Chapter Managing Small Business Start-Ups © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part What Is Entrepreneurship?    The process of initiating a business venture Organizing necessary resources: risk/reward An entrepreneur engages in entrepreneurship Recognizes a valuable idea Assumes financial and legal risks Receives the business’s profits  Successful entrepreneurs have many different motivations © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 6.1 Five Types of Small Business Owners © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Entrepreneurship Internationally  Global entrepreneurship has experienced a tremendous boost due to Advances in technology Rapid expansion of the middle class The rise of female entrepreneurs © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 6.2 Global Entrepreneurship by Gender © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Entrepreneurship and Small Business Today  Vital, dynamic, crucial aspects of the U.S economy  Entrepreneurial companies are engines for job creation and innovation  Entrepreneurship is booming around the world Represent 67% of jobs created during the latest recession Employs 55% of private-sector jobs Represent 99% of all firms © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Who Are Entrepreneurs?  Immigrants often start businesses  Women are embracing entrepreneurship  Minorities show a high rate of entrepreneurship © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 6.3 Racial and Ethnic Composition of Small Business Owners © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 6.4 Gender Composition of Small Business Owners © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Personality Traits  High importance on being free to achieve  Want to maximize their important traits:  Autonomy  High Energy  Need to Achieve  Self-Confidence  Internal Locus of Control  Entrepreneurial Struggle  Tolerance for Ambiguity  Power and Influence 10 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 6.5 Characteristics of Entrepreneurs 11 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Social Entrepreneurship Combines the creativity, business smarts, passion, and hard work of the traditional entrepreneur with a social mission to change the world for the better 12 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Launching an Entrepreneurial Start-Up 13 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 6.6 Sources of Entrepreneurial Motivation and New Business Ideas 14 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Writing a Business Plan Clear, compelling vision Realistic financial projections Profile target market Profile the industry and competition Provide an effective management team Well written and formatted Keep it short Highlight critical risks Spell out the sources of funding 10 Capture attention with a great summary 15 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Choosing a Legal Structure  Sole proprietorship – unincorporated business owned by an individual for profit Unlimited liability  Partnership – an unincorporated business owned by two or more people  Corporation – an artificial entity created by the state and existing apart from its owners Possible disagreements Unlimited liability Expensive and complex paperwork 16 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Arranging Financing  Debt Financing, money that must be repaid:  Equity Financing, money invested by owners or those purchasing stock Family and friends Bank loans/Finance companies Personal credit cards Wealthy individuals Angel financing Venture capital firms 17 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 6.7 Sources of Start-up Capital for Entrepreneurs 18 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Tactics for Becoming a Business Owner  Start a new business  Buy an existing business  Buy a franchise  Participate in a business incubator • Franchising is an arrangement to purchase the right to distribute the product or service with the help of the owner • Business incubators provide resources to entrepreneurs such as office space, support services, and management and legal advice 19 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 6.8 Some of Today’s Fastest- Growing Franchises 20 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Starting an Online or Mobile Business  The Internet is aiding in the launch of new businesses and new ventures  Starting an online business: Find a market niche Create a professional Web site Choose a domain name Know when to pivot change strategic directions Use social media 21 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part [...]... website, in whole or in part Writing a Business Plan 1 Clear, compelling vision 2 Realistic financial projections 3 Profile target market 4 Profile the industry and competition 5 Provide an effective management team 6 Well written and formatted 7 Keep it short 8 Highlight critical risks 9 Spell out the sources of funding 10 Capture attention with a great summary 15 © 2016 Cengage Learning All Rights... an arrangement to purchase the right to distribute the product or service with the help of the owner • Business incubators provide resources to entrepreneurs such as office space, support services, and management and legal advice 19 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 6.8 Some of Today’s ... financial projections Profile target market Profile the industry and competition Provide an effective management team Well written and formatted Keep it short Highlight critical risks Spell out the... Business incubators provide resources to entrepreneurs such as office space, support services, and management and legal advice 19 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied