Part 2 Chapter 5 Starting and Growing a

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Part 2 Chapter 5 Starting and Growing a Business © 2016 by Mc. Graw-Hill

Part 2 Chapter 5 Starting and Growing a Business © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

CHAPTER 4 Options for Organizing Business CHAPTER 5 Small Business, Entrepreneurship, and Franchising ©

CHAPTER 4 Options for Organizing Business CHAPTER 5 Small Business, Entrepreneurship, and Franchising © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 2

Learning Objectives LO 5 -1 Define entrepreneurship and small business. LO 5 -2 Investigate

Learning Objectives LO 5 -1 Define entrepreneurship and small business. LO 5 -2 Investigate the importance of small business in the U. S. economy and why certain fields attract small business. LO 5 -3 Specify the advantages of small-business ownership. LO 5 -4 Summarize the disadvantages of small-business ownership, and analyze why many small businesses fail. LO 5 -5 Describe how you go about starting a small business and what resources are needed. LO 5 -6 Evaluate the demographic, technological, and economic trends that are affecting the future of small business. LO 5 -7 Explain why many large businesses are trying to “think small”. LO 5 -8 Assess two entrepreneurs’ plans for starting a small business. © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 3

The Nature of Entrepreneurship • Entrepreneurship – The process of creating and managing a

The Nature of Entrepreneurship • Entrepreneurship – The process of creating and managing a business to achieve desired objectives Ø Entrepreneurship movement is accelerating, and many new small businesses are emerging Ø Technology is now easier to obtain by a small business § Websites, podcasts, online videos, social media, cellular phones, and expedited delivery services Ø Growing trend among small businesses is social entrepreneurship § Social entrepreneurs are individuals who use entrepreneurship to address social problems © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 4

Great Entrepreneurs of Innovative Companies Company Entrepreneur Hewlett-Packard Bill, Hewlett, David Packard Walt Disney

Great Entrepreneurs of Innovative Companies Company Entrepreneur Hewlett-Packard Bill, Hewlett, David Packard Walt Disney Productions Walt Disney Starbucks Howard Schultz Amazon. com Jeff Bezos Dell Michael Dell Microsoft Bill Gates Apple Steve Jobs Walmart Sam Walton Google Larry Page, Sergey Brin Ben & Jerry’s Ben Cohen, Jerry Greenfield Ford Henry Ford General Electric Thomas Edison © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

What Is a Small Business? • Small Business – Any independently owned and operated

What Is a Small Business? • Small Business – Any independently owned and operated business that is not dominant in its competitive area Ø “Smallness” is relative Ø Employees less than 500 people • Small Business Administration (SBA) – An independent agency of the federal government that offers managerial and financial assistance to small businesses © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 6

The Role of Small Business in the American Economy (1 of 2) • •

The Role of Small Business in the American Economy (1 of 2) • • • Small firms represent 99. 7% of all employer firms Small firms have generated 63% of net new jobs Small firms hire approximately 37% of high-tech workers (such as scientists, engineers, computer programmers, and others) Small firms produce 16 times more patents per employee than large patenting firms Small firms employ nearly half of all private-sector employees Small firms pay 42% of the total U. S. private payroll © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 7

The Role of Small Business in the American Economy (2 of 2) Firm Size

The Role of Small Business in the American Economy (2 of 2) Firm Size 0 -19 employees Number of Firms Percentage of all Firms 5, 104, 014 89. 8 481, 496 8. 5 100 -499 81, 243 1. 4 500+ 17, 671 0. 3 20 -99 © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 8

Women- and Minority-Owned Businesses • Women-owned Businesses – Responsible for employing 7. 7 million

Women- and Minority-Owned Businesses • Women-owned Businesses – Responsible for employing 7. 7 million workers – Contribute $1. 3 trillion in sales – Women own more than 8 million businesses nationwide • Minority-owned Businesses – Growing faster than other classifiable firms – Represent 21. 3% of all small businesses © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 9

