View
218
Download
4
Category
Preview:
Citation preview
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 1
Small Business, Small Business, EntrepreneurshipEntrepreneurship, and , and
FranchisesFranchises
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 2
The Small BusinessThe Small Business
• Independently owned and operated
• Not dominant in its field
• Relatively small annual sales
• Fewer than 500 employees
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 3
Economic Roles of Small Economic Roles of Small BusinessBusiness
• Provide jobs
• Introduce new products
• Service large corporations
• Engage in specialization
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 4
Types of Small BusinessTypes of Small Business
LifestyleLifestyle High-GrowthHigh-Growth
•Run by IndividualsRun by Individuals
•Limited Products/ServicesLimited Products/Services
•Limited ResourcesLimited Resources
•Limited MarketplaceLimited Marketplace
•Run by TeamsRun by Teams
•Multiple Products/ServicesMultiple Products/Services
•Investment CapitalInvestment Capital
•Large MarketplaceLarge Marketplace
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 5
How Entrepreneurs Spend Their How Entrepreneurs Spend Their TimeTime
• Dealing with employees
• Keeping records
• Direct selling
• Production
• Maintenance
• Dealing with suppliers
• Arranging financial matters
• Planning growth and change
• Other services
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 6
Traits of EntrepreneursTraits of Entrepreneurs
• Highly disciplined
• Like to control their destiny
• Listen to their intuition
• Relate well with others
• Eager to acquire new skills
• Learn from their mistakes
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 7
Characteristics of Characteristics of EntrepreneursEntrepreneurs
• Stay abreast of market changes
• Willing to exploit new opportunities
• Seldom follow trends
• Driven by ambition
• Think positively
• Prefer risk taking over security
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 8
Factors Contributing to Factors Contributing to Small Business GrowthSmall Business Growth
• Technology and the Internet
• Women and minorities
• Downsizing and outsourcing
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 9
Women Starting Women Starting BusinessesBusinesses
• Entrepreneurial idea• Glass ceiling• Bored in job• Downsized• Fell into it• Family event• Born entrepreneur• Reenter workforce
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 10
Starting a Small Starting a Small
BusinessBusiness• Starting a new business
• Buying an existing business
• Obtaining a franchise
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 11
Starting a New BusinessStarting a New Business
+ Control your destiny
+ Reach your potential
+ Unlimited profits
+ Recognition
+ Doing what you enjoy
– Uncertainty of income
– Risk of loss
– Long hours & hard work
– Complete responsibility
– High stress levels
Advantages Disadvantages
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 12
Buying an Existing Buying an Existing BusinessBusiness
+ Customer base
+ Business systems
+ Product or service
+ Location
+ Financing
– Alienated customers
– Obsolescence
– Location
– Personality clashes
– Outstanding receivables
Advantages Disadvantages
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 13
The Franchise The Franchise AlternativeAlternative
• Franchisee
• Franchisor
• Types of franchises
–Product
–Manufacturing
–Business-format
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 14
The Pros and Cons of The Pros and Cons of FranchisingFranchising
Advantages
Get a viable business
Instant name recognition
Built in support group
Marketing & advertising
Disadvantages
No guarantee of success
Expensive to obtain
High monthly royalties
Limited independence
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 15
How to Evaluate a How to Evaluate a FranchiseFranchise
• What does the initial franchise fee cover?
• How are periodic royalties calculated and when are
they paid?
• Are all trademarks and names legally protected?
• Who provides and pays for advertising and
promotion?
• Who selects the location of the business?
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 16
How to Evaluate a How to Evaluate a FranchiseFranchise
• Is the franchise assigned an exclusive territory?
• Does the franchisee have the right of first refusal on
additional nearby franchises?
• Is the franchisee required to purchase equipment
and supplies from the franchisor?
• How can the franchise agreement be terminated?
• Can the franchise be assigned to heirs?
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 17
Importance Importance of a Business Planof a Business Plan
• Guides company operations
• Outlines a strategy
• Attracts lenders and investors
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 18
A Formal Business PlanA Formal Business Plan
• Summary
• Mission and objectives
• Company and industry
• Products or services
• Market and competition
• Management
• Marketing strategy
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 19
A Formal Business PlanA Formal Business Plan
• Design and development plans
• Operations plan
• Overall schedule
• Critical risks and problems
• Financial forecasts and requirements
• Exit strategy
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 20
Why New Businesses FailWhy New Businesses Fail
•Management IncompetenceManagement Incompetence
•Lack of Industry ExperienceLack of Industry Experience
•Inadequate FinancingInadequate Financing
•Poor Business PlanningPoor Business Planning
•Unworkable GoalsUnworkable Goals
•Diminished Customer BaseDiminished Customer Base
•Uncontrolled GrowthUncontrolled Growth
•Inappropriate LocationInappropriate Location
•Poor System of ControlsPoor System of Controls
•Lack of Entrepreneurial SkillsLack of Entrepreneurial Skills
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 5 - 21
Sources of Small Sources of Small Business AssistanceBusiness Assistance
• SCORE
• Incubators
• The Internet
• Small Business Administration
Recommended