1. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

2. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Small Business and
Entrepreneurship:
Economic Rocket
Fuel
2
LO1 Why do entrepreneurs launch small
businesses?
LO2 What is the typical entrepreneurial
mindset and characteristics?
LO3 What are funding options for small
business?
LO4 What are the opportunities and
threats facing small businesses?
LO5 What are ways to become a business
owner and facilitate success?
LO6 What is the size, scope and economic
contribution of small business?

3. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Entrepreneurship Plays a Positive
Role in U.S. Economy
• New business creation increased
steadily from 2007 to 2009
• Interest among teenagers in launching
a business is consistent at 40%
• In 2010, U.S. entrepreneurship rates
reached their highest level in 15 years
• Job seekers offer hope as job creators
3
Source: Despite Recession, Youth Remain Interested in Entrepreneurship, Poll Shows, November 17, 2010, Philanthropy News Digest website, http://foundationcenter.org/pnd/news/story.jhtml;jsessionid=R0ZQZFD52NZNLLAQBQ4CGW15AAAACI2F?id=314900002,
accessed March 18, 2011, “Jobless Entrepreneurship” Tarnishes Steady Rate of U.S. Start-Up Activity, Kauffman Study Shows, March 7, 2011, Kauffman website, http://www.kauffman.org/newsroom/jobless-entrepreneurship-tarnishes-steady-rate-of-us-startup-
activity.aspx, accessed March 18, 2011

4. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Launching a New Venture:
What’s in It For Me?
4
 Greater Financial Success
 Independence
 Flexibility
 Challenge
 Survival
 Opportunity Lost – there are trade-offs
Business opportunities
are like buses…there’s
always another one
coming.
-- Richard Branson,
Virgin Enterprise
“
“

5. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Entrepreneur:
A Distinctive Profile
5

6. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
New Venture: Living Social
Escapes
Video HereVideo Here
6

7. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Gather Around the Water Cooler:
Let’s Talk
•
7
©iStockphoto.com/DNY59
• What motivated Maya to start Urban
Escapes?
• What entrepreneurial characteristics do
you see in Maya?
• How did Maya fund her start up?

8. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Entrepreneurship:
Do You Have What it Takes?
• Do you enjoy working?
• Do you gamble?
• Can you fake it?
• Are you good on your feet?
8Source: Personality Test for Entrepreneurship Success by Andy Swan, Small Biz Survival website, http://www.smallbizsurvival.com/2008/08/personality-test-for-entrepreneurship.html, posted
August 4, 2008, accessed April 3, 2011.
©iStockphoto.com/Neustockimages

9. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Roach Coaches Minus the
Roaches
• Today’s food truck owners are
tech-savvy entrepreneurs
 Build loyal customers via
social media
 Kogi BBQ truck has 28,000
Twitter followers
• Lunch trucks today have
gone upscale
 Korean/Mexican Tacos
 Gourmet deserts
 Sustainably harvested fish tacos
9
Source: “Food Truck Nation,” by Katy McLaughlin, June 5, 2009, The Wall Street Journal website, http://online.wsj.com/article/SB10001424052970204456604574201934018170554.html, accessed June 3, 2010; “How to Open a (Successful) Food Truck,” by Christine Lagorio, May 12, 2010, Inc. website, http://preview.inc.com/guides/2010/05/opening-a-successful-food-truck.html, accessed June 3, 2010.

10. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Finding the Money:
Funding Options for Small Business
10
 Personal Resources
 Loans
 Angel Investors
 Venture Capital
©Colin Anderson/Blend Images/Jupiterimages©Colin Anderson/Blend Images/Jupiterimages

11. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Peer-to-Peer Lending
• A new and unique funding source for
start-ups
• Websites bring together borrowers
and investors
• Both parties benefit financially
• Entrepreneurs find this an easier
source for funding with more
favorable terms 11
©TheStudioDog/Photodisc/GettyImages

12. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Small Business Sustainability
• Sustainable business practices can save
money
• Many large corporations assess suppliers
based on environmental benchmarks
• Sustainable planning:
1. Establish a benchmark
2. Identify best opportunities
3. Develop implementation plans
4. Set deadlines
5. Keep the plan active
12Source: Sustainability Planning for Business Owner by Kelly Spors , May 9, 2010, Small Business Trends website, http://smallbiztrends.com/2010/05/sustainability-planning-for-business-owners.html, accessed April 3, 2011

13. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Opportunities and Threats for Small
Business: A Two-Sided Coin
13
Threats:
• Higher Risk of Failure
• Lack of Knowledge and
Experience
• Too Little Money
• Bigger Regulatory Burden
• Higher Health Insurance Costs
Opportunities:
• Market Niches
• Personal Customer Service
• Lower Overhead Cost
• Technology
Opportunities:
• Market Niches
• Personal Customer Service
• Lower Overhead Cost
• Technology

14. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
New Business Survival Rates
14

15. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Launching Options: Reviewing
the Pros and Cons
15

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Making it Happen:
Tools for Success
16
• Use the Small Business
Administration
• Gain Experience
• Learn from Others
• Educate Yourself
• Write a Business Plan
©TheStudioDog/Photodisc/GettyImages
Source: Focus on Success, Not Failure by Rhonda Abrams, May 7, 2004, USA Today website money section, http://www.usatoday.com/money/smallbusiness/columnist/abrams/2004-05-06-success_x.htm.

17. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Business Plan
17
 Executive Summary
 Description of Business
 Marketing Strategies
 Competitive and Industry
Research
 Operating Procedures
 Personnel
 Financial Projections
 Executive Summary
 Description of Business
 Marketing Strategies
 Competitive and Industry
Research
 Operating Procedures
 Personnel
 Financial Projections
Source: Business Plan Basics, U.S. SBA, http://www.sba.gov/starting_business/planning/basic.html, accessed February 15, 2009.
©RAGMA IMAGES/Shutterstock.com

18. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Doomsday: No Rules, No Backup
Video HereVideo Here
18

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Gather Around the Water Cooler:
Let’s Talk
•
19
©iStockphoto.com/DNY59
• What is the risk of starting your own
business?
• Are there rules or backup to starting
your own business?
• How can entrepreneurs reduce their
risk?

20. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Small Business and the Economy:
An Outsized Impact
20
• Creating New Jobs
• Fueling Innovation
• Vitalizing Inner Cities
• In 2008, 99.9% of businesses
in the U.S. had less than fewer
than 500 employees
• 7% of small business owners
ran their business without any
employees
• Small businesses generate
about half the U.S. GDP
• Small businesses employ half
of the nation’s private
workforce
©TheStudioDog/Photodisc/GettyImages
Source: “Frequently Asked Questions,” SBA Office of Advocacy, updated September 2009, SBA website
http://www.sba.gov/advo/stats/sbfaq.pde, accessed June 3, 2010.

21. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Accidental Invention
• Many great ideas happen by accident
• Penicillin was the result of not cleaning up
a science workstation
• Coca-Cola resulted from efforts to develop
a headache medicine
• Saccharin was discovered from a chemist
not washing his hands
“Luck is what happens when
preparation meets opportunity”
~ Seneca 21Source: Top 10 Accidental Inventions, Science Channel website, http://science.discovery.com/brink/top-ten/accidental-inventions/inventions-01.html, accessed March 22, 2011.©haveseen/Shutterstock.com

22. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Entrepreneurship Around the
World
22
Societies need entrepreneurs. While entrepreneurs think the
environment is worse than 2009, intentions to launch a business have
not declined.
 People are afraid of losing their jobs and are considering
entrepreneurship
 Potential entrepreneurs may be more optimistic about their own
ability
 Potential entrepreneurs may be delaying their launchSource: Global Entrepreneurship Monitor 2010 Report by Donna J. Kelley, Niels Bosma, José Ernesto Amorós, College and London School of Economics, file:///C:/Users/Marce/AppData/Local/Temp/GEM%20GLOBAL%20REPORT%202010rev.pdf, published March 2011, accessed March 21, 2011 Global Entrepreneurship Monitor, 2008 Executive Report by Niels Bosma, Zoltan J. Acs, Erkko Autio,
Alicia Coduras, and Jonathan Levie, Babson College and London School of Economics, http://www.gemconsortium.org/article.aspx?id=76, published January 15, 2009, accessed February 17, 2009.
©BSHStock/ImageSource

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Entrepreneurship Rates
Around the World
23

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World Entrepreneurship
Variables
• What is the national per-capita income?
• What will the entrepreneur need to give up
(opportunity costs)?
• How high is the risk of failure?
• How strongly do the national culture and
political environment support business start-
ups?
24

25. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Reality TV: Start-up Junkies
Video HereVideo Here
25

26. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Gather Around the Water Cooler:
Let’s Talk
•
26
©iStockphoto.com/DNY59
• Ron Wiener, founder and CEO of Earth Class
Mail, is a serial entrepreneur. He founded and
sold four other businesses before founding
Earth Class mail. What do you think has
motivated him to do this?
• What key entrepreneurial characteristics aptly
describe Ron Wiener?

27. ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Looking Back
• Why do entrepreneurs launch small businesses?
• What is the typical entrepreneurial mindset and
characteristics?
• What are funding options for small business?
• What are the opportunities and threats facing small
businesses?
• What are ways to become a business owner and facilitate
success?
27