Chapter 6 Starting A Small Business Flashcards
Entrepreneurial Risk Includes:
Opportunity, Profit, Independence, Challenge
List of Entrepreneurial Attributes:
Self Directed, Self Nurturing, Action-Oriented, Highly Energetic, Tolerant of Uncertainty
Reasons for Growth of Home-Based Businesses:
Technology Advancements, Corporate Downsizing, Social Attitudes Have Changed, New Laws Allow Expenses of Deductions for Home Offices
Home-Based Business Challenges:
Getting New Customers, Managing Time, Keeping Work/Family Tasks Separate, Abiding By City Ordianances (Licensing, etc)
Affiliate Marketing:
Internet-marketing strategy where business rewards its customers or other business affiliates for each visitor/customer they send to the business website
Intrapreneurs
Creative people who work as Entrepreneurs within larger corporations
What Do Intrapreneurs Use For Resources?
They use the corporations resources (human/financial/physical) to launch new products & generate new profits (ex: 3M & Sticky Notes)
What Do Investor Visas Allow?
- Allows 10,000 people to come to the US each year if the invest $1million in an enterprise that creates or preserves 10 jobs (Arcadia Housing Boom)* Part of the Immigration Act in 1990 to encourage entrepreneurs to come to the US
What Are Enterprise Zones?
Specific geographic areas to which governments attract private business investment by offering lower taxes & other govt support to encourage entrepreneurship
What Do Small Biz & Global Firms Have In Common?
They both have similar principles of management
What Defines a Small Business According to the SBA?
A business that is:1. Independently Owned/Operated2. Not dominant in its Field of Operation3. Meets Certain Standards of Size in terms of Employees or Annual Receipts (Set by SBA)
Small Business Advantages Are:
- Offer other advantages over large companies2. More personal customer service3. Ability to respond quickly to opportunities
What Does a Business Plan Do?
It’s a writte/detailed statement that describes:1. The nature of business2. The Target market3. The advantages in relation to competition4. Lists resources/qualifications of the owner
What’s a Major Cause of Business Failures?
Poor Management
What Is Poor Management?
- Poor Planning2. Poor Record Keeping3. Poor Inventory Control4. Poor Promotion/Marketing5. Poor Employee Relations
What Do You Need for Small Business Success?
- Planning2. Financing3. Knowing You Customers (marketing)4. Managing Your Employees (HR Dept)5. Keeping Good Records (Accounting)
Two Primary Concerns Starting Your Small Business:
- Planning2 FinancingAll functions are important, but these are the top two.
Business Plan Explanation: Executive Summary:
5 Minutes to ImpressMajor goals/objectivesBusiness Summary
What are an Entrepreneur’s Sources of Capital?
- Personal Savings2. Relatives3. Former Employers4. Banks5. Finance Companies6. Venture Capitalists7. Govt Agencies (SBA)8. A Future Supplier (McDonalds Model)
Business Plan Explanation: Company Background
- Company Operations to Date2. Any legal issues3. Risks/Opportunities4. Financial Health5. Balance Sheets/Cash Flow6. Insurance coverage
Business Plan Explanation: Management Team
- List positions/job descriptions/resumes2. Organization Chart3. Outside Consultants & Their Qualifications (If used)
Business Plan Explanation: Financial Plan
- Five year projections for income/expenses/financial2. Assumptions Based on Industry/Historcial Trends3. Offer Scenarios: Best Case & Worst Case
Business Plan Explanation: Capital Required
- amount of capital needed to commence & continue
Business Plan Explanation: Location Plan
- Most important: Location2. Demographic of consumers3. Traffic Patterns4. Vehicle/Pedestrian Counts
Business Plan Explanation: Manufacturing Plan
- Plant Size2. Machinery Required3. Inventory Methods/Quality Control4. Production Capacity5. Personnel Requirements
Business Plan Explanation: Appendix
- Marketing research on goods/services2. References to research
Angel Investors
Private people who invest their own private money in hot new companies before they go public
Peer-to-Peer Lending (P2P)
Online Idea: Companies that match up people who want money with people who want to lend it via websites
CDFI (Community Development Financial Institutions)
Funding for lower-income businesses
Venture Capitalist
Individuals or companies that invest in new business in exchange for a part ownership (hefty portion) of the business usually 60% or more (ex: Shark Tank)
What is the SBA?
A US Govt Agency that advises & assists small business by providing management training, financial advice & loans
Small Business Investment Company Program (SBIC)
Private investment companies licensed by the SBA to loan money
What is a Market?
People with unsatisfied needs who have both the resources ($) and willingness to buy (demand)
Who Are Valuable Experts to Have In Your Business?
- Lawyer2. Commercial Loan Officer3. Insurance Agent
Service Corps of Retired Executives (SCORE)
SBA office with volunteers from industry, trade associations & education who council small businesses at no cost
Small Business Difficulties Getting Into the Global Market
- Financing2. Don’t Know how to get started3. Don’t know cultural differences4. Paperwork/Bureauracy
Good Reasons for Small Business to Go Global
- Absorbs excess inventory2. Softens downturns in domestic markets3. Extends products lives
Several Advantages to Small Biz vs Big Biz Overseas
- Global buyers like dealing with individuals instead of large companies2. Small biz can start shipping much faster3. Can provide a wide variety of suppliers4. Can provide personal service
