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Chapter 06 - Entrepreneurship and Starting a Small Business
6-46
test
prep
PPT 6-60
Progress Assessment
TEST PREP
6-60
• Why do many small businesses avoid doing
business globally?
• What are some of the advantages small
businesses have over large businesses in selling
in global markets?
Chapter 06 - Entrepreneurship and Starting a Small Business
6-47
PowerPoint slide notes
PPT 6-1
Chapter Title
McGraw-Hill/Irwin Copyright © 2015 by the McGraw-Hill Companies, Inc. All rights reserved.
Entrepreneurship
and
Starting a
Small Business
CHAPTER 6
PPT 6-2
Learning Objectives
LEARNING OBJECTIVES
6-2
1. Explain why people take the risks of
entrepreneurship; list the attributes of successful
entrepreneurs; and describe entrepreneurial teams,
intrapreneurs, and home- and web-based
businesses.
2. Discuss the importance of small business to the
American economy and summarize the major
causes of small-business failure.
PPT 6-3
Learning Objectives
LEARNING OBJECTIVES
6-3
3. Summarize the ways to learn about how small
businesses operate.
4. Analyze what it takes to start and run a small
business.
5. Outline the advantages and disadvantages small
businesses have in entering global markets.
Chapter 06 - Entrepreneurship and Starting a Small Business
6-48
PPT 6-4
Prudencio Unanue
PRUDENCIO UNANUE
Goya Foods
6-4
• Goya Foods has provided for
Hispanic families for over 75
years.
• Unanue, a Spanish
immigrant, opened a small
grocery store in 1936.
• Still family-owned, Goya now
employs over 3,500 and sells
more than 1,500 products.
PPT 6-5
Name That Company
NAME that COMPANY
6-5
While I was an employee at a big company, I
developed a product that has become a staple
on most office supply lists. I needed something
to mark the pages of a hymnal without falling out
or damaging the book. What started as a simple,
yellow piece of paper with a new adhesive
evolved into many different versions – now there
are Super Sticky, recycled, Pop-Up and
electronic versions of my inventions.
Who am I, who did I work for, and what did I invent?
Company: Art Fry, 3M, Post-It Notes
PPT 6-6
What Is Entrepreneurship?
WHAT is ENTREPRENEURSHIP?
6-6
• Entrepreneurship --
Accepting the risk of starting
and running a business.
Chapter 06 - Entrepreneurship and Starting a Small Business
6-49
PPT 6-7
Notable Entrepreneurs
NOTABLE ENTREPRENEURS
6-7
• French immigrant Élruthère Irènèe du Pont de
Nemours started Du Pont in 1802.
• David McConnell borrowed $500 from a friend to
start Avon.
• George Eastman started Kodak with a $3,000
investment in 1880.
• Jeff Bezos started Amazon.com with investments
from his family and friends.
This slide will help in starting the chapter discussion.
Students enjoy stories about how companies began.
Ask the students: Do you know of any interesting stories
about how some other businesses got started? (This can
also be assigned as a team project to generate a good dis-
cussion.)
PPT 6-8
Earning While Learning
EARNING while LEARNING
6-8
• Jeremy Young – Developed a prepaid laundry
service for students at his university.
• Jessica Mah – Started InternshipIn that helps
students find high-quality internships.
• Zach Workman – Launched Punch, an all-natural
energy drink.
• John Goscha – Created her one-of-a-kind jewelery
company, Tramonti, during her freshman year.
PPT 6-9
You’re Never Too Young to Be an
Entrepreneur
YOU’RE NEVER TOO YOUNG
to be an ENTREPRENEUR
6-9
Four reasons to start your business right away:
1. You don’t have a mortgage or kids to take care of.
2. You can survive on little funds and work long hours.
3. No disruption to your career path. It hasn’t started yet!
4. Use your alma mater for resources.
Source:Entrepreneur,www.entrepreneur.com,accessedNovember2014.
1. This slide shows the students that it’s never too
early to get started on your business ideas.
2. Ask the students, Can you think of other reasons
you might want to start a business right after
school? What are the potential downsides to start-
ing a business right away?
Chapter 06 - Entrepreneurship and Starting a Small Business
6-50
PPT 6-10
You’re Never Too Old to Be an
Entrepreneur Either!
