Chapter 7: SMALL BUSINESS AND ENTREPRENEURSHIP Economic Rocket Fuel
LAUNCHING NEW VENTURES: WHAT’S IN IT FOR ME? • Greater Financial Success • Independence • Flexibility • Challenge • Survival
ENTREPRENEURS Entrepreneurs – People who risk their time, money, and other resources to start and manage a business.
THE ENTREPRENEUR: A DISTINCTIVE PROFILE Vision Energy Tolerance of uncertainty Self Reliance Confidence Tolerance of Failure
Opportunities: Market Niches Personal Customer Service Lower Overhead Costs Technology BIG OPPORTUNITIES FOR SMALL BUSINESS
THREATS FOR SMALL BUSINESS • Threats: • High Risk of Failure • Lack of Knowledge and Experience • Too Little Money • Bigger Regulatory Burden
FAILING WITH STYLE • Walt Disney was fired from an ad agency for a “singular lack of drawing ability.” • Ray Kroc, McDonald’s founder, failed at real estate, he didn’t discover the McDonald brothers’ hamburger stand until he was 52 years old. • Steve Jobs, founder of Apple computer, was dumped by his board of directors, but returned a decade later to launch the iMac and the iPod. Your failure may be your first step to the next big thing.
START UP/LAUNCH OPTIONS Starting from scratch Buying an established business Buying a franchise
TOOLS FOR BUSINESS SUCCESS • Gain Experience • Learn from Others • Educate Yourself • Access Resources • Develop a Business Plan
BUSINESS PLANS: THE ROADMAP • Executive Summary • Description of Business • Competitive and Industry Research • Marketing Strategies • Operating Procedures • Personnel • Financial Projections
FINDING THE MONEY: FUNDING OPTIONS • Personal Resources • Loans • Angel Investors • Venture Capital
SMALL BUSINESS AND THE ECONOMY: AN OUTSIZED IMPACT • Creating New Jobs • Fueling Innovation • Creating Opportunities for Women
ECONOMIC IMPACT Just 9.8% of the world’s entrepreneurs expect to create almost 75% of the jobs generated by new business ventures in the next five years. Source: Global Entrepreneurship Monitor, special report, 2005.
SOMETIMES LESS IS MORE Eric Truran, founder of a small New England manufacturing firm and retail store, eventually closed his retail store to focus strictly on online and telephone sales. • His income dropped by about 50%, but his free time more than quadrupled. • He went from working 80 to 90 hours a week to working 15 to 20 hours a week. • He uses his free time to pursue other passions, such as playing guitar with his two bands.
THE ENTREPRENEURIAL SPIRIT Intrapreneurs - are innovative workers who focus on launching new products and generating new profit streams for the company that employs them.
THE ENTREPRENEURIAL SPIRIT Minipreneurs – individuals launching super small scale enterprises. Include microbusiness, freelancers, side businesses, weekend entrepreneurs, hobbypreneurs, Web-driven entrepreneurs, free agents and more..
THE ENTREPRENEURIAL SPIRIT • Mompreneurs – • Mothers (or Fathers) who start home-based businesses, often motivated by the wish or need to remain home with their children. • Sometimes these businesses become successful enough to employ other family members.
ENTREPRENEURSHIP, A WORLD OF DIFFERENCE • Entrepreneurship has an economic impact in countries around the world • Three key factors drive entrepreneurship globally: • Economic Welfare and Opportunity Costs • Cultural Environment and Population Demographics • Institutional Characteristics and the Political Environment