Management 12e richard draft chapter 06

Chapter 6
Managing Small Business Start-Ups

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What Is Entrepreneurship?




The process of initiating a business venture
Organizing necessary resources: risk/reward
An entrepreneur engages in entrepreneurship

Recognizes a valuable idea
Assumes financial and legal risks
Receives the business’s profits


Successful entrepreneurs have many different motivations

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6.1 Five Types of Small
Business Owners

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Entrepreneurship Internationally


Global entrepreneurship has experienced a tremendous boost due to

Advances in technology
Rapid expansion of the middle class
The rise of female entrepreneurs

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6.2 Global Entrepreneurship by Gender

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Entrepreneurship and Small Business Today


Vital, dynamic, crucial aspects of the U.S economy



Entrepreneurial companies are engines for job creation and
innovation



Entrepreneurship is booming around the world

Represent 67% of jobs created during the latest recession
Employs 55% of private-sector jobs
Represent 99% of all firms

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Who Are Entrepreneurs?


Immigrants often start businesses



Women are embracing entrepreneurship



Minorities show a high rate of entrepreneurship

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6.3 Racial and Ethnic Composition of Small Business
Owners

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6.4 Gender Composition of Small Business
Owners

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Personality Traits


High importance on being free to achieve



Want to maximize their important traits:

 Autonomy
 High Energy
 Need to Achieve
 Self-Confidence
 Internal Locus of Control
 Entrepreneurial Struggle
 Tolerance for Ambiguity

 Power and Influence
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6.5 Characteristics of Entrepreneurs

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Social Entrepreneurship

Combines the creativity, business smarts, passion, and hard
work of the traditional entrepreneur with a social mission to
change the world for the better

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Launching an Entrepreneurial Start-Up

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6.6 Sources of Entrepreneurial Motivation and New Business
Ideas

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Writing a Business Plan
1. Clear, compelling vision
2. Realistic financial projections
3. Profile target market
4. Profile the industry and competition
5. Provide an effective management team
6. Well written and formatted
7. Keep it short
8. Highlight critical risks
9. Spell out the sources of funding
10. Capture attention with a great summary

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Choosing a Legal Structure


Sole proprietorship – unincorporated business owned by an individual
for profit

Unlimited liability



Partnership – an unincorporated business owned by two or more people



Corporation – an artificial entity created by the state and existing apart
from its owners

Possible disagreements
Unlimited liability

Expensive and complex paperwork

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Arranging Financing


Debt Financing, money that must be repaid:



Equity Financing, money invested by owners or those purchasing stock

Family and friends
Bank loans/Finance companies
Personal credit cards
Wealthy individuals
Angel financing

Venture capital firms

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6.7 Sources of Start-up Capital
for Entrepreneurs

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Tactics for Becoming a
Business Owner


Start a new business



Buy an existing business



Buy a franchise



Participate in a business incubator

•

Franchising is an arrangement to purchase the right to distribute the product or service with the help of the owner

•

Business incubators provide resources to entrepreneurs such as office space, support services, and management and
legal advice

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6.8 Some of Today’s Fastest- Growing
Franchises

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Starting an Online or Mobile Business


The Internet is aiding in the launch of new businesses and new ventures



Starting an online business:

Find a market niche
Create a professional Web site
Choose a domain name
Know when to pivot. change strategic directions
Use social media

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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.