YOU’RE NEVER TOO OLD to be
an ENTREPRENEUR EITHER!
6-10
• The highest rate of
entrepreneurship activity is in
the 55-64 age group!
• Since 1996, older Americans
have opened businesses at
a higher rate than 20-34 year
olds.
• Older entrepreneurs have
greater experience and more
financial resources.
Source:U.S.NewsandWorldReport,www.usnews.com,accessedOctober2014.
1. This slide shows that in spite of popular belief
that all older Americans retire at a certain age,
many start their own businesses after leaving their
careers.
2. Ask the students, Can you think of reasons (other
than experience and funding) that older entrepre-
neurs are successful? Why do you think older
Americans want to start businesses at this age?
What are the downsides of starting a business
late?
PPT 6-11
Why Take the Risk?
WHY TAKE the RISK?
6-11
LO 6-1
• Opportunity
• Profit
• Independence
• Challenge
PPT 6-12
Big Time Profit
Source:Forbes,www.forbes.com,accessedNovember2014.
BIG TIME PROFIT
6-12
• Michael Dell could buy 1,100
new laptops for every
student at the University of
Texas at Austin!
• Dietrich Mateschitz could
buy himself a can of Red Bull
every day for the next 11
million years!
• Liliane Bettencourt could buy
a box of L’Oreal hair color for
every woman in the world!
LO 6-1
PhotoCredit:EmranKassim
Chapter 06 - Entrepreneurship and Starting a Small Business
6-51
PPT 6-13
What Does It Take to Be an
Entrepreneur?
WHAT DOES IT TAKE to be an
ENTREPRENEUR?
6-13
LO 6-1
• Self-directed
• Self-nurturing
• Action-oriented
• Highly energetic
• Tolerant of uncertainty
PPT 6-14
Five Steps to Starting Your Business in
School
Source:Entrepreneur,www.entrepreneur.com,accessedNovember2014.
FIVE STEPS to STARTING YOUR
BUSINESS in SCHOOL
6-14
LO 6-1
1. Find a problem or need.
2. Zero in on specifics.
3. Do research on
campus, test products
with students.
4. Move forward with your
ideas. Don’t wait!
5. Sacrifice.
1. Just because you’re still in school doesn’t mean
that starting a business is beyond your grasp.
Many students have turned their time in college
into an opportunity to create a business.
2. Ask the students, Have you had an idea for a
business? What triggered it? Why did you or did
you not pursue it further?
PPT 6-15
An Idea Is a Good Opportunity If . . .
An IDEA is a
GOOD OPPORTUNITY IF…
6-15
LO 6-1
• It fills customers’ needs.
• You have the skills and resources to start a
business.
• You can sell the product or service at a
reasonable price and still profit.
• You can get your product or service to customers
before the window of opportunity closes.
• You can keep the business going.
Chapter 06 - Entrepreneurship and Starting a Small Business
6-52
PPT 6-16
Entrepreneurial Teams
ENTREPRENEURIAL TEAMS
6-16
LO 6-1
• Entrepreneurial team -- A
group of experienced people from
different areas of business who
join to form a managerial team
with the skills to develop, make
and market a new product.
• An entrepreneurial team
(Steve Jobs, Steve Wozniak
and Mike Markkula) was key to
Apple’s success.
PPT 6-17
Micropreneurs
MICROPRENEURS
6-17
LO 6-1
• Micropreneurs -- Entrepreneurs willing to accept
the risk of starting and managing a business that
remains small, lets them do the work they want to do,
and offers a balanced lifestyle.
• About half of U.S. micropreneurs are home-based
business owners – writers, consultants, video
producers, architects, bookkeepers, etc.
• Nearly 60% of home-based micropreneurs are
men.
PPT 6-18
Home-Based Business Growth
• Computer technology has leveled the playing
field.
• Corporate downsizing has led many to venture on
their own.
HOME-BASED BUSINESS
GROWTH
6-18
LO 6-1
• Social attitudes have
changed.
• New tax laws have
loosened restrictions on
deducting expenses for
home offices.
In the United States home-based businesses have experi-
enced growth due to a variety of reasons. One of the most
important reasons for the growth in home-based businesses
is that technology has made it easier for home-based busi-
nesses to compete against their larger competitors.
