Small Businesses BUS 10123-002
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This 3 page Class Notes was uploaded by Amy Turk on Friday May 20, 2016. The Class Notes belongs to BUS 10123-002 at Kent State University taught by Dr. Diane DeRubertis in Spring 2015. Since its upload, it has received 6 views. For similar materials see Exploring Business in Business at Kent State University.
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Date Created: 05/20/16
SMALL BUSINESSES ● entrepreneurship = process of creating and managing a business to achieve desired objectives ● small business = any independently owned and operated for profit business ○ not dominant in its competitive area ○ employing less than 500 people ● small business administration = independent agency of the federal gov’t offering managerial and financial assistance to small businesses ● impact ○ 99.7% of US employer firms ○ 99.7% of all businesses employ fewer than 500 people ■ 89% of businesses employ fewer than 19 people ● represent 55% of all innovations ● popular industries ○ retailing and wholesaling ○ services ○ manufacturing ○ high technology Retailing and Wholesaling ● selling directly to consumers ● music stores ● sporting-goods shops ● dry cleaners ● boutiques ● drugstores ● restaurants ● hardware stores Services and Manufacturing ● services ○ 80% of US jobs ○ attracts individuals whose skills are not required by large films ● manufacturing ○ small manufacturers excel at customization ○ the Malcolm Baldridge National Quality Award rewards innovative small manufacturing firms High Technology ● businesses that depend heavily on advanced scientific and engineering knowledge ● over 40% of high-tech jobs are with small businesses ● gov’t offers small business grants for high-tech companies through small business innovation research Small Business Ownerships ● high failure rate = 50% of all new businesses fail within the first 5 years ● inability to cope with growth Starting A Business ● start with a concept or general idea ● create a business plan ● devise a strategy to guide planning and development ● make decisions ○ form of ownership ○ financing ○ acquire existing business or start a new business? ○ buy a franchise The Business Plan ● precise statement of the rationale for the business and a step-by-step explanation of how it will achieve its goals ● acts as a guide and reference document ● analysis of competition ● income/expense estimates ● financial resources ○ provide your own personal capital ■ cash money ■ obtain capital ○ financing options ■ loans ■ stocks ■ equity financing ● equity financing = selling or borrowing against the value of an asset to obtain funds to operate a business ● venture capitalists = people/organizations that agree to provide funding for a new business in exhange for an ownership interest or stock ○ usually requires a sharing of ownership/control ● debt financing = borrowing financial resources typically from a bank or lending institution-often collateral is needed ● line of credit = an agreement by which a financial institution promises to lend a business a predetermined sum on demand ● starting from scratch can be expensive and requires a lot of promotional efforts ● existing businesses have the advantage of a built-in network of customers, suppliers, and distributors ● reduce guesswork Franchising ● a license to sell another’s products or to use another’s name in business, or both ● franchiser = the company that sells a franchise ● franchise = the purchaser of a franchise ● restrictions on purchasing ● limited product line ● less freedom in decisions Help For Small Business Managers ● organizations and programs exist to help small businesses ● small business administration ○ development centers ○ service corps of retired executives ○ active corps of executives ● small business institutes ● US and local departments of commerce Trends Affecting The Future of Small Business ● demographic ○ baby boomers ○ generation Y ○ immigration and shifting demographics ● technological and economic ○ internet usage continues to increase ○ increase in service exports ○ economic turbulence ○ deregulation of the energy market and alternative fuels Big Business Acting Small ● large firms emulate smaller ones to improve bottom line ● downsizing (right sizing) = acting small from inception ○ Southwest Airlines ● intrapreneurs = people in large firms who take responsibility for the development of innovations within the organization
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