Chapter 06 – Entrepreneurship and Starting a Small Business
6-1
Entrepreneurship and
Starting a Small
Business
chapter
=
what’s new in this edition 6.3
brief chapter outline and learning goals 6.3
lecture outline and lecture notes 6.5
PowerPoint slide notes 6.44
lecture links 6.64
lecture link 6-1: HISTORY’S GREATEST ENTREPRENEURS 6.65
lecture link 6-2: LUCKY OFFICE SPACE 6.65
lecture link 6-3: CHARLES BABBAGE: 19TH-CENTURY ENTREPRENEUR 6.65
lecture link 6-4: INVENTING FROM THE OUTSIDE 6.66
lecture link 6-5: EX–CONTREPRENEURS 6.67
lecture link 6-6: START-UPS FOR GROWN-UPS 6.67
lecture link 6-7: A NEW KING OF BEERS IN ST. LOUIS 6.68
lecture link 6-8: FAILURE IS THE BEST MEDICINE 6.68
lecture link 6-9: COMPETING AGAINST WAL-MART 6.69
lecture link 6-10: MAKING ENTREPRENEURSHIP A COLLEGE MAJOR 6.70
6
Chapter 06 – Entrepreneurship and Starting a Small Business
6-2
critical thinking exercises 6.71
critical thinking exercise 6-1: WHAT DOES IT TAKE TO BE AN 6.71
ENTREPRENEUR?
critical thinking exercise 6-2: WHAT IS SMALL? 6.72
critical thinking exercise 6-3: WRITING A BUSINESS PLAN 6.73
critical thinking exercise 6-4: COMPETING AGAINST WAL-MART 6.75
bonus cases 6.76
bonus case 6-1: DRIVING AWAY BUSINESSES WITH THE AMAZON TAX 6.76
bonus case 6-2: 3M COMPANY, INTRAPRENEURIAL LEADER 6.78
what’s new in
this edition
additions to the 10th edition:
• Getting to Know Jay-Z, Rapper and Founder of Roc Nation
• Name That Company: McDonald’s
• Discussion of Self-Employment Assistance (SEA) and Startup America programs added in sec-
tion Encouraging Entrepreneurship: What Government Can Do
• Discussion of community development financial institutions (CDFIs) added to section Getting
Money to Fund a Small Business
• Spotlight on Small Business: Success Knows No Age
• Social Media in Business: Social Lending
• Reaching Beyond Our Borders: Emerging Markets, Emerging Entrepreneurship
• Video Case
revisions to the 10th edition:
• Text was revised to eliminate redundancy and tighten discussions.
• Statistical data and examples throughout the chapter were updated to reflect current information.
deletions from the 9th edition:
• Getting to Know Sheila C. Johnson, Cofounder of Black Entertainment Television (BET)
• Name That Company: Art Fry and 3M
• Spotlight on Small Business
Chapter 06 – Entrepreneurship and Starting a Small Business
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• Thinking Green
• Reaching Beyond Our Borders
brief chapter outline
and learning goals
c h a p t e r 6
Entrepreneurship and Starting a
Small Business
Getting To Know JAY-Z, Rapper and Cofounder of ROC NATION
I. THE AGE OF THE ENTREPRENEUR
II. THE JOB-CREATING POWER OF ENTREPRENEURS IN THE
UNITED STATES
learning goal 1
Explain why people take the risks of entrepreneurship; list the attributes of successful entre-
preneurs; and describe entrepreneurial teams, intrapreneurs, and home- and Web-based busi-
nesses.
III. WHY PEOPLE TAKE THE ENTREPRENEURIAL CHALLENGE
A. What Does It Take to Be an Entrepreneur?
B. Turning Your Passion and Problems into Opportunities
C. Entrepreneurial Teams
D. Micropreneurs and Home-Based Businesses
E. Web-Based Businesses
F. Entrepreneurship within Firms
G. Encouraging Entrepreneurship: What Government Can Do
learning goal 2
Discuss the importance of small business to the American economy and summarize the major
causes of small-business failure.