Innovation » Small firms make up 52% of home-based businesses and 2% of franchises

Innovation » Small firms make up 52% of home-based businesses and 2% of franchises » Entrepreneurs provide fresh ideas and usually have greater flexibility to change than large firms » Jeffrey Lubell founded premium apparel True Religion in 2002. It has gone on to be listed among Forbes’ best publicly-traded small companies in America. © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 10

Uni. Key One of the most significant strengths of small businesses is ability to

Uni. Key One of the most significant strengths of small businesses is ability to innovate & bring significant benefits to customers v Founder and CEO of the small firm Uni. Key, Phil Dumas, invented a way for consumers to keep doors locked v Dumas invented Kevo, a motorized deadbolt lock that links to users’ i. Phones § With just a touch of a finger, consumers can lock and unlock their doors from remote locations v Uni. Key distributes products in major retailers v Just one example of a small company with the ability to innovate and contribute to the benefit of customers © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 11

Found in Nearly Every Industry • Small businesses are found in nearly every industry,

Found in Nearly Every Industry • Small businesses are found in nearly every industry, but these are some of the most attractive: ü ü Retailing and wholesaling Services Manufacturing High Technology • Relatively easy to enter and require low initial financing © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 12

Industries that Attract Small Business (1 of 2) • Retailing and Wholesaling – Retailers

Industries that Attract Small Business (1 of 2) • Retailing and Wholesaling – Retailers acquire goods from producers or wholesalers and sell them to consumers • Services – Service sector includes businesses that do not actually produce tangible goods (80% of U. S. jobs) © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 13

Industries that Attract Small Business (2 of 2) • Manufacturing – Manufacturing goods can

Industries that Attract Small Business (2 of 2) • Manufacturing – Manufacturing goods can provide unique opportunities for small businesses (like customizing products for customers) • High Technology – High technology describes businesses that depend heavily on advanced scientific and engineering knowledge © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 14

Types of Stores that Attract Small Businesses • Retailing and wholesaling stores – –

Types of Stores that Attract Small Businesses • Retailing and wholesaling stores – – Music stores Sporting goods stores Drugstores Restaurants • Service sector businesses – Bank – Barbershop – Real estate © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Small-Business Ownership ü Advantages • Independence • Costs • Flexibility • Focus Reputation ü

Small-Business Ownership ü Advantages • Independence • Costs • Flexibility • Focus Reputation ü Disadvantages • High stress level • High failure rate • Undercapitalization • Managerial inexperience or incompetence • Inability to cope with growth © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 16

Ten Successful Traits of Young Entrepreneurs 1. 2. 3. 4. 5. Intuitive Creative Productive

Ten Successful Traits of Young Entrepreneurs 1. 2. 3. 4. 5. Intuitive Creative Productive Patient Charismatic 6. Persistent 7. Innovative 8. Frugal 9. Friendly 10. Fearless © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Advantages of Independence • Independence – To do better for themselves than they could

Advantages of Independence • Independence – To do better for themselves than they could do by remaining with their current employer or by changing jobs – To choose whom they work with, the flexibility of where/when to work, and the option to work in a family setting © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 18

Advantages of Costs • Costs – Spend less money on wages/salaries, rent, utilities, etc.

Advantages of Costs • Costs – Spend less money on wages/salaries, rent, utilities, etc. – Use external firms to handle accounting, advertising, and legal counseling – Friends and family volunteer time to work on projects © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 19

Flexibility, Focus, and Reputation Advantages • Flexibility – Small size allows flexibility to adapt

Flexibility, Focus, and Reputation Advantages • Flexibility – Small size allows flexibility to adapt to changing market demands – Usually one layer of management (the owner) so decisions can be made and executed quickly • Focus – Focus efforts on a precisely defined market niche (a specific group of custom • Reputation – Because of their capacity to focus on narrow niches, can develop enviable reputations for quality and service © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 20

