TMC110 Module 3: Entrepreneurship
Small Business Statistics
-28 million small businesses in America account for 54% of all US sales -provides 55% of all jobs & 66% of all net new jobs since the '70's -600,000+ franchised small businesses in US account for 40% of retail sales& provide jobs for some 8 million people -occupies 30-50% of all commercial space, an estimated 20-34 billion square feet -growing rapidly while corporate America has been downsizing -#of small businesses in US has increased 49% since 82 -since 1990, as big businesses eliminated 4 million jobs, small businesses added 8 million
Small Business
-500 or fewer employeed -7.5 million or less in average annual receipts for many non-maufacturing industries -organized for profit -has a place of business in US -operates primarily within US or makes significant contribution to US economy through payment of taxes or use of US products,materials,or labors -independently owned& operated -not dominant in its field on a national basis
Entrepreneur
-A person who organizes, manages, and takes on the risks of a business. -commonly viewed as an innovator
State Licenses & Permits
-In most states, there are three different categories of licenses& permits that you may need to operate a business. Business Registration Requirements. Some states require all new businesses to register with the state. Sales Tax Permits. Most states and communities require businesses that sell goods, and in some cases services, to collect sales tax and submit the tax to the proper state authorities. Professional and Occupational Licenses and Permits. In all states, there are laws that require people in certain professions to pass a state exam and maintain a professional license to conduct business. Examples includes barbers, nurses, and real estate agents.
Advantages of Small-Business Ownership
-Independence: own boss, make decisions, choose whom to do business with, freedom to control destiny -Financial Gain: removes income restraint from being employee -Control: total control in designs, sales, business operations -Prestige: you are the boss -Equity:opportunity to build equity -Opportunity: creates an opportunity for a person to make a contribution, most help local economy
Market Analysis
-Industry Description &Outlook:description of industry and its current size, growth rate -Information About Target:determine your target market &why they would buy from you -Distinguishing Characteristics: what are critical needs of customers, are they being met, demographics, seasonal trends -Size of Primary Targets: annual purchases for your market, forecast market growth -How Much Market Share Can You Gain -Pricing & Gross Margin Targets -Competitive Analysis -Regulatory Restrictions
Six Main Causes of Small Business Startup Failure
-Lack of Planning -Failure to Delegate -Unwillingness to Change -Forgetting that Cash is King -Lack of Objective Targets -Failure to Ask the Right Questions
Executive Summary for an Established Business
-Mission Statement: explains what a business is all about -Company Information:when the business was formed, names of founders &their roles, #of employees, location -Growth Highlights:examples of company growth -Products/Services: the products or services provided -Financial Info:if seeking finance, include info from current backer& investors -Summarize Future Plans
Disadvantages of Small-Business Ownership
-Time Commitment: little employees, all duties & responsibilities on owner; work more than 80 hours a week; can place a strain -Risk:cannot be eliminated; financial risk, employee disagreements, product liability, ®ulatory requirements -Uncertainty: external factors like economy, competitors, consumer demand can stall business growth -Financial Commitment: requires capital to start a business
More Small Business Statistics
-about 1/3 of employer firms (33.6) in the accommodation &food services were minority owned -among all employer firms in educational services &health care&social assistance sectors, 27% were women owned -about 1/4 (24) of all women-owned employer firms were minority owned and more than half (54) were specifically Asian owned
Traits of an Entrepreneur
-all entrepreneurs have certain traits in common: -Creativity: first step in starting a business -Risk Tolerance: tolerate risk &accept it's part of business, failure is not uncommon among start-up businesses -Flexibility:must be able to respond to changes in market, economy, tech, and so on -Passion:having a driving passion behind their ideas to help them get there
Lifestyle Entrepreneur
-develops a business in order to alter their own lifestyle, not for the sole purpose of money -focused on leading a fulfilling life &cultivating a passion for what they're doing -put their passion before profits
Parts of a Business Plan
-executive summary -company description -market analysis -organization &management -service or product line -marketing & sales -Funding Request -Financial Projections -Appendix
Small Business Job Creation
-first 3 quarters of 2014, added 1.4 million net new jobs -firms with 1-49 employees have contributed the most to job growth -Bureau of Labor Statistics (BLS) reported firms 149 accounted for 39% of net new jobs while ADP (national payroll service) reported 44%
Executive Summary for New Business
-focus on experience &background &decisions that led to the particular enterprise -demonstrate that a market analysis was done -address future plans
Social Entrepreneurs
-individuals who act as agents of change for society -build companies that solve problems, hire people in need, or both
Small Business Innovation
-leading the way in development of "green" tech -small innovative firms are 16 times more productive in terms of patents per employee -small firm green-tech patents are cited 2.5 times as often as large firms
Serial Entrepreneur
-one who continually generates new ideas &starts new businesses, one after the other. -more interested in the initial creative stages of inventing &launching an idea -may give the responsibility to someone else &move on to the next thing
Small Business Opportunities
-past 2 decades a substantial increase in # of small businesses owned by women& minorities -2011-2016, SBA's flagship loan program increased lending to Hispanic American small business owners by 65%, 45% to African American, 44 to Asian American, 33.8 to women, & 12.9 to veteran-owned businesses
8 Steps to Cover Legal Aspect of Hiring
1) Obtain an Employer Identification # (EIN) 2)Set Up Records for Withholding Taxes 3)Employee Eligibility Verification 4)Register with your State's New-Hire Reporting Program 5)Obtain Workers' Compensation Insurance 6)Post Required Notices 7)File Your Taxes 8)Get Organized & Keep Yourself Informed
10 Steps to Plan, Prepare, and Manage a Business
1) Write a Business Plan 2) Get Business Assistance &Training 3) Choose a Business Location 4) Finance Your Business 5)Determine the Legal Structure of Your Business 6)Register a Business Name 7)Get a Tax Identification Number 8) Register for State & Local Taxes 9) Obtain Business Licenses &Permits 10) Understand Employer Responsibilities
Economic Contributions of Small Business
1)Job Creation 2) Innovation 3) Opportunities for individuals to achieve financial success& independence 4)support large business by providing component parts, services, & product distribution
Federal Licenses &Permits
Most businesses do not require a federal license to operate, but some do. Examples of businesses that require federal licenses &/or permits to operate include businesses that sell (or provide) Alcohol, Tobacco, Firearms, Animal (& products) Transport (Import) Across State Lines, Commercial Fisheries, and if you broadcast info via radio, tv, cable