Chapter 06 - Entrepreneurship and Starting a Small Business
6-53
PPT 6-19
Home-Based Business Isn’t Easy
HOME-BASED BUSINESS
ISN’T EASY
6-19
LO 6-1
• Getting new customers is difficult.
• Managing your time requires self-discipline.
• Work and family tasks are sometimes not
separated.
• Government ordinances may restrict your
business.
• Homeowner’s insurance may not cover
business-related claims.
PPT 6-20
Benefits of Home-Based Businesses
BENEFITS of HOME-BASED
BUSINESSES
6-20
LO 6-1
• Ability to start your business
immediately
• Minimal start-up capital needed
• No rent or excessive set-up
charges
• Comfortable working conditions
• Reduced wardrobe expenses
• No commuting
• Tax benefits
• Elimination of office politics
• Low risk for trial and error
1. This slide lists some of the benefits of a home-
based business.
2. Before showing this slide, have students work
alone, then with a partner, then with a group (do-
ing all three will help promote discussion of stu-
dents’ ideas) to see if they can come up with a list
of benefits of home-based businesses. Then reveal
the slide and have students compare their lists to
the slide.
PPT 6-21
Downsides of Home-Based Businesses
DOWNSIDES of HOME-BASED
BUSINESSES
6-21
LO 6-1
• Difficult to establish work
habits
• Limited support system
• Isolation
• Work space may be limited
• Clients may be uncomfortable
coming to your home
• Zoning restrictions
• Success is based 100% on
your efforts
1. This slide walks students through some of the
drawbacks of a home-based business.
2. Before showing this slide, have students work
alone, then with a partner, then with a group (do-
ing all three will help promote discussion of stu-
dents’ ideas) to see if they can come up with a list
of disadvantages of home-based businesses. Then
reveal the slide and have students compare their
lists to the slide.
Chapter 06 - Entrepreneurship and Starting a Small Business
6-54
PPT 6-22
Think You’re Ready to Work from
Home?
Source:Entrepreneur,June2010.
THINK YOU’RE READY
to WORK from HOME?
6-22
Yes? No?
If I don’t know the answer, I can figure it out.
I’m hardworking, self-directed and disciplined.
I’m organized and can multitask.
I don’t mind working long hours or weekends.
I regularly set goals and measure progress.
I’m happy being alone.
I’m an excellent communicator.
I can create relationships with people I’ve never met.
I’m productive on my own.
My family and friends don’t expect me to be available
when I’m working at home.
LO 6-1
1. Running a business from home is hard work. Af-
ter discussing both the ups and downs of home-
based work, discuss this table with students.
2. Ask the students, What statements can you say
yes and no to? What do each of these statements
have to do with home business success? After
looking at this table, do you think you’d be ready
or want to work from home?
PPT 6-23
Online Business
ONLINE BUSINESS
6-23
LO 6-1
• Online sales reached
$262 billion in 2013,
about 8% of all retail
sales.
• All retail sales were up
2.5% in 2013. However,
online retail sales grew
13%.
It’s expected online sales will reach $370 billion by
2017.
PPT 6-24
Affiliate Marketing
AFFILIATE MARKETING
6-24
LO 6-1
• Affiliate Marketing -- An online marketing strategy
in which a business rewards individuals or other
businesses for each visitor or customer the affiliate
sends to its website.
Chapter 06 - Entrepreneurship and Starting a Small Business
6-55
PPT 6-25
Boosting Your Business’s Online Pres-
ence
Source: Entrepreneur, www.entrepreneur.com, accessed November 2014.
BOOSTING YOUR BUSINESS’S
ONLINE PRESENCE
6-25
PhotoCredit:MarcWathieu
LO 6-1
• Establish an identity.
• Be easy to find.
• Steal good ideas and
make them your own.
• Look out for
opportunities.
• Remember other forms
of marketing.
• Be friendly!
1. Activity online, both in retail and marketing, con-
tinues to grow each year. It’s important that busi-
nesses (even the small ones!) have an online, us-
er-friendly presence.
2. This slide provides some guidelines to successful-
ly navigate the process of creating an online busi-
ness identity.
