Chapter six
Download
1 / 17

Chapter Six - PowerPoint PPT Presentation


  • 225 Views
  • Updated On :

Chapter Six Small Business, Entrepreneurship, and Franchises Small Business: Defined A business that is independently owned and operated for profit & not dominant in its field Accounts for 99.7% of all U.S. businesses SBA “smallness” guidelines Manufacturing—a maximum of 500 employees

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Chapter Six' - emily


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Chapter six l.jpg

Chapter Six

Small Business, Entrepreneurship, and Franchises


Small business defined l.jpg
Small Business: Defined

  • A business that is independently owned and operated for profit & not dominant in its field

  • Accounts for 99.7% of all U.S. businesses

  • SBA “smallness” guidelines

    • Manufacturing—a maximum of 500 employees

    • Wholesaling—a maximum of 100 employees

    • Retailing—maximum annual sales of $6.5 million

    • Agriculture—maximum annual sales of $.75 million


The small business sector l.jpg
The Small-Business Sector

  • There are 23 million businesses in the U.S.

  • Only 17,000 employ over 500 workers

  • In the last decade, # of small businesses increased by 49%

  • Part-time entrepreneurs have increase fivefold and account for one-third of all small businesses

  • Small businesses provide over 50% of the jobs in the U.S.

  • Over 70% of new business fail within their first 5 years

WHY???


Why small businesses fail l.jpg
Why Small Businesses Fail

  • Lack of capital

  • Cash-flow problems

  • Lack of management skills

  • Overexpansion


Developing a business plan l.jpg
Developing a Business Plan

  • A carefully constructed guide for the person starting a business

    -Accuracy and realistic expectations are crucial

    Need to include:

    Description of the goods or services to be offered

    Detailed estimate of potential customers

    Current competitors

    Facilities and labor force needed

    Financing and cash flow required

    Marketing strategy

    Exit Strategy-go public, sell out, dissolve


The small business administration l.jpg
The Small Business Administration

A governmental agency that assists, counsels, and protects the interests of small business in the U.S

  • Types of SBA management assistance

    • Management courses and workshops

    • Service Core of Retired Executives (SCORE)

    • SBA publications


Importance of small business to economy l.jpg
Importance of Small Business to Economy

1) Providing employment

  • hire a larger proportion of younger workers, older workers, women, and part-time workers

  • provide 67% of workers with their first job and initial job skills

  • provide 2/3 of the new jobs added to the economy


Importance of small business l.jpg
Importance of Small Business

2) Providing technological innovation

  • Innovation among small-business workers is higher than among workers in big business

  • More than half of the major technological advances of the 20th century originated with individual inventors and small businesses


Importance of small business to economy9 l.jpg
Importance of Small Business to Economy

3) Providing competition

  • Satisfy niche markets, forcing larger firms to become more responsive to customer needs

    4) Filling needs of society & other businesses

  • meet the special needs of smaller customers

  • act as specialized suppliers of goods and services to larger businesses


The pro and cons of smallness l.jpg

ADVANTAGES

Personal relationships with customers and employees

Ability to adapt to change

Independence

Keeping all profits

Ease and low cost of going into business

Keeping business information secret

DISADVANTAGES

Risk of failure

Limited potential

Limited ability to raise capital

The Pro and Cons of Smallness


Franchising l.jpg
Franchising

  • Franchise

    • A license to operate an individually owned business as though it were part of a chain of outlets or stores

  • Franchisor

    • An individual or organization granting the franchise (Avon Corp)

  • Franchisee

    • A person or organization purchasing a franchise (Avon lady in your neighborhood)


Types of franchises l.jpg
Types of Franchises

  • Product and trade name-

  • Dealer sells product provided by the franchisor, but can use any sales tactics he chooses ex-Michelin Tires

  • Business Format-

  • Dealer must sell the product in the exact way the franchisor prescribes ex-Mc Donalds


Entrepreneur s top ten franchises in 2006 l.jpg
Entrepreneur’s Top Ten Franchises in 2006

  • Subway

  • Quiznos Sub

  • Curves

  • UPS Store, The

  • Jackson Hewitt Tax Service

  • Dunkin' Donuts

  • Jani-King

  • RE/MAX Int'l. Inc.

  • 7-Eleven Inc.

  • Liberty Tax Service

    For updates: www.franchise500.com


Advantages of franchising l.jpg

TO THE FRANCHISOR

Fast and well controlled distribution of its products

No need to construct and operate its own outlets

More working capital available for expanded production and advertising

Franchising agreements maintain product and quality standards

Motivated work force of franchisees because they see themselves as owners

Advantages of Franchising


Advantages of franchising15 l.jpg
Advantages of Franchising

TO THE FRANCHISEE

  • Opportunity to start a proven business with limited capital

  • Guaranteed customers

  • Franchisor available for advice and guidance

  • Materials for local promotional campaigns and participation in national campaigns

  • Cost savings when purchasing supplies in cooperation with other franchisees


Disadvantages of franchising l.jpg

TO THE FRANCHISOR

Failure of the franchisee to operate franchise as agreed

Disputes with franchisees over the terms of the franchise (flat or % royalty, sphere of influence)

Disadvantages of Franchising


Disadvantages of franchising17 l.jpg
Disadvantages of Franchising

TO THE FRANCHISEE

  • Franchisor retains a large amount of control over the franchisee’s activities

  • Franchisor or other franchisees opening competing outlets within the franchisee’s market


ad