CHAPTER 6 Entrepreneurship And Small Business
CHAPTER 6Entrepreneurshipand Small BusinessManagementBecoming an Entrepreneur6-2Small Business Basics6-3Starting a Small Business Getty Images/PhotoDisc6-112445610 06 Ch06 p124-147.indd 12412/20/07 10:43:32 AM
Planning a Career in . . .CONSULTINGEmployment Outlook The employment outlook for business consultantsvaries by industry, but is generally growing at abetter than average rate. Employment demand is based on the expertise andreputation of the individual consultant and theconsulting business. Most consultants have expertise in organizationalchange, finance, technology, and management.Related Job Titles Business Analyst Management ConsultantPerformance ConsultantQuality Control ConsultantSecurity ConsultantTraining ConsultantNeeded Skills Ability to problem-solve with innovative solutions Research and analytical skills Specialization in specific aspects of business operations and management Effective written and oral communication skillsWhat’s it like to work in . . .ConsultingErin Gerrard works asa small business consultant for Security SavingsBank. The bank is committed to strengtheningits services to small businesses. Security employsa 10-person team tosupport its small businesscustomers.Erin has a degree inaccounting, worked five years for a major accounting business, and then operated her own accountingservice for five years. The bank asked her to work forthem as a small business consultant because of heraccounting expertise and reputation in the community.She decided the consulting opportunity would be aninteresting challenge.This morning, Erin is meeting with Dawn Perrot,who is planning to open a florist shop. Dawn hassubmitted a business plan, but the financial plan isincomplete. Erin is looking forward to helping Dawngather information and develop a complete picture ofthe financial needs of her business. Later today, Erinand the bank’s information management specialistare visiting The Sherron Company to help them plana new computerized payroll system. Digital VisionWhen businesses face unique problems or undertakemajor changes, they often turn to consultants for adviceand help. Consultants are not long-term employees ofa company, but are hired to complete a specific task orto focus on an important challenge facing the business.Consultants may be self-employed and work independently, or they may be part of a large consulting business that employs many specialists. Large companiesoften form teams of specialists to work with a client.Consultants bring expertise to a business thatmay not exist among its employees and that wouldbe difficult to develop quickly enough to solve a current problem. Consultants also may be more objective about the business than people who are workingthere. The primary work of consultants is to conductresearch and complete other types of analysis thathelp businesses address important challenges they arefacing. Consultants often prepare written reports andplans, provide advice to decision-makers, and mayeven offer help in reorganizing the company and redirecting its efforts.What about you? How do you believe Erin’s work asa consultant is similar to and different from the workshe did as the owner of a small accounting business?12545610 06 Ch06 p124-147.indd 12512/20/07 10:46:16 AM
6-1Becoming anEntrepreneurGoalsKey TermsFocus on Real LifeIdentify characteristics of successfulentrepreneurs.entrepreneurJerelyn Frank has been working as an aerobicsinstructor for the Phase 4 Fitness Center for the past sixyears. Jerelyn enjoys her work because she has always beenactive and athletic. Since high school, she has taken wellness,first aid, and nutrition classes at the local adult education center.She has completed a number of certification courses in aerobicsinstruction and yoga. In her spare time, she has developed fitnessprograms for some of her friends and members of the fitness center where she works.Jerelyn is seriously thinking about starting a personal fitnessservice. She wants to go to people’s homes and offices to helpthem plan and maintain a fitness schedule and offer half-hour toone-hour workouts. She already has a number of contacts to helpher get underway. Jerelyn is single with no family responsibilities, and she has no debts. She has been able to save more than 15,000 in her bank account.Jerelyn decides to go forward with the plan just as thousandsof other entrepreneurs do each year. Those that become newbusiness owners are willing to contribute a great deal of time andenergy and risk personal economic resources for their venture.They hold the hope of a successful business and a reasonableprofit.Recognize theimportance of entrepreneurship in theeconomy.Describe opportunities and risks ofentrepreneurship.main ideaIdentify characteristics of successfulentrepreneurs.126CHAPTER 645610 06 Ch06 p124-147.indd 126entrepreneurshipventure capitalinnovationimprovementCHARACTERISTICS OFENTREPRENEURSAn entrepreneur is someone who takes arisk in starting a business to earn a profit.Some key factors in starting your ownbusiness are having a real desire to be yourown boss and developing a good initialplan. Having special skills and abilitiesand coming up with innovative ideas arealso important.Can you think of some service orproduct that is not being offered at thistime but that could be in demand? Isthere some service or product that youcould offer more efficiently than others are doing now? Is there some special talent you have that could becomethe starting point for a business ofyour own? If so, you have the basis fora new business enterprise. There aregood opportunities for entrepreneurship through small business ownership. Entrepreneurship is the processof starting, organizing, managing, andassuming the responsibility for a business. Here are some real-life examples ofyoung entrepreneurs.Entrepreneurs in ActionJoshua Moore was a high school studentand brother to four-year-old Sophiewhen he developed an idea for a babystroller braking system. To fund workon his invention, Josh started PersonalENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT12/20/07 10:46:53 AM
