SMALL BUSINESS

MANAGEMENT
The Small Business Decision
Lecture 3

1
The Small Business Decision
 Personal Evaluation

2
Advantages of Small Business
Ownership
 More personal contacts with people
 Independence
 Skill Development
 Potential Financial Rewards
 Challenge
 Enjoyment

3
 Disadvantages of Small
Business Ownership
 Risk
 Stress
 Need for Many Abilities
 Limited Financial Rewards
 People Conflicts
 Time Demands

4
 Demographic Characteristics
of Entrepreneurs
 Parentsowned business
 Foreign parents
 High school degree or less
 College or more
 Age 31 and under
 Age 40 or more

5
Personality Characteristics Required
by Successful Entrepreneurs
 Achievement Orientation
 Risk Taking
 Independence, Self Confidence, Self
Assurance
 Innovativeness
 Strong Verbal and Numerical Skills
 Selling Skills

6
Personality Characteristics Required
by Successful Entrepreneurs
 Selling Skills
 Problem Solving Abilities
 Strategic Planning
 Perseverance

7
 The Small Business Decision
 Organizational Evaluation

8
 Small Business Successes
 Alertness to Change
 Ability to Attract and Hold Competent
Employees
 Staying Close to the Consumer

9
 Small Business Successes
 Thoroughness with Operating Details
 Ability to Obtain Needed Capital
 Effective Handling of Laws, Rules, and
Regulations

10
 Small Business Successes
 Environments Conducive to Small Business
Success
– Personal Attention to Daily Operation
– Owner Contact with Employees
– Small or Local Demand

11
Small Business Successes
– Industries that Require Flexibility
 highgrowth rates, erratic demands,
perishable products
– More Labor and Less Capital Intensive
– Considerable Government Encouragement

12
 Small Business Failures
 Bankruptcies

13
 Entrepreneurialship and Small
Business Management
 Entrepreneurial Skills
– Characteristics
 creativity,innovativeness, independence, risk-
taking, idea-oriented
– Situations
 generating ideas and solutions to problems, starting
a new business, expanding or opening new products,
reaching performance objectives, maintaining
control of operations

14
 Entrepreneurialship and Small
Business Management
 Managerial Skills
– characteristics
 develops strategy and goal setting, prefers to know
outcomes of actions or activities, team player, works
through others, skills in finance, marketing, personnel,
operations
 situations

 generating ideas and solutions to problems, starting a new

business, expanding or opening new products, reaching
performance objectives, maintaining control of operations
15
 Concept Checks
 1. What are the major causes of business
failure?
 2. What are the characteristics of a
successful business?
 3. List the advantages of owning a small
business.

16
 Concept Checks
 4. List the disadvantages of owning a small
business.
 5. What are the characteristics of successful
small business owners?
 6. What is the difference between an
entrepreneur and a manager?

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