Chapter 06 – Entrepreneurship and Starting a Small Business
6-4
IV. GETTING STARTED IN SMALL BUSINESS
A. Small versus Big Business
B. Importance of Small Businesses
C. Small-Business Success and Failure
learning goal 3
Summarize the ways to learn about how small businesses operate.
V. LEARNING ABOUT SMALL-BUSINESS OPERATIONS
A. Learn from Others
B. Get Some Experience
C. Take Over a Successful Firm
learning goal 4
Analyze what it takes to start and run a small business.
VI. MANAGING A SMALL BUSINESS
A. Begin with Planning
B. Writing a Business Plan
C. Getting Money to Fund a Small Business
D. The Small Business Administration (SBA)
E. Knowing Your Customers
F. Managing Employees
G. Keeping Records
H. Looking for Help
learning goal 5
Outline the advantages and disadvantages small businesses have in entering global markets.
VII. GOING GLOBAL: SMALL-BUSINESS PROSPECTS
VIII. SUMMARY
Chapter 06 – Entrepreneurship and Starting a Small Business
Getting to Know JAY–Z, Rapper and Founder of ROC
NATION
Shawn Carter, aka Jay-Z, has sold over 45 million albums worldwide and is one of the
world’s richest musicians. He founded Roc-A-Fella Records in 1996 and retained control over
his image. When choosing endorsements, he carefully considered the products and again kept
creative control. His branding expertise has helped him in all of his ventures. Being successful
in business, not just music, has opened many doors and relationships (with Bill Gates, Warren
Buffett, and former President Bill Clinton)!
I. THE AGE OF THE ENTREPRENEUR
A. The need to CREATE MORE JOBS is a major issue
in the U.S. today.
When this company’s founder had financial problems in the business’s early days,
he asked his suppliers to help him out. They did and they were well rewarded for
their risk. Today these suppliers still service this mammoth company that has fran-
chises all over the world. Name that company.
(Students should read the chapter before guessing the company’s name:
McDonald’s.)
Chapter 06 – Entrepreneurship and Starting a Small Business
6-6
(See complete PowerPoint slide notes on page 6.44.)
(See complete PowerPoint slide notes on page 6.44.)
(See complete PowerPoint slide notes on page 6.45.)
(See complete PowerPoint slide notes on page 6.45.)
(See complete PowerPoint slide notes on page 6.45.)
(See complete PowerPoint slide notes on page 6.46)
Chapter 06 – Entrepreneurship and Starting a Small Business
6-7
nesses.
III. WHY PEOPLE TAKE THE ENTREPRENEURIAL
CHALLENGE
A. Reasons why people are WILLING TO TAKE THE
RISKS of business ownership include:
Chapter 06 – Entrepreneurship and Starting a Small Business
6-8
Who are the greatest entrepreneurs of all time? One news
website lists its top 10. (See the complete lecture link on page
6.64 in this manual.)
SPOTLIGHT ON
small
business
(Text page 149)
PPT 6-8
Success Knows
No Age
(See complete PowerPoint slide notes on page 6.46.)
(See complete PowerPoint slide notes on page 6.46.)
(See complete PowerPoint slide notes on page 6.47.)
(See complete PowerPoint slide notes on page 6.47.)
According to its owners, the building at 165 University Av-
enue in Palo Alto, California, is blessed with “good karma.”
(See the complete lecture link on page 6.65 in this manual.)
1. ENTREPRENEURIAL ATTRIBUTES Entrepre–
neurs tend to be:
a. SELF-DIRECTED: Be self-disciplined and
comfortable being the boss.
in problems or challenges.
Chapter 06 – Entrepreneurship and Starting a Small Business
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This exercise explores the motivations and expectations of
small-business owners. (See complete exercise on page 6.71
of this manual.)
(See complete PowerPoint slide notes on page 6.47.)
(See complete PowerPoint slide notes on page 6.48.)
Nineteenth-century England was not ready for Charles
Babbage, inventor and entrepreneur. (See the complete lecture
link on page 6.65 in this manual.)
