CHAPTER 6 - ENTREPRENEURSHIP AND STARTING A SMALL BUSINESS

SMALL BUSINESS ADMINISTRATION (SBA)

A US government agency that advises and assists small businesses by providing management training and financial advice.

INTRAPRENEURS

A creative person who works as an entrepreneur within a corporation. They use a companies' existing resources to launch new products for the company.

BUSINESS PLAN

A detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and owners qualifications. It is mandatory for talking with bankers and investors. It also forces potential owners to be specific about what they will offer.

ENTREPRENEURIAL TEAM

A group of experienced people from different areas of business who join to form a managerial team with the skill to develop, make and market a product.

ENTREPRENEUR

A person who risks time and money to start and manage a business

ENTREPRENEURSHIP

Accepting the risks of starting and running a new business

BENEFITS OF HOME-BASED BUSINESSES

Ability to start your business immediately, minimal startup capital needed, no rent or excessive sep-up charges; comfortable working conditions, reduced wardrobe expenses, no commuting, tax benefits, elimination of office politics, low risk for trial and risk.

ACCOUNTING ASSISTANT

Computers simplify the process by helping with inventory control, customer records and payroll. A good accountant helps in: deciding whether buy or lease equipment; dividing whether to own or rent a building; tax planning; financial forecasting, choosing sources of financing and writing request for funds.

DOWNSIDE OF HOME-BASES BUSINESSES

Difficult to establish work habits, limited support system, isolation, work space may be limited, disruption for personal life, clients may be uncomfortable coming to your home, zoning restrictions in some communities, success is based 100% on your efforts.

MICROPRENEURS

Entrepreneurs willing to accept the risk of starting and managing a business that remains small. Many micropreneurs are home-based business owners such as writers, consultants, video producers, architects, bookkeepers.

Most common incubator services

Help with business basics, networking activities, marketing assistance, high-speed internet access, help with accounting and financial management, access to bank loans, loan funds and guarantee programs, help with presentation skills, links to higher education resources and links to strategic partners.

COMMERCIAL LOAN OFFICER

Helps to design an acceptable business plan, to give financial advice and to lend money.

INSURANCE AGENT

Helps to know the risks associated with the business; how to cover risks with insurance and how to prevent risks with safety devices.

SMALL BUSINESS

Independently owned and operated, for profit, and not dominant in its field of operation and meets certain standards of size.

VENTURE CAPITALISTS

Individuals or companies that invest in new businesses in exchange for partial ownership.

MARKETING RESEARCH

Marketing decisions need to be made long before introducing a product or opening a store. A marketing research study can help to determine where to locate, whom to select as your target market and what is an effective strategy for reaching the market.

ADVANTAGES OF SMALL OVER BIG BUSINESS

More personal customer service and the ability to respond quickly to opportunities.

INCUBATORS

Offer new businesses low-cost offices with basic services

WHY TAKE THE RISK?

Opportunity; Profit; Independence; Challenge

BUSINESS FAILURE ARE LOWER THAN REPORTS

Owner closing a business to start another or changing forms of ownership or retirement are reported as failure

LEGAL HELP

Owners need outside consulting advice early in the process. Small and medium-sized firms cannot afford to hire experts as employees. A competent lawyer can help with leases, contracts, partnership agreements and protection against liabilities.

SOURCES OF CAPITAL

Personal savings; Relatives and friends; Former employers; Banks & finance companies; Investors buying stock; Government agencies; Angel investors.

MAJOR SMALL BUSINESS FUNCTIONS

Planning your business; Financing finding capital; Knowing customers; Managing employees and outside agents; Keeping records accounting

WHAT DOES IT TAKE TO BE AN ENTREPRENEUR?

Self-directed (disciplined); Self-nurturing (believe in your idea); Action Oriented (burning desire to succeed); Highly Energetic (do it yourself attitude); Tolerant to uncertainty.

ONLINE BUSINESS

Web-based businesses have more unique products than most brick and mortal store.