Hampton Creek • Hampton Creek, in San Francisco, focuses on using technology to produce

Hampton Creek • Hampton Creek, in San Francisco, focuses on using technology to produce sustainable protein products Ø Developed a new type of egg substitute made from plant materials ♦ Concept is likely to attract vegetarians and consumers concerned with sustainability Ø Founder and CEO Josh Tetrick has bigger plans ♦ ♦ Concept is not to focus solely on a niche industry Believes the solutions discovered at Hampton Creek will eventually help solve food shortages through alternatives that do not place a strain on the environment © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

High Stress Level ü Disadvantages • • Likely to provide a living for its

High Stress Level ü Disadvantages • • Likely to provide a living for its owner, but not much more Ongoing worries about competition, employee problems, new equipment, expanding inventory, rent increases, or changing market demand Small-business person is often the owner, manager, sales force, shipping and receiving clerk, bookkeeping, and custodian Multitasking can result in long hours for most owners © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 22

High Failure Rate Half of all small businesses fail within five years ü Disadvantages

High Failure Rate Half of all small businesses fail within five years ü Disadvantages • • • Undercapitalization • • The lack of funds to operate a business normally Too many entrepreneurs think that all they need is the money to get started Managerial inexperience or incompetence • Just because an entrepreneur has a brilliant vision, it does not mean he or she has the knowledge or experience to manage Inability to cope with growth • Growth requires the owner to give up an amount of direct authority © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 23

Starting a Business q Start with a concept or general idea q Create a

Starting a Business q Start with a concept or general idea q Create a business plan q Devise a strategy for planning & development q Make decisions v Form of ownership v Financing v Acquire existing business or start new v Buy a franchise © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

The Business Plan • A precise statement of the business rationale and a step-by-step

The Business Plan • A precise statement of the business rationale and a step-by-step explanation of how it will achieve its goals ü Acts as a guide and reference document ü Explanation of the business ü Analysis of competition ü Income/expense estimates ü Establish strategy for acquiring sufficient funds to keep the business going ü Revised periodically to ensure the firm’s goals and strategies adapt to changes in the environment © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 25

Forms of Business Ownership • After developing a business plan, the entrepreneur has to

Forms of Business Ownership • After developing a business plan, the entrepreneur has to decide on an appropriate legal form of business ownership v Sole Proprietorship v Partnership v Corporation © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 26

Financial Resources Ø Often, the small-business owner has to put up a significant percentage

Financial Resources Ø Often, the small-business owner has to put up a significant percentage of the necessary capital v Cash money v Obtain capital Ø Financing options: v Equity financing v Debt Financing © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 27

Equity Financing v Referred to as equity financing because the owner uses real personal

Equity Financing v Referred to as equity financing because the owner uses real personal assets rather than borrowing funds from outside sources to get started in a new business v Can also obtain equity financing by finding investors for their operations and selling stock in the business to family members, friends, employees or other investors © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 28

Venture Capitalists • Persons or organizations that agree to provide some funds for a

Venture Capitalists • Persons or organizations that agree to provide some funds for a new business in exchange for an ownership interest or stock v Venture capitalists hope to purchase the stock of a small business at a low price and then sell the stock for a profit after the business has grown successful v Although this form of equity financing has helped many small businesses, they require that the small-business owner share the profits of the business (and sometimes the control, as well) with the investors © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 29

Venture Capitalists • Venture Capitalists – Usually experienced and successful business people and investors

Venture Capitalists • Venture Capitalists – Usually experienced and successful business people and investors who find businesses in which to invest • Certain standards a startup has to meet before they will be considered for investment • If a startup does not have any real evidence of success, VCs will be reluctant to invest because of the high level of risk © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 30

Angel Investors • Angel Investors – Affluent people who invest their own money and

Angel Investors • Angel Investors – Affluent people who invest their own money and may or may not have business or investing experience • Tend to judge a startup less harshly than a VC, and may be prone to invest because they believe in the business © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 31

