int

bu
ro
du
sin
cti
ones
to
s
Entrepreneurship
Small Business
Sector
Chapter 6
int
bu
ro
du
sin
cti
ones
Overview
to
s
Entrepreneurship
Business Plans
Small Businesses

2 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
to
s

Entrepreneurship
int
bu
ro
du
sin
cti
ones
Entrepreneurship
to
s
Entrepreneurs take tremendous amounts
of risk to start a business with no
guarantee of success
Actually, most start-ups fail within first 5
years
But: Without the entrepreneurial spirit
there would be no businesses

4 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Hall of Fame
to
s David McConnell started Avon in
1886 with $500 borrowed from a
friend
George Eastman started Kodak in
1880 with $3,000
William Procter and James Gamble
started Procter & Gamble in 1837
with $7,000
Henry Ford started
the Ford Motor
Company in 1903

5 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Hall of Fame (cont.)
to
s
Bill Gates and Paul Allen (Microsoft)
Steve Jobs and Steve Wozniak (Apple)
Jeff Bezos (Amazon)
Mark Zuckerberg (Facebook)
Sergey Brin and Larry Page (Google)
Jack Dorsey (Twitter)
Travis Kalanick and Garrett Camp (Uber)

6 entrepreneurship, small
int
bu
ro
du
sin
cti
Is Entrepreneurship For
ones
to Everyone?
s
Entrepreneurship is about passion,
perseverance and execution
It is NOT for everyone
Since much is at risk for an entrepreneur,
fully understanding the sacrifice and risk
one must take is important to understand
before undertaking an entrepreneurial
venture

7 entrepreneurship, small
int
bu
ro
du
sin
cti
Two Main Types of New
ones
to Ventures
s
Lifestyle (Micropreneurs)
Exit not a priority
Typically no or few outside investors
Creates a nice living for the owners
Growth (Entrepreneurs)
Outside investors
Growth is a priority
Exit is a priority
Founders rarely stay long term

8 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Before You Start
to
s
Do you want to have a lifestyle or a
growth business?
Personal plan
Business plan
What will success mean?
Personal mission statement (personal plan)
How will I measure success (metrics?)

9 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Before You Start (cont.)
to
s
When and what will exit look like?
Timeline
IPO (Initial Public Offering)
Acquired
Merger
Handed down to a family member?

10 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Why???
to
s
Opportunity
Financial gain
Independence
Challenge

11 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
What Does It Take?
to
s
You cant really learn how to be an
entrepreneur
It takes a certain personality:
Self-directed
Self-nurturing
Action-oriented
Highly energetic
Tolerant of uncertainty
THEY ARE NOT AFRAID TO FAIL

12 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Passion and Persistence
to
s
Entrepreneurs are passionate about their
ideas and goals
They also need to be persistent
To be successful, the business idea must
address some need
To survive, the business needs to make a
profit

13 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Sir Ken Robinson
to
s

14 entrepreneurship, small
int
bu
ro
du
sin
cti
Failure = Learning
ones
to Experience
s
We hear a lot about successes but rarely
about failures
Have you failed at something?
How did it make you feel?
Did you learn something?
Failure is a learning opportunity
Write a failure resume (When and how
did I fail? What did I learn?)

15 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Famous Failures
to
s

16 entrepreneurship, small
int
bu
ro
du
sin
cti
They Did What?
ones
to Famous Business Failures
s
Tommy Hilfiger First store went bankrupt
Milton Hershey First confectionary failed
H.J. Heinz Company went bankrupt six
years after start
Walt Disney First film company went
bankrupt
Henry Ford First two car companies failed
L.L. Bean Almost went bankrupt in first
year

17 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Entrepreneurial Teams
to
s
Entrepreneurial teams consist of people
with complementary talents and skills
They can also motivate and nurture each
other
Examples:
Steve Jobs, Steve Wozniak, Mike Markkula
(Apple)
Bill Gates, Paul Allen (Microsoft)
Sergey Brin, Larry Page (Google)

18 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Micropreneurs
to
s Micropreneurs strive for a comfortable lifestyle
(not necessarily growth and lots of money)
Often home-based (maybe out of necessity after
getting fired)
Information technology and online tools (e.g.,
affiliate marketing) have leveled the playing field
and democratized opportunities
Some drawbacks:
How to get customers
Separating personal life from business
Zoning laws and other regulations

19 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Intrapreneurs
to
s
Intrapreneurs are innovators within
existing companies
To stay on top and continue to innovate is
a major challenge for big, established
companies
Examples:
80/20 rule at Google
Art Fry at 3M
Skunkworks at Lockheed Martin

