommonHome-Based Businesses

Personal Svcs.14%

Bus. Services

27%

Bldg. Trades31%

Financial & Real Estate

5%Sales & Distribution

10%

Arts/ Design Creative

13%

Source: Independent Insurance Agents of America

Current problems facing small businesspg. 12-13

• Recession/Current Economy• Retirement/Transition• Capital/Financing• Unexpected Growth• Succession• Inadequate Financing• Inadequate Management• Government Regulations/Paperwork

Royalty-Free/CORBIS

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Challenges to small businesspg. 14-15

• Exploding technology• Occupational and industry shifts

–Reinvention–Reengineered–Downsizing/Rightsizing

• Global challenges• Real world example 1.7

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Factors Affecting Industry/BusinessTable 1.4 pg. 23

1) Economics2) Technology3) Lifestyle4) Political/Legal5) Demographics Royalty-Free/CORBIS

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Declining Job Types

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Why Start ASmall Business?

72%

10%

10%

8%

Independence

Control

Satisfaction

Other

Why To Not StartA Small Business?

12%23%

22%17%

17%

Long Hours

Taxes

Risk

Responsibility

Other

Small Business Concerns pg. 25Poorly planned growthLoss of independenceThreat of failure

– Discontinuance– Failure

• Formal• Personal/Informal• Failure occurs due to

• Lack of managerial experience & financial backing• Poor location• Unexpected growth• Communication skills

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Job Satisfaction

0%

10%

20%

30%

40%

50%

60%

70%

Self-Employed Working For Others

GreatBritain

U.S.

Objectives ofSmall Business Owners

pg. 15-19

• Achieve independence

• Additional income

• Help families

• Provide products not available elsewhere

• Expertise specialty

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Checklist ForAspiring Entrepreneurs

pg. 15-19

Passion Not Money

Something You Know

PatienceMentorFunding

Cash Manager

Build Sales

Don’t Rush

Wary of bad advice & suppliers/creditors

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Business Objectivespg. 15-19

• Service• Profit• Social• Growth• Mesh objectives (network)

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Characteristics OfSuccessful Owners

pg. 20

+ Desire Independence

+ Strong Sense Of Initiative

+ Personal/Family Motivation

+ Quick/Concrete Results

+ Able To React Quickly

+ Dedicated To Business

+ Enter Business By Chance And/Or Design

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What leads to successful SBM?pg. 21

• Adequate market• Sufficient capital• Recruit effectively• Timely information• Cope with government regulations• Expertise• Flexible• NBIA – Business incubators

– Nurture young firms and help them to survive and grow during the startup period when they are most vulnerable

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Personal Analysis

• Values

• Mental Abilities

• Attitudes

• Real world example 1.7, 1.8, 1.9, 1.10

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Stages in the Development of Business

Figure 1.5 Pg. 25• Stage 1:

– Owner– Hire manager, workers

and delegates

• Stage 2:– Owner-manager– workers

• Stage 3– Owner – managers –

workers– Size increases– Positions open up– Branch extends

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Ideas ForSmall Business

Career Counseling Catering Computer & Office

Machine Repair Day Care Education

Financial Planning Home Health Marketing Senior Fitness &

Recreation Specialized Delivery

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Where Arethe New Jobs?

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Chapter 1 Review

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Ms Tabinda Zabin

Summary page 26-27 Learn key terms page 27 Attempt questions page 28 Case Study 1.1 page. 28 Case Study 1.2 page 29