Bài giảng Economics - Chapter 6 Small Business, Entrepreneurship, and Franchising

Chapter SixSmall Business,Entrepreneurship, and FranchisingEntrepreneurship andSmall BusinessEntrepreneurshipThe process of creating and managing a business to achieve a desired objective.Small BusinessAny independently owned and operated business that is not dominant in its competitive area and employs fewer than 500 people.6-1Small Business...6-2Source: Small Business Answer Card 1998, Small BusinessAdministration Office of Advocacy, ADVO/stats/answer.html, August 23, 1998. Represents 97.3% of business establishments.Created more than 80% of all new jobs in fiscal 1996-97Accounted for 50% of GDP in 1999Provided over half of the employment in Canada in 1999The Role of Small Business in the Canadian EconomyJob creationInnovation6-3# of Firms byEmployment Size6-4Source: Small Business Answer Card 1998, Small BusinessAdministration Office of Advocacy, ADVO/stats/answer.html, August 23, 1998. Establishments by IndustryGOODS PRODUCING SECTORa ALL INDUSTRIES SERVICE PRODUCING SECTORPRIMARY INDUSTRIESCONSTRUCTIONMANUFACTURINGWHOLESALE TRADERETAIL TRADEFINANCE, INS. & REBUS & PERSONAL SERVICES 20 % 40 % 60 % 80 % 100 %0 – 45 - 4950 - 99100 + No. of employeesTop Five SmallBusiness Industries6-6Source: 1997 Small Business Profile, Small Business Administration Officeof Advocacy, “Small Business: Backbone of the United States Economy,” September 30, 1998.Advantages of Small Business OwnershipPersonalindependenceBusinessstartup costsflexibilityfocusreputation6-7Disadvantages of Small Business OwnershipHigh stress levelHigh failure rateUndercapitalizationManagerial inexperience or incompetenceInability to cope with growth6-8Roads to Successor Paths to Failure6-9FlexibilityFocusReputationUndercapitalizationManagerialinexperience orincompetenceInability tocope withgrowthSuccessFailureSmall Business Life Expectancy Percentage of firmsLess than 1 year 33%1 to 2 years 50%5 or more years 33%6-10Financial ResourcesEquity financingowner’s fundsventure capitalistsDebt financingloanslines of credittrade credits6-11Top Ten Franchises6-12Source: Entrepreneur’s Franchise 500 For 2002 as reported Feb. 25,2002 at 10 Fastest-Growing Franchises for 2002 Growth during 2001Kumon Math & Reading Centers 2,2597-Eleven Inc 1,654 Curves for Women 555 Coverall North America Inc. 1,675Subway 1,356Jani-King 681Jackson Hewitt Tax Service 483KFC Corp 996McDonald’s 895Budget Rent A Car Corp. 97Source:www.entrepreneurmag.com/Franchise_ZoneFranchising Trends6-13Source: Janean Chun, “Get A Clue,” Entrepreneur,January 1998.Reprinted with permission from Entrepreneur Magazine.Hertz operates a franchise organization as do many other rental car companies.6-14Small Business and Internet Use6-15Source: “How Likely Are Small Business toByte?,” Business Week, May 25, 1998, p. 8.010203040PercentSanFranciscoNew YorkChicagoTotal5060Very orSomewhatLikelyVery orSomewhatUnlikelyNeutralLikelihood of Using the InternetSmall Business and Internet Use78% of Canadian SME’s use the internetOnline activity by SME’s in 2001 equaled $2 billionSolve the Dilemmaa. Evaluate the idea of a low-fat cookie and muffin retail store.b. Are there any concerns in connection with starting a small business that Jack and Bruce have not considered?c. What advice would you give Jack and Bruce as they start up their business?6-16Explore Your Career OptionsWhat are some of the key qualities required of an individual starting a new small business?6-17Additional Discussion Questions and Exercises1. Assume you wanted to go into business for yourself. What kind of business would you prefer? What would  be the financial requirements for entering the business? What type of work or managerial experience would you need?2. What should be included in a business plan? What is the importance of a business plan to the small-business entrepreneur?6-18aAdditional Discussion Questions and Exercises3. What are the goals of venture capitalists when they invest in new businesses?4. Think of your local community. Can you name five new businesses that have started up recently? Would you consider these new businesses to be small businesses? Are these new businesses franchises?6-18bChapter 6 Quiz6-19a1. A license to sell another’s products or to use another’s name in business, or both, is called a. a franchise. b. a joint venture. c. a licensing agreement. d. a small business license.2. Which of the following industries is least likely to be entered into by small- business entrepreneurs? a. services b. high technology c. mining and manufacturing d. retailingChapter 6 Quiz6-19b3. The shortest path to business failure is a. undercapitalization. b. lack of a business plan. c. stress. d. employee turnover.4. The money needed to finance regular business operations is called a. a line of credit. b. collateral. c. undercapitalization. d. working capital.