Ch. 6-2Ch. 6-2

Small Business BasicsSmall Business Basics

Small Business Small Business OwnershipOwnership

Small Business- An independent business Small Business- An independent business with fewer than 500 employees.with fewer than 500 employees.

99.9% of all U.S. businesses are 99.9% of all U.S. businesses are considered small businesses.considered small businesses.

Small businesses are responsible for Small businesses are responsible for creating 60-80 percent of all new jobs.creating 60-80 percent of all new jobs. The owner is typically the manager.The owner is typically the manager. The business operates in one or very few The business operates in one or very few

locationslocations It typically serves a small marketIt typically serves a small market It is not dominant in its field.It is not dominant in its field.

Ownership DiversityOwnership Diversity

Women own more than ¼ of all small Women own more than ¼ of all small businessesbusinesses

18% of small businesses have 18% of small businesses have African-American, Asian-American, African-American, Asian-American, or Hispanic-American ownershipor Hispanic-American ownership

The majority of small business The majority of small business owners are over 35 years oldowners are over 35 years old

What are some advantages What are some advantages of a small business?of a small business?

Fewer customersFewer customers Better customer serviceBetter customer service More individual attention to the customerMore individual attention to the customer Deal directly with a person, not an Deal directly with a person, not an

answering serviceanswering service

Provide unique servicesProvide unique services

Able to market to specific nichesAble to market to specific niches

What must you do before What must you do before starting a small business?starting a small business?

Prepare and do research!Prepare and do research! CustomersCustomers CompetitorsCompetitors Government regulationsGovernment regulations PricePrice Target marketTarget market Advertising/marketingAdvertising/marketing

CustomersCustomers Who are your potential customers?Who are your potential customers?

How do you plan on reaching your How do you plan on reaching your potential customers?potential customers?

Who else is targeting your potential Who else is targeting your potential customers?customers?

What kind of income do your What kind of income do your potential customers have?potential customers have?

CompetitorsCompetitors

Who are your competitors?Who are your competitors?

What are they doing that works?What are they doing that works?

What are they doing that needs What are they doing that needs improvement?improvement?

How you can you learn from their How you can you learn from their success and failures?success and failures?

Government RegulationsGovernment Regulations

What kinds of government What kinds of government regulations are you going to be regulations are you going to be dealing with?dealing with?

Zoning restrictionsZoning restrictions

Environmental Protection AgencyEnvironmental Protection Agency

PricePrice

How are you going to price the How are you going to price the product or service?product or service?

Can you stay competitive while still Can you stay competitive while still making a profit?making a profit?

Target MarketTarget Market

Who is your target market?Who is your target market?

How are you going to reach your How are you going to reach your target market?target market?

What is the income of your target What is the income of your target market?market?

Advertising/MarketingAdvertising/Marketing

Where do you plan on advertising?Where do you plan on advertising?

How much do you plan on spending How much do you plan on spending on advertising?on advertising?

How can you market the product or How can you market the product or service in a way to best reach your service in a way to best reach your target market?target market?

Small Business FailuresSmall Business Failures

50% of small businesses fail in the 50% of small businesses fail in the first year.first year.

95% of small businesses fail within 95% of small businesses fail within the first 5 years.the first 5 years.

Why do small businesses Why do small businesses fail?fail?

Why do small businesses Why do small businesses fail?fail?

Not enough start-up moneyNot enough start-up money Lack of management experienceLack of management experience Not controlling operating expensesNot controlling operating expenses Poor locationPoor location Failure to manage credit offered to Failure to manage credit offered to

customerscustomers OverspendingOverspending Inadequate business planInadequate business plan Ineffective marketing/advertisingIneffective marketing/advertising

Successful Small Successful Small BusinessesBusinesses

What are some small businesses that What are some small businesses that you know of that have been you know of that have been successful?successful?

Successful Small Successful Small BusinessesBusinesses

What makes those small businesses What makes those small businesses successful?successful?

Successful Small Successful Small BusinessesBusinesses What makes those small businesses What makes those small businesses

successful?successful?

Great work ethicGreat work ethic

Good customer serviceGood customer service

Hard-working employeesHard-working employees

Good locationGood location

Well-plannedWell-planned

Know where your business Know where your business is goingis going

Mission statement- A short, specific Mission statement- A short, specific written statement of the reason a written statement of the reason a business exists and what it wants to business exists and what it wants to achieve.achieve.

We will be the easiest pharmacy We will be the easiest pharmacy retailer for customers to use.retailer for customers to use.

CVS PharmacyCVS Pharmacy

We will be the easiest pharmacy We will be the easiest pharmacy retailer for customers to use.retailer for customers to use.

______ ______ is a results-oriented ______ ______ is a results-oriented oil and gas company that builds oil and gas company that builds value for its shareholders value for its shareholders through its employees by through its employees by creating an atmosphere of creating an atmosphere of optimism, teamwork, creativity, optimism, teamwork, creativity, resourcefulness and by dealing resourcefulness and by dealing with everyone in an open and with everyone in an open and ethical manner.ethical manner.

Devon EnergyDevon Energy

Devon Energy is a results-Devon Energy is a results-oriented oil and gas company that oriented oil and gas company that builds value for its shareholders builds value for its shareholders through its employees by creating through its employees by creating an atmosphere of optimism, an atmosphere of optimism, teamwork, creativity, teamwork, creativity, resourcefulness and by dealing resourcefulness and by dealing with everyone in an open and with everyone in an open and ethical manner.ethical manner.

We are a global family with a We are a global family with a proud heritage passionately proud heritage passionately committed to providing personal committed to providing personal mobility for people around the mobility for people around the world.world.

Ford Motor CompanyFord Motor Company

We are a global family with a We are a global family with a proud heritage passionately proud heritage passionately committed to providing personal committed to providing personal mobility for people around the mobility for people around the world.world.

At _________, we work to help At _________, we work to help people and businesses people and businesses throughout the world realize throughout the world realize their full potential. This is our their full potential. This is our mission. Everything we do mission. Everything we do reflects this mission and the reflects this mission and the values that make it possiblevalues that make it possible

MicrosoftMicrosoft

At Microsoft, we work to help At Microsoft, we work to help people and businesses people and businesses throughout the world realize throughout the world realize their full potential. This is our their full potential. This is our mission. Everything we do mission. Everything we do reflects this mission and the reflects this mission and the values that make it possiblevalues that make it possible

In order to be successful in business, In order to be successful in business, you must have goals and you must you must have goals and you must know where you are going.know where you are going.

What are some reasons why you would What are some reasons why you would or would not want to become an or would not want to become an entrepreneur?entrepreneur?

How is the internet changing the How is the internet changing the characteristics of small businesses?characteristics of small businesses?

Do you believe the internet can make Do you believe the internet can make small businesses more competitive with small businesses more competitive with large businesses? Why?large businesses? Why?