Small Business
An independently owned and operated business for profit and is not dominant in its field.
Importance of Small Business
1. Represent 99.7% of all employer firms.
2. Employ about half of all private sector employees
3. Pay 43% of total U.S. private payroll
4. Generated 64% of net new jobs over the past 18 years
5. Create more than half of the nonfarm private GDP
6. Hire 43%
To establish a business as a legal entry it takes...
Less than a week and $600
Steps to set up a small business
1. Registering the name of the business
2. Applying for tax ID's
3. Setting up unemployment and workers' comp. insurance
How many businesses are in the U.S. and how many employ more than 500 workers?
27.9 million business and 18,500 employ more than 500 workers
How much has the small business sector increased in the past decade?
49%
Who accounts for 1/3 of all small businesses
part-time employees
2 year survival percentage rate
5 year survival percentage rate
10 year survival percentage rate
69%
50%
31%
Primary reason for business failure
mismanagement resulting from a lack of business know-how
Three Broad Categories of Industries
distribution, service, and production
Less than one-quarter of the small distribution firms are
wholesalers
Distribution Industries
Retailing, wholesaling, transportation and communication are the sectors of distribution and it accounts for 33% of all small business
Definition of wholesaler
purchase products in quantity from manufacturers and then resell them to retailer.
Service Industries
Accounts for more than 48% of all small businesses.
Production Industries
Includes the construction, mining, and manufacturing industries. About 19% of all small businesses are in this group. Due to requiring relatively large initial investments.
Entrepreneurial Spirit
Desire to create a new business.
What percent of Americans would prefer being an entrepreneur to working for someone else.
70%
What is the percent of people who would prefer being an entrepreneur to working for someone else in Western Europe and Canada
Western Europe - 46%
Canada - 58%
Other Personal factors in small-business success include
independence, a desire to determine one's own destiny, a willingness to find and accept a challenge, family background, and age.
Women own what percent of home based businesses
66%
How many women owned businesses in the U.S. provide how many jobs and generate how much in sales?
7.8 million women owned business, 7.6 million jobs, $1.2 trillion in sales
How many of small businesses are home based, and what percent have no employees?
Over 1/2 of small businesses are home based, and 91% have no employees
What percent are of women businesses are in service industries, construction, and retail trade?
60% service
16% construction
14% retail
Key ingredients in the survival of a small business
Capital, management, and planning
Advantage of owning a small business
Personal Relationship, ability to adapt to change, simplified record keeping, independence, Profit Retention, ease of start up ability to keep secret
Disadvantage of owning a small business
High risk of failure, limited potential, limited ability to raise capital
Importance of small business in our economy
provides technical innovation, Provide employment, provide competition, and filling needs of society and other businesses
business plan
a carefully constructed guide for the person starting a business
business plan should include
1. Introduction
2. Executive Summary
3. Benefits to the Community
4. Company and industry
5. Management Team
6. Manufacturing and Operations Plan
7. Labor Force
8. Marketing Plan
9. Financial Plan
10. Exit Strategy
11. Critical Risks and Assumptions
12. A
Small Business Administration (SBA)
A governmental agency that assists, counsels, and protects the interests of small businesses in the United States.
SBA Management Assistant Program
Provides free individual counseling, courses, conferences, workshops, and a wide rage of publications.
SBA Management Course and workshops
Covers all the functions duties, and roles of managers.
SBA one-day conference
Aimed at keeping owner-managers up to date on the new management developments, tax laws, and the like.
Small Business Training Network
An online training network consisting of 23 SBA-run courses, workshops and resources.
Service Corps of Retired Executives (SCORE)
a group of businesspeople who volunteer their services to small businesses through the SBA
Small Business Institute (SBI)
groups of senior and graduate students in business administration who provide management counseling to small businesses
Small Business Development Centers (SBDCs)
University based group that provide individual counseling and practical training to owners of small businesses
The Average size of a SBA-guaranteed business loan is what and its average duration is how many years?
$300,000 and 8 years
Venture Capital
money that is invested in small (and sometimes struggling) firms that have the potential to become very successful
Small Business Investment Companies
Privately owned firms that provide venture capital to small enterprises that meet their investment standards.
franchise
a license to operate an individually owned business and though it were part of a chain of outlet stores
Franchising
the actual granting of a franchise
franchisor
an individual or organization granting a franchise
franchisee
a person or organization purchasing a franchise
franchisors primary goal in franchising is
the careful development and control of marketing strategies
Dual Brand Franchise
two franchises offering their product together
Growth of Franchising
1. Success Rate is higher than small business
2. 94% are successful
3. Too rapid expansion, in adequate capital or management skills
4. Began in the U.S. around the civil war
How many franchising categories are there
75
Franchisers look for
94% people skills
87% Ability to be coached
Global Perspectives in Small Business
More than 70% of the worlds purchasing power is outside of the United States and over the next five years 85% of the worlds economic growth will be overseas
U.S. Commercial Service
A commerce department division who aids small and medium sized business in selling overseas.