Management Ch. 7

Keeping records

A businessperson who sets up an accounting system early will salve much grief later. A good accountant is invaluable in the record-keeping process.

a small business

A small business is a business that: is independently owned and operated; is not dominant in its field; and meets certain standards of size in terms of employees or annual revenues. 98.2% of businesses in Canada have fewer than 100 employees.

Web-based businesses: affiliate marketing

Affiliate marketing is an Internet-based marketing strategy in which a business rewards individuals or other businesses (affiliates) for each visitor or customer the affiliate sends to its Web site.

Business incubators

Business incubators: centres that provide space, services, advice, and support to assist new and growing businesses to become established and successful. Entrepreneurs and new start-ups can find assistance from incubators. The goal of an incubator is not only to ensure that the small business survives the start-up period, but also to produce confident, successful graduates who will run a productive business in the future.

Managing a small business

The functions of business in a small-business setting: 1. planning your business 2. financing your business 3. knowing your customers (marketing) 4. managing your employees (human resource development) 5. keeping records (accounting). 6. looking for Help

the increase of women entrepreneurs is due to

personal financial need; lack of promotional opportunities in corporation; women had difficulties to return to the workforce; family and personal responsibility; public awareness of women in business; part-time occupations; and a higher rate of success for women.

Getting money to fund a small business

personal savings credit from financial institutions loans from friends and relatives venture capital and angel investors crowdfunding government lending agencies

Small and medium-sized enterprise (SME)

refers to all businesses with fewer than 500 employees.

Entrepreneurial team

An entrepreneurial team is a group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product.

Entreprenuer

Entrepreneur: a person who risks time and money to start and manage a business. Entrepreneurship is accepting the challenge of starting and running a business. The word entrepreneur originates from the French word entreprendre, which means "to undertake." In a business context, it means to start a business.

What does it take to be an entrepreneur?

Entrepreneurial attributes to look for in yourself include the following: Self-directed: You should be a self-starter, with a lot of confidence in yourself. Determined: You have to believe in your idea even when no one else does. Attributes: Action-Oriented Highly Energetic Tolerant of Uncertainty Able to Learn Quickly Making errors is inevitable. What is important is what you learn from them.

Knowing your customers: market

People with unsatisfied wants and needs who have both the resources and the willingness to buy. One of the greatest advantages that small businesses have over larger ones is the ability to know their customers better and to adapt quickly to their ever-changing needs.

Venture capitalists (VC's)

Venture capitalists (VCs) are individuals or companies that invest in new businesses in exchange for partial ownership of those businesses.

Micro-enterprises

are defined as a small business having 1 to 4 employees. Micro-enterprises represent 55% of all employer businesses in Canada.

Advantages of international small business

1. Overseas buyers enjoy dealing with individuals rather than with large corporate bureaucracies; 2. Small companies can usually begin shipping much faster; 3. Small companies can support a wide variety of suppliers; 4. Small companies can give customers more personal service and more undivided attention, because each overseas account is a major source of business to them.

Chapter summary questions

1. Why people are willing to become entrepreneurs New idea, independence... the attributes of successful entrepreneurs. Self-directed, action oriented.... 2. Small business and the Canadian economy. 2.6 million workers in the Canadian economy were self-employed. 3. Summarize the major causes of small-business failure. Plunging in without first testing the waters on a small scale. Underpricing or overpricing goods or services. Underestimating how much time it will take to build a market. 4. Ways to learn about how small businesses operate. 5. Analyze what it takes to start and run a small business. Planning Money... 6. Outline the advantages and disadvantages that small businesses have in entering global markets. small companies usually can begin shipping much faster small companies provide a wide variety of suppliers

Ways to get into your first business venture

1. learn from others Talk to ENTREPRENEURS that have already done it. 2. get some experience The general rule is: THREE YEARS of experience in a comparable business. 3. buy an existing business How do you determine the price for the business: Value is based on (1) what the business owns, (2) what it earns and (3) what makes it unique. 4. buy a franchise 5. inherit/takeover a family business

3 things you need to be an entrepreneur

1. the right skills: marketing innovation, managing risk, leading yourself and others 2. the right process: understanding the problems, company creation 3. the right heart: love of the game, commitment (affection, passion, and discipline)

business establishment

A business establishment has at least one paid employee, annual sales revenue of $30,000, or is incorporated and has filed a federal corporate income tax return at least once in the previous three years.