3. Ask the students, Do you have any other ideas of
important steps to take in creating an online per-
sonality for a business? Through Facebook? Twit-
ter? Ads on Pandora or Hulu?
PPT 6-26
Intrapreneurs
• Art Fry of 3M developed
Post-Its when he was
trying to mark pages of
his hymnal without
damage.
INTRAPRENEURS
6-26
LO 6-1
• Intrapreneur -- A creative person who works as an
entrepreneur within a corporation.
• Intrapreneurs use a company’s existing
resources to launch new products for the
company.
In order to develop new ideas, engineers at Google are
allowed to work on projects that interest them for up to
20% of the time at work. The idea is to support creative
people and ideas in an effort to launch new products. This
work can be more motivating than working on someone
else’s ideas.
PPT 6-27
Government and Entrepreneurship
GOVERNMENT and
ENTREPRENEURSHIP
6-27
LO 6-1
• Immigration Act passed in 1990 created a
category of “investor visas” that encourage
entrepreneurs to come to the U.S.
• Enterprise Zones -- Specific geographic areas to
which governments attract private business
investment by offering lower taxes and other
government support.
• Incubators -- Offer new businesses low-cost offices
with basic services.
Small-business is the economic engine of the United
States economy. Due to the economic power of small-
businesses the government has used “investor visas,” en-
terprise zones and business incubators to encourage entre-
preneurship. A good website to further explore incubators
is http://www.nbia.org/.
Chapter 06 - Entrepreneurship and Starting a Small Business
6-56
PPT 6-28
Test Prep
TEST PREP
6-28
• Why are people willing to take the risks of
entrepreneurship?
• What are the advantages of entrepreneurial
teams?
• How do micropreneurs differ from other
entrepreneurs?
• What does the government do to promote
entrepreneurship?
1. The primary reasons people are will to take the risk
of entrepreneurship are: (a) opportunity to share in
the American dream; (b) profit, the potential to
become wealthy and successful; (c) independence,
becoming you own boss; and (d) challenge, the desire
to take a chance.
2. Whereas an entrepreneur has to wear many hats and
take huge responsibility, a team allows members to
combine creative skills with production and
marketing skills right from the start. Having a team
can also ensure more cooperation and coordination
later among functions in the business.
3. Most entrepreneurs are committed to the quest for
growth in their business. Mircorpreneurs know they
can be content even if their companies never appear
on a list of top-ranked businesses. Many
micropreneurs are home-based businesses.
4. The government helps by creating enterprise and
promise zones, offering tax breaks, enacting the
JOBS Act (discussed further in Chapter 19), and “in-
vestor visas.”
PPT 6-29
Small Businesses
SMALL BUSINESSES
6-29
LO 6-2
• Small Business --
Independently owned and
operated, not dominant in its
field of operation and meets
certain standards of size.
• Businesses are “small” in
relation to other businesses
in their industries.
Chapter 06 - Entrepreneurship and Starting a Small Business
6-57
PPT 6-30
Small-Business Statistics
SMALL BUSINESS STATISTICS
6-30
LO 6-2
• There are 28 million small businesses in the U.S.
• Of all nonfarm businesses in the U.S., almost
97% are considered small.
• Small businesses account for over 50% of the
GDP.
• Small businesses have generated 65% of new
jobs since 1995.
• About 80% of U.S. workers’ first jobs were in
small business.
The power of small business is immense. Students are
often shocked to see how small businesses contribute to
the U.S. economy.
PPT 6-31
Advantages of Small over Big
Business
ADVANTAGES of SMALL OVER
BIG BUSINESS
6-31
PhotoCredit:ElliotBrown
LO 6-2
• More personal customer service.
• The ability to respond quickly to opportunities.
PPT 6-32
Business Failures Are Lower Than the
Reports Because . . .
BUSINESS FAILURES are LOWER
THAN the REPORTS BECAUSE…
6-32
LO 6-2
• Owner closing a business
to start another is reported
as a “failure.”
• Changing forms of
ownership is reported as a
“failure.”
• Retirement is reported as
a “failure.”
Chapter 06 - Entrepreneurship and Starting a Small Business
6-58
PPT 6-33
They Did What?
Source:WorldFeaturesSyndicate.