Debt Financing (1 of 3) • New businesses sometimes borrow more than half of

Debt Financing (1 of 3) • New businesses sometimes borrow more than half of their financial resources $ $ Banks are the main suppliers of external financing $ Look to family and friends as sources for long-term loans or other assets for an ownership interest in the business Federal level: the Small Business Administration (SBA) offers financial assistance to qualifying business • State the agreement clearly in writing before money changes hands © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Debt Financing (2 of 3) v Collateral ü A financial interest in the property

Debt Financing (2 of 3) v Collateral ü A financial interest in the property or fixtures of the business, to guarantee payment of the debt v Mortgage ü May have to provide personal property as collateral, if the business fails then they may eventually claim/sell the collateral v Line of Credit ü An agreement by which a financial institution promises to lend a business a predetermined sum on demand © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 33

Debt Financing (3 of 3) v Trade Credit ü Suppliers allow the business to

Debt Financing (3 of 3) v Trade Credit ü Suppliers allow the business to take possession of the needed goods and services and pay for them at a later date/installments v Bartering ü Trading their own products for the goods and services offered by other businesses © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 34

Starting from Scratch vs. Buying an Existing Business § Starting from scratch can be

Starting from Scratch vs. Buying an Existing Business § Starting from scratch can be expensive and requires promotional efforts to familiarize customers with the business § Existing businesses have the advantage of a built-in network of customers, suppliers, and distributors v Reduces some of the guesswork inherent in starting a new business v Entrepreneur who buys an existing business also takes on any problems the business already has © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 35

Franchising ü Franchise • A license to sell another’s products or to use another’s

Franchising ü Franchise • A license to sell another’s products or to use another’s name in business, or both ü Franchiser • The company that sells a franchise ü Franchisee • The purchaser of a franchise © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 36

Advantages of Franchises ü Advantages • • • Training and support Brand name appeal

Advantages of Franchises ü Advantages • • • Training and support Brand name appeal Standardized quality of goods & services National/local advertising Financial assistance Proven products/format Centralized buying power Site selection & territorial protection Greater chance for success © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 37

Disadvantages of Franchises ü Disadvantages • • • Fees and profit sharing Standardized operations

Disadvantages of Franchises ü Disadvantages • • • Fees and profit sharing Standardized operations Restrictions on purchasing Limited product line Possible market saturation Less freedom in decisions © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 38

Top Ten Fastest Growing Franchises 1. Subway 2. Jan-Pro Franchising Int’l Inc. 3. 7

Top Ten Fastest Growing Franchises 1. Subway 2. Jan-Pro Franchising Int’l Inc. 3. 7 -Eleven Inc. 4. Vanguard Cleaning Systems 5. Liberty Tax Service 6. Chester’s 7. Jazzercise Inc. 8. Jimmy John’s Gourmet Sandwiches 9. Dunkin’ Donuts 10. Anago Cleaning Systems © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Top Ten Hottest New Franchises 1. Kona Ice 2. Menchie’s 3. Orange Leaf Frozen

Top Ten Hottest New Franchises 1. Kona Ice 2. Menchie’s 3. Orange Leaf Frozen Yogurt 4. Shelf. Genie Franchise Systems LLC 5. Bricks 4 Kidz 6. Smashburger Franchising LLC 7. Game Truck Licensing LLC 8. Paul Davis Emergency Services 9. Signal 88 Security 10. Mac Tools © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Help for Small-Business Managers ☼ Organizations and programs exist to help smallbusiness managers o

Help for Small-Business Managers ☼ Organizations and programs exist to help smallbusiness managers o o National publications such as Inc. and Entrepreneur Small Business Administration (SBA) • • • o o o Small Business Development Centers (SBDCs) Service Corps of Retired Executives (SCORE) Active Corps of Executives (ACEs) Small Business Institutions (SBIs) U. S. and Local Departments of Commerce Other small businesses © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Demographic Trends Baby boomer generation represents 26% of Americans § § Wealthy, but many

