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Small Businesses

by: Amy Turk

Small Businesses BUS 10123-002

Amy Turk

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About this Document

Fundamentals of small businesses
Exploring Business
Dr. Diane DeRubertis
Class Notes
Entrepreneurship, Retailing, wholesaling, manufacturing, ownership, business, plan, equity, financing, venture, capitalists, debt, Credit, franchising, Demographic, economic, downsizing, intrapreneurs
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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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