Small businesses
***Make up 99% of United States Businesses
-Usually fewer than 20 employees and most are home based
***Many fail within first 5 years
-Business that has fewer than 500 employees, is independently owned, and does not dominate its industry
-serve as mainstays of economy
-Employ 55% of private workers
-Provide 6 out of every 10 new jobs in economy
3 Life Cycle Stages of Small Business
Birth Stage
Breakthrough Stage
Maturity Stage
Birth Stage-establishing the firm, getting customers, finding money
Breakthrough Stage- Working on finances, becoming profitable, growing
Maturity Stage- Refining the strategy, Continuing to grow, Managing for success
Family Business
Owned and operated by family members
***Face potential for family feuds, which can lead to business failure
Succession Problem
Succession Plan
Succession Problem-Who will run current business when the current head leaves
Succession Plan-Describes how leadership transition and financial matters will be handled when this occurs
Reasons why small businesses Fail
****60-80% of small businesses fail in first 5 years
Insufficient Funding-not having enough money to maintain operations while building business
Lack of Experience-Not having sufficient know-how to run business in chosen market
Lack of Expertise-Not having expertise necessary in operations like finance, sel
Ways of financing a business
Debt Financing-Borrowing money from another person or bank
Equity Financing-Gives ownership shares to outsiders in return for investment
Venture Capitalist-make large investments in new ventures in return for an equity stake i
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