This document provides an overview of understanding entrepreneurship and small business. It discusses what constitutes a small business, the importance of entrepreneurship, reasons for success and failure in small businesses, how to start and operate a small business, and what franchising is. It addresses popular forms of small businesses, entrepreneurial characteristics, financing options, and definitions of key terms.

1. Chapter 7
Understanding Entrepreneurship
and Small Business
http://www.slideshare.net/Subjectmaterial

2. Sr. Chapter Chapter Heading
No.No.
1. 3 Understanding the Global context of business (031012)
2. 4 Conducting Business Ethically and Responsibly (250212)
3. 6 Organizing the Business Enterprise (030312)
4. 7 Understanding Entrepreneurship and Small Business (100312)
5. 8 Managing Human Resources
6. 9 Understanding Employee Motivating, Satisfying and Leadership
7. 11 Understanding Marketing Processes and Consumer Behavior
8. 16 Managing Quality and Productivity
9. 17 Managing Information Systems and Communication Technology
10. 19 Understanding Money and Banking
11. 20 Intermediate Term and Lease Financing

3. Next class Quiz
 Two groups
 1. established entrepreneurs
 What they did
 Why did they stall
 How could they improve
 2. emerging entrepreneurs
 story
 What to do next
3

4. FINAL PROJECT
 GENERATE REVENUE
4

5. Marks Distribution
50 Terminal Examination
20 Mid Term Examination
15 Quizzes
15 Final Assignment
5

6. 1. WHAT IS SMALL BUSINESS
2. ENTREPRENEURSHIP
3. SUCCESS AND FAILURE IN SMALL
BUSINESS
4. STARTING AND OPERATING THE SMALL
BUSINESS
5. FRANCHISING

7. 1. WHAT IS SMALL BUSINESS
• The importance of small business in the economy
• Popular forms of small business enterprise
2. ENTREPRENEURSHIP
• The distinction between entrepreneurship and small
business
• Entrepreneurial characteristics
3. SUCCESS AND FAILURE IN SMALL BUSINESS
• Trends in small business start-Ups
• Reasons for failures
• Reasons for success
4. STARTING AND OPERATING THE SMALL BUSINESS
• Financing the small business
• Sources of management advice
5. FRANCHISING
• Advantages and Disadvantages of Franchising

8. What Is “Small Business”?
Independently owned and
managed business that
does not dominate its
market

9. The importance of Small business
in Economy
Job Creation
Innovation
Importance to Big Businesses

10. Popular Forms of Small-Business
Enterprise
Services
Manufacturing
 5%
Finance &
 Retailing Insurance Other
 Construction 10% 1.7%
 Financial Wholesale
8%
 Insurance
 Wholesaling
 Transportation
 Manufacturing
Construction Services
Retailing 37.6%
10%
22.7%
Transportation
5%

11. 2. ENTREPRENEURSHIP
Entrepreneurship is the act of being an
entrepreneur
An entrepreneur can be defined as a
businessperson who accepts the risks and
opportunities of creating, operating and
growing a new business
Small Business Owner does not have plans
for growth
11

12. Entrepreneurial Characteristics
 Entrepreneurs are …
 Founders of businesses that become large-scale
enterprises.
 People who:
 Buy a local franchise outlet
 Open a small retail shop
 Operate a self-employed service business
 People who introduce a new product or
operational change in an existing organization
12

13. Entrepreneurial Characteristics
Small Business Founder True Entrepreneur
HE: HE:
Boss Leader
Lone Ranger Networker
Secretive Open
Self-reliant Inquisitive
Seat-of-the-pants Letter of the business plan
Snap decisions Consensus decision
Male ownership Mixed Ownership
Knows the Trade Knows the business
Automation: Technology lets Innovation: Technology lets people
business automate the work that do things that they’ve never done
people had always done before
13

14. 3. SUCCESS AND FAILURE
IN SMALL BUSINESS
14

15. Trends in Small Business Start-ups
Emergence of
E-commerce
Entrepreneurs who
crossover from
Big Business
Increased opportunities for
Minorities & Women
Global
Opportunities
Increased
Survival Rates

16. Reasons for Success and
Failure
Reasons for Failure
 Poor management
 Neglect
 Weak control systems Reasons for Success
 Insufficient capital  Hard work, drive,
dedication
 Market demand
 Strong management
 Luck!!!

17. 4. STARTING AND
OPERATING THE SMALL
BUSINESS
17

18. Starting the Small Business
First: The entrepreneurs commitment
towards business
Second:Choosing the goods and services,
evaluating the chosen industry and market
Third: Assessment of one’s own skills
18

19. How to start the small
business
1. Buying an existing business
2. Starting from Scratch
19

20. 20

21. Financing the Small Business
 Personal resources
 Loans
 Venture capital companies
 Small-business investment companies
 Small Business Association (SBA)
 Financial aid and management advice
 Advisory boards, management consultatnts,
the SBA, and networking

22. DEFINITIONS:
 Business plan:
 document that tells potential lenders why money is needed,
how it will be used, and when it will be repaid
 Venture Capital company:
 Group of small investors that invest money in companies with
rapid growth potential
 Management consultant:
 Independent outside specialist hired to help managers to solve
business problems
 Networking:
 Interconnections among business people for the purpose of
discussing mutual problems and opportunities and perhaps
pooling resources

23. 5. FRANCHISING
 Franchise is an arrangement in which a
buyer (franchisee) purchases the right
to sell the good or service of the seller
(Franchiser)
23

24. FRANCHISING
An Ownership Opportunity
Advantages Disadvantages
 Proven business  Start-up costs
opportunity  On-going
 Access to payments
management  Management
expertise rules and
restrictions