Entrepreneurship Starting and Managing Your Own Business Chapter

Entrepreneurship: Starting and Managing Your Own Business Chapter 6

Chapter Overview 1. Characteristics of Successful Entrepreneurs 2. Small Business 3. Starting Your Own Business 4. Managing A Small Business 5. Trends in Entrepreneurship and Small Business

Entrepreneur: person with vision, drive, and creativity willing to take the risk of starting a new business or of greatly changing the scope and direction of an existing firm

Types of Entrepreneurs 1. Classic entrepreneurs people who start their own companies based on innovative ideas 2. Multipreneurs people who start a series of companies 3. Intrapreneurs people who apply vision and risk taking within a large organization

Application of Intrapreneurship as a management strategy • to encourage managers to invest more in, and take ownership of, their work • by giving intrapreneurs 2 types of profitshare: – personal reward – apply toward improving their departments Source: Entrepreneur, Jan. 2000, p. 116

Characteristics of Successful Entrepreneurs 1. Personality ambitious, independent, self-confident, risk-taking, visionary, creative, energetic, passionate, committed 2. Managerial Ability 3. Technical Knowledge

Small Business: business that is independently owned by an individual or small group of investors, locally based, and nondominant in its industry

Advantages of Small Business 1. Greater flexibility 2. More efficient operation 3. Greater ability to serve specialized markets 4. More personal service

Disadvantages of Small Business 1. High need for managerial skill 2. Difficulty fund-raising 3. Burdensome government regulations 4. Extreme personal commitment from owner

Signs of Overworking • Unable to reduce amount of time working • Forgetfulness • Unable to delegate work to others • Decreased ability to laugh • Weight change • People comment on working too hard • Physical complaints Source: American Express Small Business Exchange, home 3. americanexpress. com/smallbusiness

Help for Small Businesses Small Business Administration: Government agency that helps people start and manage small businesses 1. Financial Assistance – Small Business Investment Companies 2. Management Advice – Business Development Library – Volunteer consulting groups

Starting Your Own Business 1. Self-assessment 2. Choose to buy a small business or start from scratch 3. Find a business idea 4. Choose a business organization 5. Develop a Business Plan 6. Finance the business

Contents of a Business Plan 1. Title Page & Table of Contents 3. Executive Summary 4. Vision and Mission Statement 5. Company Overview 6. Detailed Plans for: Products and/or Services, Marketing, Management, Operating, and Financing 7. Appendix of Supporting Documents

Tips for a Good Executive Summary • Write it after the rest of the business plan • Polish it; get feedback from others • Include: – business idea, financial features, financial requirements, current state of business, principal owners, major achievements • Include: – industry statistics, market research, information that backs up your claims • Keep it brief (1 -3 pages) & interesting Source: American Express Small Business Exchange, home 3. americanexpress. com/smallbusiness

Managing a Small Business Issues 1. Using outside consultants certified public accounting, outsourcing some business functions 2. Hiring and Retaining Employees Jim Day, Chief Executive of Noble Drilling, recognizes the importance of hiring people good for the job, rather than people similar to oneself (Source: Fortune, Sept. 28, 1998, p. 254. ) 3. Operating Internationally increased sales and higher profits

Trends in Entrepreneurship and Small Business Increase in home-based business More younger, female, and minority entrepreneurs More small businesses are started on the Internet - The number of small businesses doing ecommerce increased from 150, 000 in 1997 to 850, 000 in 1999 (Source: International Data Corp. /Entrepreneur, Jan. 2000, p. 46)