ENTREPRENEURIAL ENTREPRENEURIAL CONSULTINGCONSULTING

Entrepreneurship 475 Entrepreneurship 475 Spring 2010Spring 2010

Dr. Robert LahmDr. Robert LahmDr. Frank LockwoodDr. Frank Lockwood

IntroductionIntroduction

ENT 475 is the capstone course for the ENT 475 is the capstone course for the entrepreneurship program. The course is entrepreneurship program. The course is designed to give you the opportunity:designed to give you the opportunity:– Analyze the operations of an ongoing businessAnalyze the operations of an ongoing business– Develop an analysis of the problemDevelop an analysis of the problem– Conduct a market or industry analysisConduct a market or industry analysis– Develop and present a plan to solve the Develop and present a plan to solve the

problem (could be a business plan) to the problem (could be a business plan) to the management of the small businessmanagement of the small business

What is a “Small Business”What is a “Small Business”

The SBA* defines a small business as an The SBA* defines a small business as an independent business with < 500 employeesindependent business with < 500 employees

How important are small businesses to the U.S. How important are small businesses to the U.S. economy?economy?– 99.7% of all employer firms99.7% of all employer firms– ½ of all employees work for small businesses½ of all employees work for small businesses– 22.8% of federal prime contracts in 200622.8% of federal prime contracts in 2006– 40% of high tech workers (where innovation happens)40% of high tech workers (where innovation happens)– 13X’s as many patents per employee as large firms13X’s as many patents per employee as large firms

*All statistics are from the SBA*All statistics are from the SBA

Job CreationJob Creation

Most jobs are created by small businessMost jobs are created by small business– 60-80% of all new jobs in the U. S. each of the 60-80% of all new jobs in the U. S. each of the

last 10 years were created in small businesseslast 10 years were created in small businesses– 90% of jobs in western NC 90% of jobs in western NC – Large firms lost more jobs than they createdLarge firms lost more jobs than they created

Net loss of>180,00 jobs in large firmsNet loss of>180,00 jobs in large firms

Job CreationJob Creation

Breakdown of U.S. jobsBreakdown of U.S. jobs– 115.1 million non-farm private sector jobs in 2004115.1 million non-farm private sector jobs in 2004

58.6 million in firms < 500 workers58.6 million in firms < 500 workers 41.8 million in firms < 100 workers41.8 million in firms < 100 workers 21.2 million in firms < 20 workers21.2 million in firms < 20 workers

Survival rate for new businessesSurvival rate for new businesses– 66% survive at least 2 years66% survive at least 2 years– 44% survive at least 4 years44% survive at least 4 years

Rates don’t vary much by industry or classRates don’t vary much by industry or class

Job CreationJob Creation

Why do some survive when others don’t?Why do some survive when others don’t?– Adequate supply of capitalAdequate supply of capital– Being large enough to have employeesBeing large enough to have employees– Education level of the ownerEducation level of the owner– Owner’s reason for starting the businessOwner’s reason for starting the business

Freedom for family lifeFreedom for family life Wanting to be their own bossWanting to be their own boss

A recent A recent USAUSA Today Today survey indicated that 60% of survey indicated that 60% of parents wish that their children could start and run parents wish that their children could start and run their own businesstheir own business

Sources of CapitalSources of Capital

EquityEquity– Personal savingsPersonal savings– Friends and familyFriends and family– Angel investorsAngel investors– Venture capitalistsVenture capitalists– Public OfferingsPublic Offerings

DebtDebt– Commercial banks or other depositories (65%)Commercial banks or other depositories (65%)

Incl. loans, credit lines, leases, etc.Incl. loans, credit lines, leases, etc.

– Credit CardsCredit Cards