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Business in a
Changing World
Chapter 6
Small Business, Entrepreneurship, and
Franchising
2
McGraw-Hill/Irwin
Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights
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Cato Corner Farm
Farmstead Cheeses
Great demand for new, unique artisan cheeses.
A mother-son operation in Connecticut is
serving that need.
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Small Business, Entrepreneurship & Franchising
Join a small business? Start my own business?
Choices that you will be available to you.
Business students have many options upon
graduation – some choose to start their own
businesses, find employment in small
businesses, or perhaps, join a franchise.
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Entrepreneurship & Small Business
Entrepreneurship
The process of creating and managing a
business to achieved desired objectives is
our working definition for entrepreneurship.
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Entrepreneurship & Small Business
Entrepreneurship & Entrepreneurs
Ability to see emerging trends & create company that
satisfies those consumer needs. (Dell Computers)
Create new markets (Amazon.com)
Improve or re-package existing products (Starbucks)
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Entrepreneurship & Small Business
What is a Small Business?
“Smallness” is relative. Defined, small
business is any independently owned and
operated business, not dominant in its
competitive area, employing less than 500
people.
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Entrepreneurship & Small Business
Supporting Small Business
The Small Business Administration (SBA) is
an independent agency of the federal
government that offers managerial and
financial assistance to small businesses.
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Impact of Small Business
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Impact of Small Business
60-80% of all new jobs, annually, created by
small business in the last 10 years.
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Small Business & Innovation
55% of all innovations
•Airplane
•Audio tap recorder
•Double-knit fabric
•Fiber-optic examining equipment
•Heart valve
•Optical scanner
•Personal computer
•Soft contact lenses
•Zipper
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Small Business
Industries that Attract Small Business
Retailing and wholesaling, services,
manufacturing and high technology are
especially attractive to entrepreneurs.
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Retailing & Wholesaling
Selling directly to the consumer
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Music stores
Sporting-goods shops
Dry cleaners
Boutiques
Drugstores
Restaurants
Hardware stores
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Small Business – retailers/wholesalers
The “Boppy” www.boppy.com
•Annual sales $50 million
•2007 #1 baby product in the
nation
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Small Business
Services
•66% of the economy
•Employs 70% of workforce
•The Geek Squad – one-man service firm, 1994
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Small Business
Manufacturing
Small business advantage over large firms –
product customization
Artwork, clothing, jewelry, clothing, furniture
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Small Business
High Technology
Businesses that depend heavily on advanced
scientific and engineering knowledge.
•39% of high-tech jobs are in small business
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Small Business Ownership
ADVANTAGES
•Personal advantages
•Business advantages
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Advantages of Small Business Ownership
Traits Needed to Succeed in
Entrepreneurship
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Advantages of Small Business Ownership
•Costs
•Flexibility
•Focus
•Reputation
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Disadvantages of Small-Business Ownership
•High Stress Level
•High Failure Rate
•90% of all new businesses fail within the first 5 years
•Undercapitalization
•Lack of funds to operate a business normally
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Disadvantages of Small-Business Ownership
•Managerial Inexperience or Incompetence
•Inability to Cope with Growth
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Small-Business Ownership
Top Five Biggest Challenges, Concerns, and
Goals of Small and Medium Businesses.
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Small-Business Ownership
Most Common Mistakes Made by Startup
Businesses
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