Student Lec 5_Entrepreneurship SME PDF

Lecture 5 Entrepreneurship & Small Business  Lecture Objectives Describe the entrepreneurial and intrapreneurial activities and entrepreneurial characteristics Define small and medium enterprise (SME) and its contributions Explain the advantages and problems of SMEs List...

Lecture 5 Entrepreneurship & Small Business  Lecture Objectives Describe the entrepreneurial and intrapreneurial activities and entrepreneurial characteristics Define small and medium enterprise (SME) and its contributions Explain the advantages and problems of SMEs List the arguments for and against supporting SMEs Identify ways for setting up a small business Describe the essential elements of a business plan  Entrepreneurship The process of creating and managing a business to achieve a desired objective.  Entrepreneurship and SME Entrepreneurship Small and Medium Starting, buying, or Enterprise growing a business Any independently often with innovative owned and operated products/processes. business that is not The positive, dominant in its forward-thinking competitive area and desire to create employs a limited profitable, number of employees. sustainable business e.g. < 50 -- 100 enterprises.  Start one’s own business & perform entrepreneurial tasks Writing Market Product Business research Development Plans Growing Financing the the business business Taking business public or selling it at a profit  Identify entrepreneurial characteristics/traits 1. Sarah had a clear and strong view about creating a sustainable fashion brand that would offer stylish and environmentally-friendly products. 2. Sarah was keen on sustainability & fashion and be fuelled with her entrepreneurial drive. 3. Sarah was willing to step out of her comfort zone to pursue her business idea by investing her savings into researching sustainable materials and finding local designers. 4. Despite setbacks & failures, Sarah constantly modified her strategies and seeking alternative solutions.  The Journey of a determined entrepreneur A young woman named Sarah, who was a dreamer. She was always filled with ideas a burning desire to make a difference in the world. She possessed an entrepreneurial spirit that thrived on challenges and opportunities. Sarah’s entrepreneurial journey began during her college years. While pursuing her degree in environmental science, she noticed a growing concern for sustainable living and eco-friendly products. Inspired by this, Sarah embarked on a mission to create a business that would promote environmental consciousness and provide sustainable solutions.  Identify entrepreneurial characteristics/traits 5. Sarah conducted market research, sought customer feedback, and adjusted her product offerings accordingly to meet the evolving demands of her target audience 6. Sarah differentiated her brand by incorporating unique design elements and innovative materials into her products. 7. Sarah embraced a growth mindset and sought opportunities to expand her knowledge/skills and to enhance her entrepreneurial capabilities. 8. Sarah actively contacted people & business partners, connected with like-minded individuals. 9. Any other characteristics?  Discussion Question Are entrepreneurial characteristics and behaviour necessary to exist in a large corporation? Why or why not? Entrepreneurial activity for new products Obtain greater profits/return on investment: v Capture larger market share v Meet customers’ changing needs & tastes v Cope with shorter product life cycle (PLC) v Build competitive advantages v Planned obsolescence …  Intrapreneurship v The process of creating and maintaining the innovation and flexibility of a small- business environment within the confines of a large organization. Entrepreneurial Managers Carry out entrepreneurial efforts within a larger organization. Freedom to define and initiate new projects, much as they were independent entrepreneurs.  Small and Medium Enterprise Manufacturing enterprises with fewer than 100 employees and non-manufacturing enterprises with fewer than 50 employees are regarded as SMEs in Hong Kong.  Industries that Attract SMEs Retailing & Wholesaling Services Small-scale Manufacturing Innovative Technology 2015 Factors Contributing to the Increase in the Number of Small Businesses  Global Perspective in Small Business v National & international economies are growing more interdependent. v Trade barriers are diminishing. v Shrinking distance and expanding business opportunities v Leverage technology and reach more markets worldwide The Impact & Contributions of Small Business IMPACT #1: Economic, due to the number of small businesses that exist. IMPACT # 2: Employment, due to the number of employees working in small businesses. IMPACT #3: Technology, due to the number of technological innovations they contribute. IMPACT # 4: Market Impact, by serving market niches larger businesses ignore. ü 360,000 SMEs in HK à accounted for over 98% of the total business units (March 2024) ü provided job opportunities to over 1.2m persons, about 44.4% of total employment (excluding Civil Service) ü most of the SMEs were in the import/export trade and wholesale industries, followed by the professional and business services industry à accounted for about 46% of the SMEs in HK and represented 44% of the SME employment.  Advantages of Small Business Ø Better personal relationships Ø Ability to adapt to change Ø Simplified record keeping Ø Independence Ø Ease of start-up Ø Profit retention Ø Ability to keep secrets and privacy  Discussion Why did a lot of SMEs fail? Should the SAR Government support SMEs? Why or why not? If yes, how? Why SMEs Failed ? Arguments for government to support SMEs Arguments for not to support Approaches to Starting a Business 1.Acquire existing business 2.Join a franchise 3.Start a new business  (1) Buying existing business Starting from scratch can be expensive, need a lot of promotional efforts. It has the advantage of providing a network of existing customers and suppliers.  (1) Buying existing business Reduces guesswork However, the entrepreneur must deal with the problems the business already has.  (2) Join a fanchise A license to sell another’s products or to use another’s name in business, or both. Ø Franchiser – the company that sells a franchise (e.g. McDonald’s, 7-Eleven, Holiday Inn). Ø Franchisee – the purchaser of a franchise.  (2) Join a franchise Franchise Agreement Franchisor Franchisee (2) Advantages of Franchising Training & support Brand name appeal National/large scale advertising Financial assistance Proven products Lower risk -- greater chance of success (2) Disadvantages of Franchising Fees and profit sharing Standardized operations Restrictions on purchasing Limited product line Possible market saturation Less freedom in decisions  (3) Starting a New Business Ø Start with a concept or general idea Ø Create a business plan Ø Devise a strategy to guide planning and development  Business Plan vA precise statement of the rationale for the business and a step-by- step explanation of how it will achieve its goals. Ø guide operations Ø attract lenders and investors Ø provide a reality check  Developing a Business Plan ü A business plan has three basic purposes: – To communicate to potential investors – To manage progress – To plan the various phases of business ü Should answer: – What is the nature and mission of new venture? – Why is it a good idea? – What are the goals? – How much will it cost? What are the essential elements in a business plan?