What are the characteristics of entrepreneurs?
- •Internal locus of control
- •High energy level
- •High need for achievement
- •Tolerance for ambiguity
- •Passion & action orientation
- •Self-reliance & desire for independence
What three main things define a small business?
- 500 or fewer employees
- Independently owned and operated
- Does not dominate its industry
What percentage of US businesses are small businesses?
99% are small businesses, 87% of those employ fewer than 20 people
What percentage of employment do family businesses provide?
Family businesses provide 60% of US employment and 78% of new jobs
What is the most crucial factor for the survival of a family business?
a proper succession plan
What are the statistics on family businesses after the first generation?
66% plan on keeping the business in the family, but 30% survive to the second generation, 12% to the third, only 3% beyond the third
How many small businesses fail within the first 5 years?
60-80% of new businesses fail in the first five years
Why do small businesses typically fail? (8 reasons)
- •Lack of experience in the industry
- •Lack of expertise in finance, production, sales...
- •Lack of strategy or planning
- •Poor financial control
- •Growing too fast, ahead of cash flow
- •Insufficient commitment
- •Ethical failure—fraud, embezzlement
- •Not usually lack of initial capital
a document that summarizes the business strategy and structure
Parts of a business plan
- business goals
- strategies used to achieve these goals
- a plan of how the entrepreneur will implement these strategies
- exit strategy
Advantages of Franchising
- –Reduced financial risk of new business success through experience provided by franchisor.
- –Training, financial, and management support by franchisor.
Disadvantages of Franchising
- –Start-up fees to purchase franchise.
- –Limitations of franchise (market area, product, customers).
- –Imposed operational controls of franchisor.