AEM1200_1119ToPost - AEM1200, Introduction to Business...

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Unformatted text preview: AEM1200, Introduction to Business Management. AEM1200, Wednesday 11/19 Small Business and Entrepreneurship Small Entrepreneurship and entrepreneurial attitudes Small business Managing small businesses Entrepreneurship Entrepreneurship Accepting the risk of starting and running a business. Entrepreneurial attitudes s Self-Directed & Self-Disciplined s Self-Nurturing s Action-Oriented s Highly Energetic s Tolerant of Uncertainty Types of entrepreneurship Types High growth entrepreneurship “Incremental” entrepreneurship Micropreneurship Home-based businesses Web-based businesses Intrapreneurship Small and Medium Enterprise Small Privately owned Privately operated Not dominant in its industry Relative (to the industry) small revenue and/or # Relative of employees of Small Business: Types Small Lifestyle businesses Intended to provide the owner with a comfortable Intended lifestyle lifestyle Low tech: beauty saloons, restaurants, specialized retail; High tech: providers of specialized capabilities and services. High growth ventures Businesses with ambitious sales, profit, and growth Businesses objectives objectives Low tech: franchising, retailing, marketing orientation; High tech: disruptive technologies, venture capital. The SMEs in the US The 97% of businesses in the U.S.A. are considered small 80% of first jobs; 45% of gross domestic product; 750,000 businesses started every year; Create 75% of new jobs. Small Business Small Personalized Service/ Personalized Personal Contact Personal Flexibility Lower Costs Innovation Innovation Opportunities Opportunities - Limited Experience Long Hours Insufficient Capital High Failure Rate Internationalization of small business Internationalization 1. World Market 1. Absorb Excess Absorb 1. Financing Difficult 1. How to Get Started? 1. Lack of Cultural Lack 1. Soften U.S. Soften Inventory Inventory Understanding Understanding 1. Paperwork 1. Extend Product Life Downturns Downturns Successful small businesses Successful Have a clear and detailed plan of the activities of Have the business the Firmly engage in marketing Monitor and control operations closely Cope with red tape Adjust to growth Seek advice & assistance The Entrepreneurial Process The Opportunity recognition It is not just about creative ideas, but about ideas that It are feasible and have a market! are Business plan, startup team, finance, prototype/mock up Assembly of resources Startup Marketing, managing growth, management skills To stay or to leave? Harvesting and exit Five Entrepreneurial Realities (that you can take advantage of, or avoid!) you The typical start-up only requires about $25,000 to get going. Most The successful entrepreneurs design their businesses to work with little cash. They borrow instead of paying for things. They rent instead of buy. And they turn fixed costs into variable costs by, say, paying people commissions instead of salaries. instead The odds that a start-up company will get VC money are about one in 4,000. 32% of “angels” have a household income of $40,000 per year or less and 32% seventeen percent have a negative net worth. seventeen 53% of the financing of companies that are two years old or younger comes 53% from debt and only 47% comes from equity. from banks account for 16% of all the financing provided to companies that are banks two years old or younger, 3% higher than the amount of money provided by the next highest source – trade creditors – and higher than a bunch of other sources that everyone talks about going to: friends and family, business angels, venture capitalists, strategic investors, and government agencies. Five More Entrepreneurial Realities (that you can take advantage of, or avoid!) you Most entrepreneurs head right for the worst industries for start-ups; The industry you choose to start your company has a huge effect on the The odds that it will grow; odds The typical profit of an owner-managed business is $39,000 per year. Only The the top ten percent of entrepreneurs earn more money than employees. And the typical entrepreneur earns less money than he otherwise would have earned working for someone else. earned Of the 590,000 or so new businesses with at least one employee founded in Of this country every year, data from the U.S. Census shows that less than 200 reach the $100 million in sales in six years that venture capitalists talk about looking for. looking most people who begin the process of starting a company fail to get one up most and running. Seven years after beginning the process of starting a business, only one-third of people have a new company with positive cash flow greater than the salary and expenses of the owner for more than three consecutive months. Advise for potential entrepreneurs Advise Take-aways Take-aways If you have an appropriate combination of personality If and experience, becoming an entrepreneur is your best option to increase your wealth; best Small businesses are an integral and necessary part Small of the economy; of Managing small businesses requires careful Managing application of the principles of business management, even more so than very large corporations, because there is no room for error, and one or few decision makers have to embrace the whole enterprise. makers ...
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This note was uploaded on 11/12/2009 for the course AEM 1200 at Cornell University (Engineering School).

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