Getty Images/PhotoDiscAffections, selling key chains, pictureframes, mirrors, and personalized stickers at his Walhalla, South Carolina, highschool. He received an Entrepreneur ofthe Year award for an operational business from the National Foundation forTeaching Entrepreneurship. At age 15, hewas on his way to his dream of becomingan inventor and business owner.Pankaj Arora was not a typical highschool student in Rochester, Minnesota.In addition to a busy schedule of schoolwork and after-school activities, he alsoran two business ventures. Using hisadvanced computer skills, Pankaj createdand distributed software through his company, Pankaj Arora Software. His secondcompany, paWare, specialized in custombuilt computer systems and web design.Along with his college degree, Pankaj’stechnical and entrepreneurial skills helpedhim get a job at General Electric.Rich Stachowski of Moraga,California, is an avid scuba diver. Whileenjoying his hobby, he recognized thathe was unable to talk to others whowere snorkeling with him. He put hisimagination to work and invented WaterTalkiesTM. These walkie-talkies can beused under water. Rich worked with afamily friend who developed the manufacturing process. He then opened a businessto make and sell his product before he waseven a teenager. His Short Stack line ofwater toys is now sold by 100 chain retailers in the United States and several othercountries.Sometimes ideas for new productscome from problems in daily life. AbbeyFleck was watching her father use a microwave oven to cook bacon one morning intheir White Bear Lake, Minnesota, home.The bacon came out soaked in grease.Abbey had an idea to develop a pan thatwould cook the bacon while letting thegrease drain out below. She and her fathertested several designs that resulted in theMakin Bacon microwave bacon tray.Do you have ideas or skills that you could use to start a small business?They were able to convince the producersof Armour brand bacon to sell the traywith an advertisement and order formprinted on each package of bacon. Theproduct was an instant hit. Abbey’s company, A de F, Inc., has sold more than 3 million worth of Makin Bacon trays. The U.S. government is taking steps to support the morethan 6 million women who own their own businesses.One of the resources is a web site dedicated to providing information and networking opportunities to womenentrepreneurs. Access the web site shown below andclick on the link for Chapter 6. Read the latest news onwomen’s entrepreneurship. Review the types of resourcesthat can be accessed through the web site. Locate othergovernment web sites that provide information and helpfor people wanting to starting their own -145610 06 Ch06 p124-147.indd 127BECOMING AN ENTREPRENEUR12712/20/07 10:47:49 AM
Digital VisionThe experiences of these entrepreneursare examples of the thousands of youngpeople who have creative ideas and turnthem into businesses each year. Not allideas lead to successful businesses, but eachprovides evidence of the opportunitiesthat exist for people who believe they canturn their idea into a profitable business.What Does It Take?Not all people who own or manage a business are entrepreneurs. It takes uniqueskills and personal characteristics todevelop a new idea for a product or service. A person must also have both theconfidence and capability to turn an ideainto a business.Entrepreneurs come from all age categories and racial and ethnic groups. Theyrepresent both genders as well as variedamounts and types of education. Manyentrepreneurs own their first businesswhile in their teens. Others do not takethe step until retirement. More businessowners are male, but young entrepreneursare more equally divided between maleand female.It is important to have an understanding of business operations andFIGURE 6-1Which characteristics of successful entrepreneurs do youpossess? Which ones wouldyou like to develop?What are some advantages and disadvantages ofturning a hobby into a business?management. This understanding doesnot always come from getting a businessdegree in college. People learn how to runa business in many ways. They may workin a business or ask for help and advicefrom an experienced business owner.They may read and study on their own aswell as in school.There are personal traits that are common to successful entrepreneurs, as shownin Figure 6-1. While some people alreadyhave many of these qualities, others donot. If you have a desire to become anentrepreneur, you can work to developthese characteristics.Personal Characteristics of Successful EntrepreneursENTREPRENEURS ARE MORETHEY HAVE persistent problem-solving skills inquisitive tolerance for ambiguity energetic strong integrity goal oriented personal initiative independent ability to secure resources self-confident capability to learn from failure creative willingness to work hard reliable competitive128CHAPTER 645610 06 Ch06 p124-147.indd 128ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT12/20/07 10:48:04 AM
