Chapter 5 - Small business, entrepreneurship, and franchising. This chapter include objectives: Define entrepreneurship and small business, investigate the importance of small business in the . economy and why certain fields attract small business, specify the advantages of small-business ownership, summarize the disadvantages of small-business ownership and analyze why many small businesses fail,. | Part 2 Starting and Growing a Business © 2015 McGraw-Hill Education. 1 CHAPTER 4 Options for Organizing Business CHAPTER 5 Small Business, Entrepreneurship, and Franchising 5-2 2 Learning Objectives LO 5-1 Define entrepreneurship and small business. LO 5-2 Investigate the importance of small business in the . economy and why certain fields attract small business. LO 5-3 Specify the advantages of small-business ownership. LO 5-4 Summarize the disadvantages of small-business ownership, and analyze why many small businesses fail. LO 5-5 Describe how you go about starting a small business and what resources are needed. LO 5-6 Evaluate the demographic, technological, and economic trends that are affecting the future of small business. LO 5-7 Explain why many large businesses are trying to “think small”. 5-3 3 What Is a Small Business? 5-4 Small Business Any independently owned and operated business that is not dominant in its competitive area Small Business Administration (SBA) An . | Part 2 Starting and Growing a Business © 2015 McGraw-Hill Education. 1 CHAPTER 4 Options for Organizing Business CHAPTER 5 Small Business, Entrepreneurship, and Franchising 5-2 2 Learning Objectives LO 5-1 Define entrepreneurship and small business. LO 5-2 Investigate the importance of small business in the . economy and why certain fields attract small business. LO 5-3 Specify the advantages of small-business ownership. LO 5-4 Summarize the disadvantages of small-business ownership, and analyze why many small businesses fail. LO 5-5 Describe how you go about starting a small business and what resources are needed. LO 5-6 Evaluate the demographic, technological, and economic trends that are affecting the future of small business. LO 5-7 Explain why many large businesses are trying to “think small”. 5-3 3 What Is a Small Business? 5-4 Small Business Any independently owned and operated business that is not dominant in its competitive area Small Business Administration (SBA) An independent agency of the federal government that offers managerial and financial assistance to small businesses 4 Small-Business Ownership 5-5 Advantages Disadvantages Independence High stress level Costs High failure rate – 50% of all new businesses fail within the first 5 years Flexibility Undercapitalization – Lack of funds to operate a business normally Focus Managerial inexperience or incompetence Reputation Inability to cope with growth 5 Advantages/Disadvantages of Small-Business Ownership 5-6 Some of the advantages of small businesses include: Flexibility Lowers start-up costs Ability to be your own boss Disadvantages Entrepreneurs experience a great deal of independence but also a great deal of stress Many fail 6 Starting a Business 5-7 7 Forms of Business Ownership 5-8 8 Equity Financing 5-9 Referred to as equity financing because the owner uses real personal assets rather than borrowing funds from outside sources to get started in a new business The owner may bring useful .