• Tommy Hilfiger – First store went bankrupt
• Milton Hershey – First confectionery failed
• H.J. Heinz – Company went bankrupt six years after
start
THEY DID WHAT?
Famous Business Failures
6-33
LO 6-2
• Walt Disney – First film company
went bankrupt
• Henry Ford – First two car
companies failed
• L.L. Bean – Almost went bankrupt in
first year
1. Starting a successful new business is never easy
and many famous entrepreneurs failed at their
first and subsequent attempts.
2. Ask the students, How can a business failure ac-
tually be a positive experience? (While failure is
never a goal, it often gives the entrepreneur an
invaluable experience. There is an old adage,
Learn from your mistakes.)
3. Ask the students, If your first business failed,
would you try again? Why or why not?
4. How can businesses survive such poor perfor-
mances? (Determination and passion of the own-
ers and founders plays a big role.)
PPT 6-34
Causes of Small Business Failures
CAUSES of SMALL BUSINESS
FAILURES
6-34
LO 6-2
PPT 6-35
Increasing Small Business Successes
INCREASING SMALL BUSINESS
SUCCESSES
6-35
LO 6-2
Chapter 06 - Entrepreneurship and Starting a Small Business
6-59
PPT 6-36
Learning about Small Business
LEARNING ABOUT
SMALL BUSINESS
6-36
LO 6-3
• Learn from Others – Investigate your local
colleges for classes on small business and
entrepreneurship; talk to and work for successful
local entrepreneurs.
• Get Some Experience – Gain three years
experience in the field; then start a part-time small
business.
• Take Over a Successful Firm – Serve as an
apprentice and eventually take over once the owner
steps down.
PPT 6-37
Should You Stay or Should You Go?
SHOULD YOU STAY or
SHOULD YOU GO?
6-37
Suppose you worked in a company for two years and
you see signs of it faltering. You and a coworker
have ideas about how to succeed and are
considering quitting to start your own company.
• Should you approach other coworkers about working for
your new venture?
• Will you try to lure your old boss’s customers?
• What are the alternatives?
• What are the consequences?
• What is the most ethical choice?
PPT 6-38
Major Business Functions
MAJOR BUSINESS FUNCTIONS
6-38
LO 6-4
• Planning
• Financing
• Knowing customers
• Managing employees
• Keeping records
Starting a business is when the real work begins. It is im-
portant that entrepreneurs understand the major business
functions such as planning, financing, understanding your
customer, managing employees and keeping good records.
Many entrepreneurs create business plans which may in
part outline the major business functions.
Chapter 06 - Entrepreneurship and Starting a Small Business
6-60
PPT 6-39
Business Plans
BUSINESS PLANS
6-39
LO 6-4
• Business Plan -- A detailed written statement that
describes the nature of the business, the target
market, the advantages the business will have over
competition, and the resources and owners
’
qualifications.
• A business plan forces potential owners to be
specific about what they will offer.
• A business plan is mandatory for talking with
bankers or investors.
The business plan is the entrepreneur’s road map to suc-
cess. While a well-designed business plan will not guar-
antee success, the lack of one may lead to failure. To bor-
row money or to seek investors, a business plan is a must.
PPT 6-40
Writing a Business Plan
• A good plan takes a long time to prepare.
• A good executive summary catches interest and
tempts potential investors to read on.
WRITING a BUSINESS PLAN
6-40
LO 6-4
• Getting the plan into
the right hands is
almost as important
as getting the right
information in it.
PPT 6-41
A Family Affair
Source:BloombergBusinessweek,www.businessweek.com,accessedNovember2014.
A FAMILY AFFAIR
What to Consider Before Starting a Family Business
6-41
LO 6-4
• Clarify Expectations – What will each person
contribute?
• Discuss Work/Family Boundaries – What is the
line that separates work from personal relationships?
• Develop Good Communication – Agree about
types of decisions you’ll make jointly and on your own.
• Clarify Long-Term Intentions – Discuss how long
everyone will work full time and goals for the business.
• Have an Escape Hatch – Have a Plan B.
1. This slide illustrates what needs to be considered
before starting a business with family members.
2. Communication and the establishment of clear
expectations are the keys to making a family
business work.
3. Ask the students: Why do family businesses need
extra care?