checkpoint ››What personal characteristicare common to most successfulentrepreneurs?Employment Growth byBusiness Size (1993-2003)1 – 19 employees25.00%35.50%ENTREPRENEURSHIP AND THEECONOMYEntrepreneurship is a key part of theU.S. economy. Nearly one in ten of allAmericans 18–64 years old is involvedin some type of entrepreneurship activity. More than 670,000 new businessesare created annually. Entrepreneurship isalso risky. Nearly as many small businessesclose as begin each year.EmploymentSmall businesses are responsible for mostnew employment. Figure 6-2 showsemployment growth by firm size between1993 and 2003. Over 60 percent of newjobs were created by businesses with fewerthan 500 employees.FinancingMost of the money needed to start a newbusiness comes from the entrepreneurand his or her family and friends. Onein five Americans has invested in a business of someone they know well. Morethan 50 percent lend financial supportfor the business of a family memberor relative. Twenty nine percent givemoney to neighbors and friends. Eightpercent invest in businesses started bywork colleagues. Family and friendsinvest more than 100 billion in newbusinesses each year.Another source of money for somenew businesses is venture capital.Venture capital is money provided bylarge investors to finance new productsand new businesses that have a goodchance to be very profitable. In the late1990s, many venture capital companieswere formed. They supplied more than21.25%100 – 499 employees18.25%500 or more employeesSource: U.S. Bureau of Labor StatisticsFIGURE 6-2What percentage of job growth came from businesses with fewer than100 employees? 100 billion each year to new businesses.Many of the businesses receiving thosefunds were e-commerce and high-techstart-ups. When many of those businessesfailed, the amount of venture capitaldeclined to less than 22 billion in 2005.More than 2,900 companies receive venture capital each year. That shows thatmany people think new businesses provide a good investment opportunity. Theother sources of financing for new businesses are loans from banks and financialinstitutions and credit given by businessesthat sell products and services to the newbusiness.main ideaRecognize theimportance ofentrepreneurship inthe economy.ProductivityNew and small businesses produce a largevolume of goods and services for theeconomy. Businesses with just a singleowner and no staff account for morethan 600 billion in sales annually. Smallbusinesses are responsible for more thanhalf of the U.S. gross domestic producteach year. They account for 55 percentof all innovative products and servicesdeveloped.checkpoint ››What are the sources of financingthat entrepreneurs use for their newbusinesses?6-145610 06 Ch06 p124-147.indd 12920 – 99 employeesBECOMING AN ENTREPRENEUR12912/20/07 10:48:13 AM
main ideaDescribe opportunities and risks ofentrepreneurship.OPPORTUNITIES AND RISKSWhen Jerelyn Frank was decidingwhether she would open her own personal fitness business, she had to thinkabout both the opportunities and therisks. Giving up a regular job and stableincome is a difficult choice. As benefits,she will have personal control over herown business. She can take personal satisfaction if her idea develops into a successful, profitable company.The American private enterprise economy promotes innovation and new business development. Individuals are able totake the risk to start a new business. Theycan compete with other businesses tosell their products and services and makea profit. Consumers are always lookingfor new and better choices to meet theirwants and needs.Many opportunities are open to prospective entrepreneurs. The opportunities begin with the creation of new orimproved products and services. Aninnovation is an invention or creationthat is brand new. An improvement is adesigned change that increases the usefulness of a product, service, or process.Inventors often develop innovations. Those inventions may becomethe basis for a new business. The inventor may sell them to another companyfor development and sale. Examples ofwell-known innovations include theApple personal computer developed bySteven Jobs and Stephen Wozniak andPost-it Notes created by Arthur Fry andSpencer Silver. Recent innovations thatWork as a TeamNew businesses usually need investments fromother people. As a team, develop a list of questionsyou would ask an entrepreneur to determine if thenew business would be one in which you wouldwant to invest some of your money.130CHAPTER 645610 06 Ch06 p124-147.indd 130 CORBISNew Business OpportunitiesWhat do innovation, invention, and improvement haveto do with entrepreneurship opportunities?may become successful products includea miniaturized artificial heart, a virtualcomputer keyboard, and an optical camouflage system that allows people wearing a special reflective material to seemto disappear.In addition to inventions, innovators create new services that becomethe basis for a business. Frederick Smithenvisioned an economical worldwidesystem for quickly and efficiently shipping packages. The creation of FedEx wasthe result. After graduating from college,Paul Orfalea developed neighborhoodwalk-in photocopying centers knownas Kinko’s. When the Internal RevenueService no longer prepared individualtax returns for free, two brothers, Henryand Richard Bloch, created the H & RBlock Company. They trained people toprovide efficient, low-cost tax preparationservices to individual taxpayers.Not all entrepreneurship opportunities emerge from those types of inventions and innovations. Many come froman improved design, more effectiveprocedures, or greater attention to quality. Entrepreneurs are creative problemsolvers. Those traits lead to ideas forimproved products and services.ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT12/20/07 10:48:15 AM
