Podcast
Questions and Answers
What defines a small business?
What defines a small business?
What percentage of all innovations do small businesses represent?
What percentage of all innovations do small businesses represent?
Which of the following industries is especially attractive to entrepreneurs?
Which of the following industries is especially attractive to entrepreneurs?
Which of the following is NOT a trait of successful entrepreneurs?
Which of the following is NOT a trait of successful entrepreneurs?
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What role do retailers play in the supply chain?
What role do retailers play in the supply chain?
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What role do wholesalers play in the supply chain?
What role do wholesalers play in the supply chain?
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Which sector employs 80% of jobs in the U.S. and does not produce tangible products?
Which sector employs 80% of jobs in the U.S. and does not produce tangible products?
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What is one of the main advantages of small business ownership?
What is one of the main advantages of small business ownership?
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What percentage of new businesses fails within the first five years?
What percentage of new businesses fails within the first five years?
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What aspect of small businesses does the Malcolm Baldridge National Quality Award focus on?
What aspect of small businesses does the Malcolm Baldridge National Quality Award focus on?
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Study Notes
Entrepreneurship
- Involves creating and managing a business to achieve objectives while risking personal wealth, time, and effort.
Small Business Definition
- Defined as independently owned businesses, not dominant in their competitive area, employing fewer than 500 people.
Impact of Small Businesses
- Small businesses account for 55% of all innovations, contributing significant advancements such as personal computers and fiber-optic technology.
Traits of Successful Entrepreneurs
- Key traits include vision, persistence, risk-taking, adaptability, and confidence.
Popular Industries for Small Businesses
- Retailing and wholesaling, services, manufacturing, and high technology are attractive due to lower barriers to entry, minimal initial financing, and accessible customer targeting.
Retailing and Wholesaling
- Retailers sell directly to consumers, while wholesalers supply products to others for resale.
Services and Manufacturing
- Service sector constitutes 80% of U.S. jobs, requiring unique skills for smaller businesses. Small manufacturers excel in product customization.
High Technology
- Small businesses represent 40% of high-tech jobs, and government grants are available for high-tech ventures.
Small Business Ownership
- Advantages: Independence, flexibility, focus, and reputation.
- Disadvantages: High stress, high failure rates (50% fail within the first five years), undercapitalization, and managerial inexperience.
Starting a Business
- Initial steps include conceptualizing an idea, creating a business plan, and deciding on ownership structure and financing.
Business Plan
- A detailed document outlining the business rationale, competition analysis, and financial projections, serving as a guide for operation.
Forms of Business Ownership
- Three primary forms are sole proprietorships, partnerships, and corporations.
Financial Resources
- Business funding sources include personal capital, loans, equity financing, venture capital, and debt financing.
Equity Financing
- Involves fundraising by selling or borrowing against asset value for operational funding.
Venture Capitalists
- Provide funding in exchange for ownership interest, necessitating shared control.
Debt Financing
- Involves borrowing from banks or lending institutions, typically requiring collateral.
Line of Credit
- An agreement where a lender promises to provide funds on demand to a business.
Starting from Scratch vs. Buying an Existing Business
- Starting a new business can be costlier and requires extensive marketing, while existing businesses offer established networks and reduced uncertainty.
Franchising
- A business model allowing an individual to sell another's products or utilize their brand name.
- Franchiser: The company that offers the franchise.
- Franchisee: The individual who purchases the franchise.
Advantages and Disadvantages of Franchising
- Advantages: Training and support, brand recognition, national advertising, financial assistance, and higher success rates.
- Disadvantages: Fees, profit sharing, standardized operations, purchasing restrictions, and limited product offerings.
Help for Small Business Managers
- Resources available include the Small Business Administration, development centers, and local commerce departments.
Future for Small Business
- Influenced by demographic trends such as Baby Boomers, Millennials, and various immigrant populations.
- Shifts driven by technological advancements, increasing internet use, service export growth, and economic changes.
Big Businesses Acting Small
- Large firms often emulate smaller businesses through downsizing and fostering intrapreneurship to enhance innovation and efficiency.
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Description
Test your knowledge on the fundamentals of entrepreneurship, including the definition of small businesses, their impact on innovation, and the traits that contribute to successful entrepreneurs. Discover the popular industries for small businesses and understand the difference between retailing and wholesaling. Perfect for aspiring entrepreneurs and business students!
