Instructions After you complete the reading for this week, apply what you have learned in answering the following questions using no less than

BU332 – Small Business Development and Planning

Unit 1 Presentation Script

S1. Introduction

This is the era of the entrepreneur! Through the world, growing numbers of

people are realizing their dreams of owning and operating their own business.

Entrepreneurship is thriving. The past two decades have seen record numbers of

entrepreneurs launching new businesses and each year. American entrepreneurs

alone start 3 to 4.3 million businesses each year and 84 percent are doing that for

the first time.

S2. The World of the Entrepreneur

A study by the Global Entrepreneurship Monitor (GEM) found 11.3 percent of the

adult population in the United States is working to start a business. North

America, South America and Latin America lead the world in entrepreneurial

activity.

S3. What is an Entrepreneur?

An entrepreneur is one who creates a new business in the face of risk and

uncertainty for achieving profit and growth opportunities and assembles the

necessary resources to capitalize on those opportunities. While we may not be

able to teach entrepreneurship, we can teach the skills of small business

management. This is an important distinction to make to students.

Noted psychologist David McClelland characterized high achievers/entrepreneurs

as possessing these traits:

• Desire for responsibility

• Preference for moderate risk (risk eliminators)

• Confidence in their ability to succeed

• Desire for immediate feedback

• High level of energy

• Future orientation (serial entrepreneurs)

• Skill in organization

• Value of achievement over money

Other characteristics of entrepreneurs include:

• High degree of commitment

• Willingness to accept risk, work hard and take action

• Flexibility

S4. The Benefits of Entrepreneurship

The primary benefits entrepreneurs enjoy include the opportunity to:

• Create their own destiny

• Make a difference

• Reach their full potential

• Generate impressive profits

• Contribute to society and be recognized for their efforts

• Do what they enjoy and have fun at it!

S5. The Potential Drawbacks of Entrepreneurship

With these potential rewards, Entrepreneurship also presents risk and

uncertainty. Entrepreneurs may experience:

• Uncertainty of income – “The entrepreneur is the last one to be paid.”

• Risk of losing their entire investment

• Long hours and hard work

• Lower quality of life until the business gets established

• High levels of stress

• Complete responsibility

• Discouragement

S6. Behind the Boom: What’s Feeding the Entrepreneurial Fire?

The rapid increase in entrepreneurs has been a result of:

• Considering entrepreneurs as heroes

• Entrepreneurial education

• Demographic and economic factors

• Shift to a service economy

• Technological advancements

• Independent lifestyles

• Commerce and the Internet

• Additional international opportunities

S7. The Cultural Diversity in Entrepreneurship

Entrepreneurs are found in virtually every walk of life including:

• Young Entrepreneurs

• Women Entrepreneurs

• Minority Enterprises

• Immigrant Entrepreneurs

• Part-time Entrepreneurs

• Home-Based Businesses

• Family Businesses

• Co-entrepreneurs

• Corporate Castoffs

• Corporate Dropouts

S8. The Power of “Small” Business

Because big business is more visible than small business, most people

underestimate the role of the small firm in the U.S. economy.

The definition of a “Small Business” is:

1. One which is independently owned and operated and not dominant in its

field.

2. Eligibility requirements are based on the specific industry.

• Retailing – annual sales/receipts not exceeding $3.5 to $13.5

million.

• Services – annual receipts not exceeding $2.5 to $14.5 million.

• Wholesaling – yearly sales must not be over $9.5 to $22 million.

• Agriculture – annual receipts not exceeding $1.0 to $3.5 million.

• Construction – General construction with annual receipts not

exceeding $17 million.

• Special Trade Construction – annual receipts not exceeding $7

million.

• Manufacturing – maximum number of employees may range

from 500 to 1,500 depending on the industry.

The most commonly used measure of small business is the number of employees

on a firm’s payroll. The White House Conference on Small Business definition is: A

firm employing 500 people or fewer. The Committee for Economic Development

states that a small business must meet two of four stated criteria:

1. Management is independent.

2. Capital is supplied and ownership is held by an individual or a small

group.

3. Area of operation is mainly local; markets need not be local.

4. Size is small when compared to the biggest unit in the field.

S9. The Ten Deadly Mistakes of Entrepreneurship

Studies have indicated that there are common reasons for new business ventures

to fail. These causes of small business failure may include:

1. Management mistakes

2. Lack of experience

a. Poor financial control

b. Weak marketing efforts

3. Failure to develop a strategic plan

4. Uncontrolled growth

5. Poor location

a. Improper inventory control

b. Incorrect pricing

c. Inability to make the “entrepreneurial transition”

S10. Putting Failure into Perspective

Entrepreneurs don’t fail—the venture fails.

• There are no such things as failures, only results.

• Always look to turn a negative situation into a positive opportunity.

• Have no fear of failure and be sure to have a contingency plan.

• The only people who never fail are those who never do anything or never

attempt anything new.

The successful entrepreneur understands the meaning of these clichés and knows

how to deal with adversity in a proactive and positive manner.

S11. How to Avoid the Pitfalls

These same studies have indicated that entrepreneurs can increase their chances

for success if they:

1. Know their business in depth.

2. Develop a solid business plan in writing.

3. Manage financial resources.

4. Understand financial statements.

5. Learn to manage people effectively.

6. Keep in tune with who they are.