Chapter 6- Entrepreneurship: Small Business Sector
Small Business Administration (SBA)
A U.S. government agency that advises and assists small businesses by providing management training and financial advice
TRUE OR FALSE: As opposed to venture capitalists, angel investors prefer to target their investments in new firms requiring large sums of money.
FALSE
True or false: State & local govts often act as venture capitalists
FALSE
What act was passed in 1990 to encourage entrepreneurs to come to the U.S?
Immigration Act, category of investor visas
intrapreneur
a creative who works as an entrepreneur within a corporation
business plan
a detailed wirrten 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
Small Business Investment Company (SBIC) Program
a program through which private investment companies licensed by the SBA lend money to small businesses
Advantage of small business (market)
ability to know the market & quickly adapt to market needs
Service Corps of Retired Executives (SCORE)
an SBA office with volunteers from industry, trade associations and education who counsel small businesses at no cost (except for expenses)
affiliate marketing
an internet-based marketing strategy in which a business rewards individuals or other businesses (affiliates) for each visitor of customer the affiliate send to its Web site
Venture capitalists tend to invest in what kind of businesses?
businesses that needs large sums of money
incubators
centers that offer new businesses low-cost offices with basic services
Other forms of help for small businesses
commercial loan officer, insurance agent, SCORE
market
consumers with unsatisfied wants & needs who have bother resources and willingness to buy
What are the elements of a business plan?
cover letter, executive summary, company background, mgmt team, financial plan, market analysis & marketing plan, summary
lifestyle (micropreneurs)
exit not a priority typically no or few outside investors balanced lifestyle remains small
Business plan is mandatory when?
for talking with bankers or investors
entrepreneurial team
group of experienced people from different areas of business who join to form a managerial team with the skills to develop, make & market a new product
small business
independently owned & operated, not dominant in its field of operation and meets certain standards of size meets SBA's standards of size
venture capitalists
individuals or companies that invest in new businesses in exchange for partial ownership
small businesses need legal help-- lawyers for:
leases, contracts, partnership agreements, protection against liabilities
2 main types of new ventures
lifestyle (micropreneurs) & growth (entrepreneurs)
Employees of small companies:
often more satisfied with their jobs-- they feel challenged & respected
growth (entrepreneurs)
outside investors growth is a priority exit is a priority founders rarely stay long term
What is entrepreneurship about?
passion, perseverance & execution
angel investors
private individuals investing their own money tend to invest less than venture capital firms
enterprise zones
specific geographic areas to which govts attract private business investment by offering lower taxes and other govt support
what do intrapreneurs do?
uses company's existing resources to launch new products for the company
When is a small business considered "small"?
when they are small in relation to other businesses in their industries
4 questions a business plan should answer?
who are you? what do you do? who do you do it to? why should they care to pay attention to you & buy from you?