20 entrepreneurship, small
int
bu
ro
du
sin
cti
What The Government Can
ones
to Do
s
Investor visas
Enterprise zones (e.g., lower tax rates)
Incubators (e.g., office space, basic
services)
Self-Employment Assistance (SEA)
program (collect unemployment while
starting new business)
Startup America (joint venture with
private sector)
21 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
to
s

Business Plans
int
bu
ro
du
sin
cti
ones
Business Plans
to
s
Business Plan: A detailed written statement
that describes the nature of the business,
the target market, the advantages the
business will have over competition, and
the resources and owners qualifications
A business plan forces potential owners to
be specific about what they will offer
A business plan is mandatory for talking
with bankers or investors

23 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Writing A Business Plan
to
s
A good plan takes a long time to prepare
A good executive summary catches
interest and tempts potential investors to
read on
Getting the plan into the right hands is
almost as important as getting the right
information in it
Needs to be supported by elevator pitch

24 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Elements of a Business Plan
to
s
Cover Letter
Executive Summary
Company Background
Management Team
Financial Plan
Market Analysis and Marketing Plan
Summary

25 entrepreneurship, small
int
bu
ro
du
sin
cti
FOUR Questions a Business
ones
to Plan Should Answer
s
Who are you?
What do you do?
Who do you do it to?
Why should they care to pay attention to
you and buy from you? (value
proposition)

26 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Tools for Business Plans
to
s
Software (e.g., Business Plan Pro)
Websites (e.g., www.sba.gov/starting)
Books (e.g., The One Page Business Plan
by Jim Horan)

27 entrepreneurship, small
int
bu
ro
du
sin
cti
Business Plan Competition at
ones
to UCI
s

For more info, visit:

http://merage.uci.edu/ResearchAndCenters/Beall/SYCR.aspx

28 entrepreneurship, small
int
bu
ro
du
sin
cti
Kickoff on Nov. 5 at 5:30
ones
to 8:30
s

29 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
to
s

Small Businesses
int
bu
ro
du
sin
cti
ones
What Is Small?
to
s
According to the Small Business
Administration (SBA), a small business
Is independently owned and operated
Is not dominant in its field
Meets certain size requirements (which vary
greatly between industry sectors)
A small business is considered small
only in relationship to other businesses in
its industry.
(p. 162)
31 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Some Statistics
to
s
Almost 30 million small businesses in U.S.
Account for more than 50% of GDP
Have generated 65% of new jobs over
last 2 decades
Most people find their first job in a small
business

32 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Small Can Be Beautiful
to
s
Small businesses have distinct
advantages
More personalized service
More nimble to adapt to market changes
More innovation
Less bureaucracy
Statistics show (???) that most start-ups
fail
However, these statistics may lie (e.g.,
closing a profitable business to do
entrepreneurship,
33something else) small
int
bu
ro
du
sin
cti
ones
Reasons for Failure
to
s
Reasons why business start-ups fail:
Not enough planning
Lack of money
Inadequate financial control
Underpricing/overpricing
Lack of necessary skills
Bad record keeping
Easy-to-start businesses have a higher
chance of failing (e.g., restaurants)

34 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
How To Learn More
to
s
Take classes
Read
Network
Become an apprentice
Take over a small business
(possibly with profit sharing)

35 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Factors for Success
to
s
Planning
Financing
Market analysis
Human resources
Record keeping

36 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Sources of Money
to
s Personal savings
Friends and family
Banks
Angel investors (e.g., TechCoast Angels)
Venture capital firms (e.g., Kleiner Perkins Caufield
& Byers)
Small Business Administration (www.sba.gov)
Small Business Investment Companies (SBIC)
Small Business Development Center (SBDC)
Crowdfunding (e.g., Kickstarter)

37 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Market Analysis
to
s
Who are your potential customers?
What are their needs?
How can you meet these needs?
Quality
Price
How much are they willing to pay?
How can you turn them into loyal
customers?

38 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
to Other Considerations
s
Effective human resource management
Adequate recording keeping
Accounting services
Legal and tax advice
Loan officers
Insurance

39 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
Sources
to
s
Small Business Administration (
www.sba.gov)
Service Corps of Retired Executives (
www.score.org)
Local chamber of commerce
Business plan competitions at
universities

40 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
International Aspects
to
s Increased participation of small businesses in
global economy
Technology helps (e.g., PayPal)
Advantages of being small:
More personalized service
More flexible
More nimble
Disadvantages of being small:
Financing hard to get
Not enough knowledge and experience
Paperwork and logistics

41 entrepreneurship, small
int
bu
ro
du
sin
cti
ones
to
s

Summary
int
bu
ro
du
sin
cti
ones
Summary
to
s
Entrepreneurship
Characteristics of an entrepreneur
Two main types of new ventures
Intrapreneurship
Business Plans
Small Businesses
Importance of small business sector
Resources (e.g., SBA)

43 entrepreneurship, small