Recognizing Risks Higher than expected expensesMany successful entrepreneurs and theirbusinesses are well known. Their successencourages others to think about startinga new business. Developing a successfulnew business is not easy. Many more newbusinesses fail than succeed. The time andenergy required of new business owners ismuch higher than most people expect.The National Federation ofIndependent Business reports that of allnew businesses, about one-third are profitable, one-third do not make a profit butcontinue to operate, and the remainingthird lose money. Over a 10-year period,more than 50 percent of all new businessesare discontinued. The primary reasons thatbusinesses started by entrepreneurs close are Competitive pressure Lack of adequate capital An owner unprepared to manage agrowing business Operations requiring more time thanthe owner is willing to commitEntrepreneurs need to be aware of themany risks they may face and prepare forthem. Most entrepreneurs are willing totake risks. They will work hard to maketheir businesses succeed. However, manyentrepreneurs have seen one or more oftheir business ideas fail before they areable to grow a successful company.checkpoint ››Where do entrepreneurship opportunities begin? Low otobizKey ConceptsMake Academic ConnectionsDetermine the best answer.5. Math Ronaldo Jacarda is opening a manufacturingbusiness. It will produce a new type of USB flash storage card for cell phones and digital cameras. He hasseveral sources for the money needed to start his business. Those sources and amounts are personal savings, 56,500; loans from family and friends, 38,000;venture capital investment, 128,000; bank loan, 22,500. Determine the total amount of capital he hasaccumulated and the percentage of that total fromeach of the sources. Prepare a pie chart that illustratesthe answers.1. True or False. Everyone who owns or manages a business is an entrepreneur.2. Which of the following is not a characteristic of entrepreneurship in the United States?a. About 3 percent of people aged 18–64 are involvedin entrepreneurship activity.b. About 670,000 new businesses are created eachyear.c. Forty percent of new businesses have noemployees.d. One in every five Americans has invested in a business of someone who they know well.3. Money provided by large investors to finance newproducts and new businesses that have a good chanceto be very profitable is known asa. a loanb. creditc. venture capitald. start-up funding6. History Use the Internet to identify importantinventions and innovations developed in the past50 years. Select the five you believe have had thegreatest business success. Now select the five youbelieve have been most important in improvingsociety. Prepare a short report in which you identify and briefly describe each of the inventions andinnovations you selected and justifications for yourc
the starting point for a business of your own? If so, you have the basis for a new business enterprise. There are good opportunities for entrepreneur-ship through small business owner-ship. Entrepreneurship is the process of starting, organizing, managing, and assuming the responsibility for a
Part One: Heir of Ash Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Chapter 24 Chapter 25 Chapter 26 Chapter 27 Chapter 28 Chapter 29 Chapter 30 .
TO KILL A MOCKINGBIRD. Contents Dedication Epigraph Part One Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Part Two Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18. Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Chapter 24 Chapter 25 Chapter 26
To define the entrepreneurship. To explain the significance of Entrepreneurship. To explain the Entrepreneurship Development. To describe the Dynamics of Entrepreneurship Development. 1.1 Need and significance of Entrepreneurship Development in Global contexts It is said that an economy is an effect for which entrepreneurship is the cause.
DEDICATION PART ONE Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 PART TWO Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 .
CHAPTER 2: ENTREPRENEURSHIP THEORY AND CREATIVITY ctives. epreneurs. reneurship. 3:49). thought on the meaning of entrepreneurship. One group focused on the characteris-tics of entrepreneurship (e.g. innovation, growth, uniqueness) while a second group focused on the outcomes of entrepreneurship (e.g. the creation of value).
This is "Global Entrepreneurship and Intrapreneurship", chapter 11 from the bookChallenges and Opportunities in International Business(index.html)(v. 1.0). . Who is an entrepreneur, and what is entrepreneurship? 2. What do entrepreneurs do? 3. What is entrepreneurship across borders? 4. How does entrepreneurship lead to global start-ups?
About the husband’s secret. Dedication Epigraph Pandora Monday Chapter One Chapter Two Chapter Three Chapter Four Chapter Five Tuesday Chapter Six Chapter Seven. Chapter Eight Chapter Nine Chapter Ten Chapter Eleven Chapter Twelve Chapter Thirteen Chapter Fourteen Chapter Fifteen Chapter Sixteen Chapter Seventeen Chapter Eighteen
18.4 35 18.5 35 I Solutions to Applying the Concepts Questions II Answers to End-of-chapter Conceptual Questions Chapter 1 37 Chapter 2 38 Chapter 3 39 Chapter 4 40 Chapter 5 43 Chapter 6 45 Chapter 7 46 Chapter 8 47 Chapter 9 50 Chapter 10 52 Chapter 11 55 Chapter 12 56 Chapter 13 57 Chapter 14 61 Chapter 15 62 Chapter 16 63 Chapter 17 65 .
