We continue part 2 of your textbook, Starting and Growing a Business, with chapter 5, Small Business, Entrepreneurship, and Franchising.1
In Chapter 1, we defined an entrepreneur as a person who risks his or her wealth, time, and effort to develop for profit an innovative product or way of doing something. Entrepreneurship is the process of creating and managing a business to achieve desired objectives. Many large businesses you may recognize (Levi Strauss and Co., Procter & Gamble, McDonald’s, Dell Computers, Microsoft, and Google) all began as small businesses based on the visions of their founders. Some entrepreneurs who start small businesses have the ability to see emerging trends; in response, they create a company to provide a product that serves customer needs.The entrepreneurship movement is accelerating, and many new, smaller businesses are emerging. Technology once available only to the largest firms can now be obtained by a small business. Websites, podcasts, online videos, social media, cellular phones, and even expedited delivery services enable small businesses to be more competitive with today’s giant corporations.Another growing trend among small businesses is social entrepreneurship. Social entrepreneurs are individuals who use entrepreneurship to address social problems. They operate by the same principles as other entrepreneurs but view their organizations as vehicles to create social change. Although these entrepreneurs often start their own nonprofit organizations, they can also operate for-profit organizations 2
committed to solving social issues.2
You may ask yourself the question: “what is a small business?” The question is difficult to answer because the term “small” is relative. We define small business as any independently owned and operated business that is not dominant in its competitive area or industry group and employs less than five hundred people. This definition is similar to the one used by the Small Business Administration (SBA), an independent agency of the federal government that offers managerial and financial assistance to small businesses. On its website, the SBA outlines the first steps in starting a small business and offers a wealth of information to current and potential small-business owners. We will consider the elements of this definition in greater detail as we continue our discussion in the next slides.3
No matter how you define a small business, one fact is clear: They are vital to the American economy. More than 99 percent of all U.S. firms are classified as small businesses, and they employ about half of private workers. Small firms are also important as exporters, representing 98 percent of U.S. exporters of goods and contributing 31 percent of the value of exported goods.
- Spring '14