Entrepreneurial & Small Business Development Strategies Flashcards
Unlimited Tax G.O. Bonds
Tax-exempt bonds secured through taxes that are levied without rate or amount limitations in order to repay the principal and interest of the bond.
They are typically used to finance public works infrastructure and land acquisition for blight elimination.
What should you ask potential entrepreneurs to gauge where they are in the process?
Have you researched your target market?
Written business, financial, and marketing plans?
Identified potential financing solutions?
Made a list of materials needed to start business?
Public policy supports entrepreneurs at the local level for what reasons?
They add to the net-sum gain of jobs.
Homegrown businesses are more likely to remain loyal and stay in the area in the future.
With increased use of technology, more people are able to run businesses out of their home.
Small businesses respond quickly to market shifts, whereas larger manufacturing companies do not have the same flexibility.
Why is it hard for entrepreneurs to secure capital?
They are considered too risky because they often lack collateral, significant credit history, and a formal business plan.
They typically require smaller loans and conventional lenders prefer to provide large loans to help lower the transaction cost per loan.
Some of the most common reasons for small business failure include
Insufficient preparation, lack of understanding of government regulations, under-capitalization
What benefits do small businesses give to the community?
They affect local competitiveness, diversify the economic base and stimulate economic development.
More specifically:
Employee: create new jobs; hire individuals entering the job market
Tax Revenue Generators: broaden the tax base; property and income tax
Economic Supporters: buying and supplying local products and services.
Property Owners and Renters: lease space from local property owners; fill vacant storefronts downtown.
Providers of Economic Stability: Small homegrown firms are owned and operated by people who have a personal stake in the community and are more likely to remain there.
What kind technical assistance can be provided to small business?
Business plan development
Assistance with grant and loan applications
Advice regarding financing, marketing, and product development
Site selection and workforce development assistance.
What are the general four stages of development for a small business/entrepreneur?
- Creating the business idea
- Formalizing the business plan
- Opening the business
- Expansion and growth
What technical service does a SBDC provide?
A nationwide network of one-stop center that provides information, training, one-on-one consulting, and workshops.
What technical service does SCORE provide?
The Service Core of Retired Executives.
Nonprofit association supported by SBA. They match small businesses that need expert advice with mentors in the business community who volunteer to share their management and technical expertise.
Women’s Business Centers
Provide comprehensive training and counseling to assist women in starting and growing small businesses.
SBA Veterans Business Outreach Center Program
Business training, counseling, mentoring and referrals for eligible veterans owning and considering starting a business.
The SBA 7(j) Management and Technical Assistance Program
Provides training, executive education, and one-on-one consulting to eligible small businesses.
What is a business incubator and what are its benefits?
A business incubator encourages and supports young companies until they become viable. Incubators provide affordable space and technical and management support while helping new firms secure equity and long-term debt financing.
They offer low rent, shared support services like equipment, and offer network opportunities.
What steps can a practitioner take to assess the local financing situation?
First, determine why there is a problem accessing capital in the area; conservative banking community?
Second, determine what role the organization will play in solving the client’s financing problem? Will the practitioners leverage private sector investment?
What information should an EDO know about its community before being an asset to businesses?
The territory: know the types of businesses in the area, which business sectors are represented, how that representation is divided, which business typically flourish, and which do not.
Problems: a practitioner must be constantly aware of the issues and conditions that small business owners struggle with.
Local business history: by knowing local buying trends, a practitioner can discourage an entrepreneur from opening a business in a section of the City that traditionally has never housed successful businesses
Business Climate.
How to relate.
Sole Proprietorship
One person who has sole ownership, control, and responsibility.
General Partnership
Two or people are included in the business enterprise. The owners bear unlimited liability for all debts and liabilities.
Limited Partnership
Three or more people, and there can be no fewer than two general partners and one limited partner. The limited partner has limited liability and is not involved in the regular management of the organization (less responsibility and involvement).
Corporations
A separate legal body that is owned by shareholders. Shareholders are responsible for for electing a board of directors who operate and control the corporation.
Positive: accumulate income and pay taxes at a lower marginal rate than an individual, not affected by death of owner, credible.
Limited Liability Companies and partnerships
Provide the protection of a corporation with the flexibility of a partnership. Combine the limited liability that a corporation affords its shareholders with the tax status a partnership receives.
S Corporation
Elect to be treated under Subchapter S of the IRS code. Individual shareholders pay corporate net income personally, as though it were a partnership.
C Corporation
Standard state-formed corporation. No limit on number of shareholders.
How should an EDO prep to assist small businesses/entrepreneurs?
- Hire the right staff
- Market the program to reach entrepreneurs
- Screening process; pick only the ready entrepreneurs
What is Economic Gardening?
Gardening means growing jobs in the community through the provision of entrepreneurial support services instead of recruiting employers with attraction activities. Simply, gardening is considered an inside-out vs. outside-in strategy for economic development.
It works well when a small business owner who has a vested interest in the community, is ready to enter a growth stage.
What are the three stages of growth?
- Start-up companies: new business ventures.
- Second-stage companies: those that have grown past the start-up stage but have not grown to maturity. They have enough employees to exceed the comfortable control span of one owner/CEO and benefit from adding professional managers, but they do not yet have a full-scale professional management team.
- Gazelles or high-impact companies: Gazelles often emerge in business-to-business markets where they can capitalize on niche opportunities. Most importantly, gazelles experience a rapid stage of expansion, growing at least 20% per year over the previous four years. They are usually small-or medium-sized companies.