Demographic Trends Baby boomer generation represents 26% of Americans § § Wealthy, but many small businesses do not actively pursue it Travel, financial planning, and health care will continue to grow as boomers age Millennials/Generation X number around 75 million and are not solely concerned about money § Concerned with advancement, recognition, improved capabilities, and need direct, timely feedback © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

An Untapped Market for Small Businesses » » Another growing trend is the growing

An Untapped Market for Small Businesses » » Another growing trend is the growing number of immigrants living in the U. S. and provides another untapped market for small businesses The Latino population is the biggest and fastest growing minority segment in the United States—and a lucrative market for businesses looking for ways to meet the segment’s many needs © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 43

Technological and Economic Trends ü ü Internet usage continues to provide new opportunities Increase

Technological and Economic Trends ü ü Internet usage continues to provide new opportunities Increase in service exports § ü Economic turbulence provides both opportunities and threats § ü Creates new opportunities to expand operations abroad Can react quickly to change and can stay close to their customers Deregulation of the energy market & alternative fuels § Worldwide energy markets are valued in the hundreds of billions of dollars © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Imgur Photo-Sharing Ø Imgur is a photo-sharing hub filled with trivial and humorous photos

Imgur Photo-Sharing Ø Imgur is a photo-sharing hub filled with trivial and humorous photos (company only has 11 employees) v v Popular as a meme site v It charges users of the site $24/year if they want features like unlimited data storage Company generates income by posting display advertisements from movie studios and videogame publishers § v v Users do not have to register to show approval or disapproval of a photo Users upload 1. 5 million images every day Becoming one of the most visited sites in the world © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Making Big Businesses Act “Small” • Continuing success and competitiveness of small businesses through

Making Big Businesses Act “Small” • Continuing success and competitiveness of small businesses through rapidly changing conditions in the business world have led many large corporations to take a closer look at what makes their smaller rivals tick v Large firms emulate smaller ones to improve bottom line v Downsizing (rightsizing) – To reduce management layers, corporate staff, and work tasks to make the firm more flexible, resourceful, and innovative v Intrapreneurs - Individuals in large firms who take responsibility for the development of innovations within the organizations © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 46

Solve the Dilemma (1 of 3) The Small-Business Challenge • Jack Gray and his

Solve the Dilemma (1 of 3) The Small-Business Challenge • Jack Gray and his best friend, Bruce Mc. Vay, decided to start their own small business ♦ Jack had developed recipes for fat-free and low-fat cookies and muffins to satisfy his personal health needs ♦ Bruce had extensive experience in managing food-service establishments ► They knew that a startup company needs a quality product, adequate funds, a written business plan, some outside financial support, and a good promotion program ► Each had $35, 000 to invest and with their homes and other resources, they had borrowing power of an additional $125, 000 © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 47

Solve the Dilemma (2 of 3) The Small-Business Challenge ü Remaining Decisions – What

Solve the Dilemma (2 of 3) The Small-Business Challenge ü Remaining Decisions – What form of organization to use – How to market their product – How to determine exactly what products to sell • Just cookies and muffins or additional products © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 48

Solve the Dilemma (3 of 3) The Small-Business Challenge ü Discussion Questions • Evaluate

Solve the Dilemma (3 of 3) The Small-Business Challenge ü Discussion Questions • Evaluate the idea of a low-fat cookie and muffin retail store. • Are there any concerns in connection with starting a small business that Jack and Bruce have not considered? • What advice would you give Jack and Bruce as they start up their business? © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 49

Discussion ? ? What demographic, technological, and economic trends are influencing the future of

Discussion ? ? What demographic, technological, and economic trends are influencing the future of small businesses? Why do large corporations want to become more like small businesses? What are the advantages of starting a small business? The disadvantages? What types of financing do small entrepreneurs typically use? What are some of the pros and cons of each? © 2016 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.