Business plan

A business plan is a detailed written statement that describes the nature of the business, the target market, the advantages the business will have in relation to competition, and the resources and qualifications of the owner(s). A business plan is mandatory for talking with bankers or other investors. A business plan forces potential owners of small businesses to be quite specific about the goods or services they intend to offer.

Causes of small-business failure

Causes of small-business failure: Not allowing for setbacks and unexpected expenses. Going into business with little or no experience and without first learning something about the industry or market. Failing to keep complete, accurate records, so that the owners drift into trouble without realizing it. Plunging in without first testing the waters on a small scale. Underpricing or overpricing goods or services. Underestimating how much time it will take to build a market. Starting with too little capital. Attempting to do too much business with too little capital. Borrowing money without planning just how and when to pay it back. Starting with too much capital and being careless in its use. Buying too much on credit. Extending credit too freely. Expanding credit too rapidly.

Intrepreneurs

Creative people who work as entrepreneurs within corporations. The idea is to use a company's existing resources—human, financial, and physical—to launch new products and generate new profits.

Crowdfunding

Crowdfunding is the raising of funds through the collection of small contributions from the general public (known as the "crowd") using the Internet and social media. It is becoming an increasingly common source of raising funds in the technology and media industries.

Entrepreneurship differs from small business

Entrepreneurship is not always small, and small business is not always entrepreneurial. While most businesses start small, it's the intent to stay small that separates small business from entrepreneurship. While many people use the terms entrepreneurship and small business interchangeably, there are significant differences. Entrepreneurial ventures differ from small businesses in four ways: 1. Amount of wealth creation 2. Speed of wealth creation 3. Risk 4. Innovation

Home-based business challenges

Getting New Customers Managing Time Keeping Work and Family Tasks Separate Abiding by City Ordinances (Rules) Managing Risk

Managing employees

Hiring, training, and motivating employees are critical. It is not easy to find good, qualified help when you offer less money and fewer benefits. There are problems in promoting employees who have been with the entrepreneur from the beginning but are not qualified, or firing family members in the business. Employees of small companies are often more satisfied with their jobs than their counterparts in large companies.

Micropreneurs

Micropreneurs: small-business owners with fewer than five employees who are willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle. Many micropreneurs are owners of home-based businesses. Many home-based businesses are owned by people who are trying to combine career and family. Reasons for micropreneurs to grow the home-based businesses: Computer Technology Corporate Downsizing Change in Social Attitudes

Importance of small business

Nearly all small businesses are Canadian-owned and managed. This is in contrast to large businesses, of which many are foreign-owned and -managed. Small business thus plays a major role in helping to maintain the Canadian identity and Canadian economic independence.

Why people take the entrepreneurial challenge

New Idea, Process, or Product. Some entrepreneurs are driven by a firm belief, perhaps even an obsession, that they can produce a better product, or a current product at a lower cost, than anybody else. Independence. Many entrepreneurs simply do not enjoy working for someone else. Challenge: Many people thrive on overcoming challenges. Family Pattern: Some people grow up in families who have started their own businesses Profit Immigrants

Angel investors

Private individuals who invest their own money in potentially hot new companies before they go public. Angel investors usually target their support (generally $20,000 to $500,000) to pre-start-up and early-stage companies.

Small business and international prospects: reasons for not going international

Reasons for not going international: (1) financing is often difficult to find; (2) many would-be exporters don't know how to get started; (3) do not understand the cultural differences of prospective markets, and (3) the bureaucratic paperwork can threaten to bury a small business.

Looking for help

Small business owners should consider getting legal, accounting, tax and marketing advice early on. Other expert advice can come in the form of a commercial account officer and an insurance agent.

Web-based businesses

The Internet has sprouted a world of small Web-based businesses that sell everything from staplers to refrigerator magnets to wedding dresses . Web-based businesses have to offer more than the same merchandise customers can buy at stores—they must offer unique products or services. One of the easiest ways to start a Web-based business is through affiliate marketing.