Chapter 06 – Entrepreneurship and Starting a Small Business
e. You can keep the business going
5. An ENTREPRENEURIAL READINESS QUES-
TIONNAIRE is presented in the text box on text
pages 153–154.
D. ENTREPRENEURIAL TEAMS
1. An ENTREPRENEURIAL TEAM is a group of ex-
perienced people from different areas of business
accept the risk of starting and managing the type
of business that remains small, lets them do the
kind of work they want to do, and offers them a
balanced lifestyle.
2. Micropreneurs are content with limited growth.
Chapter 06 – Entrepreneurship and Starting a Small Business
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(See complete PowerPoint slide notes on page 6.48.)
This questionnaire helps students determine whether they
have entrepreneurial ability and in which category they fit.
(See complete PowerPoint slide notes on page 6.48.)
See complete PowerPoint slide notes on page 6.49.)
Chapter 06 – Entrepreneurship and Starting a Small Business
5. Reasons for the GROWTH OF HOME-BASED
BUSINESSES:
a. COMPUTER TECHNOLOGY allows home-
based businesses to look and act as big as
corporations.
curity
b. Getting results instead of following routines
c. Earning a profit instead of earning a
Chapter 06 – Entrepreneurship and Starting a Small Business
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(See complete PowerPoint slide notes on page 6.49.)
(See complete PowerPoint slide notes on page 6.49.)
(See complete PowerPoint slide notes on page 6.50.)
(See complete PowerPoint slide notes on page 6.50.)
(See complete PowerPoint slide notes on page 6.50.)
This text figure gives some suggestions for would-be entre-
preneurs.
Chapter 06 – Entrepreneurship and Starting a Small Business
F. WEB-BASED BUSINESSES
1. The Internet has spawned many small Web-based
businesses.
website.
a. The text uses the example of directing poten-
tial buyers to a product.
i. You register as an affiliate on the seller’s
website.
Chapter 06 – Entrepreneurship and Starting a Small Business
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This text figure highlights clues to avoiding home-based
business scams.
(See complete PowerPoint slide notes on page 6.51.)
For years, Amazon has made billions without collecting a
cent of sales tax. Illinois is putting an end to that and hoping
increased revenue will help the state debt. (See the complete
case, discussion questions, and suggested answers beginning
on page 6.76 of this manual.)
(See complete PowerPoint slide notes on page 6.51.)
(See complete PowerPoint slide notes on page 6.51.)
Chapter 06 – Entrepreneurship and Starting a Small Business
6. Web-based businesses are not failure-proof.
G. ENTREPRENEURSHIP WITHIN FIRMS
OF 1990 to encourage more entrepreneurs to
come to the United States.
a. It created a category of “INVESTOR VISAS”
that allows 10,000 people to come to the U.S.
each year if they invest $1 million in an enter-
prise that creates or preserves 10 jobs.
6-18
(See complete PowerPoint slide notes on page 6.52.)
Each year the 3M Company produces about 60,000 prod-
ucts and generates $16 billion in sales by fostering employee
innovation. (See the complete case, discussion questions, and
suggested answers beginning on page 6.78 of this manual.)
For years companies haven’t given time to products created
outside of their own R&D departments. As companies are
downsizing, product development is shifting from intrapre-
neurs toward outside inventors (See the complete lecture link
on page 6.66 of this manual.)
(See complete PowerPoint slide notes on page 6.52.)
Chapter 06 – Entrepreneurship and Starting a Small Business
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IV. GETTING STARTED IN SMALL BUSINESS
A. In general, the SAME PRINCIPLES apply to small and
Chapter 06 – Entrepreneurship and Starting a Small Business
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lecture link 6-5
EX-CONTREPRENEURS
Prisoner Entrepreneurship Program (PEP) has helped inmates
in state prisons by teaching them how to open their own legiti-
mate businesses after serving their sentences. (See complete lec-
ture link on page 6.67 of this manual.)
progress
assessment
(Text page 158)
PPT 6-27
Progress Assessment
(See complete PowerPoint slide notes on page 6.53.)