Business Business
Essentials Essentials
Ronald J. Ebert Ronald J. Ebert Ricky W. Griffin Ricky W. Griffin
Business Business
Essentials Essentials
Ronald J. Ebert Ronald J. Ebert Ricky W. Griffin Ricky W. Griffin
The Contemporary Business World The Contemporary Business World The Contemporary Business World The Contemporary Business World
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ENTREPRENEURSHIP, NEW VENTURES, 3
L E A R N I N G O B J E C T I V E S L E A R N I N G O B J E C T I V E S
After reading this chapter, you should be able to:
After reading this chapter, you should be able to:
1.1. Define Define small businesssmall business, discuss its importance to the , discuss its importance to the U.S. economy, and explain popular areas of small U.S. economy, and explain popular areas of small
business.
business.
2.2. Explain entrepreneurship and describe some key Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities and characteristics of entrepreneurial personalities and
activities.
activities.
3.3. Describe the business plan and the start-up decisions Describe the business plan and the start-up decisions made by small businesses and identify sources of
made by small businesses and identify sources of financial aid available to such enterprises.
financial aid available to such enterprises.
4.4. Discuss the trends in small business start-ups and Discuss the trends in small business start-ups and identify the main reasons for success and failure identify the main reasons for success and failure
L E A R N I N G O B J E C T I V E S (cont’d) L E A R N I N G O B J E C T I V E S (cont’d) After reading this chapter, you should be able to:
After reading this chapter, you should be able to:
5.5. Explain sole proprietorships, partnerships, and Explain sole proprietorships, partnerships, and cooperatives and discuss the advantages and cooperatives and discuss the advantages and
disadvantages of each.
disadvantages of each.
6.6. Describe corporations, discuss their advantages and Describe corporations, discuss their advantages and disadvantages, and identify different kinds of
disadvantages, and identify different kinds of corporations.
corporations.
7.7. Explain the basic issues involved in managing a Explain the basic issues involved in managing a corporation and discuss special issues related to corporation and discuss special issues related to
corporate ownership.
corporate ownership.
What’s in It for Me?
What’s in It for Me?
By understanding the material discussed in this By understanding the material discussed in this chapter, you’ll be better prepared to:
chapter, you’ll be better prepared to:
1.1. Understand the challenges and opportunities Understand the challenges and opportunities provided in new venture start-ups
provided in new venture start-ups
2.2. Assess the risks and benefits of working in a new Assess the risks and benefits of working in a new business
business
3.3. Evaluate the investment potential inherent in a new Evaluate the investment potential inherent in a new enterprise
enterprise
What Is a “Small” Business?
What Is a “Small” Business?
Small Business Defined Small Business Defined
A business that is independent (not part of a larger business) A business that is independent (not part of a larger business) and that has relatively little influence in its market.
and that has relatively little influence in its market.
中小企業的定義：中小企業的定義：
製造業、營造業、礦業及土石採取業等三業，係以實收資本額在 製造業、營造業、礦業及土石採取業等三業，係以實收資本額在 新台幣新台幣 88 千萬元以下者，或經常雇用員工數未滿千萬元以下者，或經常雇用員工數未滿 200200 人者為中小人者為中小
企業；其餘行業則以前一年營業額在新台幣
企業；其餘行業則以前一年營業額在新台幣 11 億元以下者，或經億元以下者，或經 常雇用員工數未滿
常雇用員工數未滿 5050 人者為中小企業。人者為中小企業。
The Importance of Small Business in the U.S. Economy The Importance of Small Business in the U.S. Economy
Job creationJob creation
InnovationInnovation
Contributions to big businessContributions to big business
Popular Areas of Small-Business Popular Areas of Small-Business
Enterprise Enterprise
Major small-business Major small-business industry groups:
industry groups:
ServicesServices
RetailingRetailing
ConstructionConstruction
WholesalingWholesaling
Finance and insuranceFinance and insurance
Manufacturing and Manufacturing and transportation
transportation
FIGURE 3.2
FIGURE 3.2Small Business by IndustrySmall Business by Industry FIGURE 3.2
FIGURE 3.2Small Business by IndustrySmall Business by Industry
Entrepreneurship Entrepreneurship
Entrepreneurship
Entrepreneurship 企業家精神 企業家精神
The process of seeking businesses opportunities The process of seeking businesses opportunities under conditions of risk
under conditions of risk
Entrepreneur
Entrepreneur 企業家 企業家
One who accepts the risks and opportunities of One who accepts the risks and opportunities of creating, operating and growing a new business creating, operating and growing a new business
Small Business Owner Small Business Owner
Does not always have growth of the business as a Does not always have growth of the business as a primary entrepreneurial goal
primary entrepreneurial goal
Entrepreneurial Characteristics Entrepreneurial Characteristics
Successful Entrepreneurs:
Successful Entrepreneurs:
are resourceful.are resourceful.
are concerned for good customer relations.are concerned for good customer relations.
desire to be their own boss.desire to be their own boss.
can deal with uncertainty and risk.can deal with uncertainty and risk.
are open-minded.are open-minded.
rely on networks, business plans, and consensus.rely on networks, business plans, and consensus.
have different views on how to succeed, to automate have different views on how to succeed, to automate a business, and when to rely on experience or
a business, and when to rely on experience or business acumen
business acumen 銳敏 銳敏 ..
Starting and Operating a New Business Starting and Operating a New Business
Crafting a Business Plan Crafting a Business Plan
Conveys a description of the business strategy for Conveys a description of the business strategy for the new venture and how it will be implemented
the new venture and how it will be implemented
A business plan should address:A business plan should address:
The entrepreneur’s goals and objectivesThe entrepreneur’s goals and objectives
The strategies that will be used to obtain themThe strategies that will be used to obtain them
The implementation of the chosen strategiesThe implementation of the chosen strategies
Preparing a Business Plan Preparing a Business Plan
Setting goals and objectivesSetting goals and objectives
Sales forecastingSales forecasting
Financial planningFinancial planning
Starting the Small Business Starting the Small Business
Buying an Existing Business Buying an Existing Business
Less risk in purchasing ongoing, viable Less risk in purchasing ongoing, viable business
business
Franchising
Franchising 經銷權 經銷權
AdvantagesAdvantages
Proven business opportunity for franchiseeProven business opportunity for franchisee
Access to management expertise of Access to management expertise of franchisor
franchisor
DisadvantagesDisadvantages
Start-up costs for franchise purchaseStart-up costs for franchise purchase
Ongoing payments to the franchisorOngoing payments to the franchisor
Starting the Small Business (cont’d) Starting the Small Business (cont’d)
Questions to Be Answered:
Questions to Be Answered:
Who and where are my customers?Who and where are my customers?
How much will those customers pay for my product?How much will those customers pay for my product?
How much of my product can I expect to sell?How much of my product can I expect to sell?
Who are my competitors?Who are my competitors?
Why will customers buy my product rather than the Why will customers buy my product rather than the product of my competitors?
product of my competitors?
Financing the Small Business Financing the Small Business
Personal Resources Personal Resources
Loans from Family and Friends Loans from Family and Friends Bank Loans
Bank Loans
Venture Capital Companies Venture Capital Companies
Small-Business Investment Companies (SBICs) Small-Business Investment Companies (SBICs) Minority Enterprise Small-Business Investment Minority Enterprise Small-Business Investment Companies (MESBICs)
Companies (MESBICs) SBA Financial Programs SBA Financial Programs
Guaranteed loans and immediate loans programsGuaranteed loans and immediate loans programs
Trends in Small-Business Startups Trends in Small-Business Startups
Emergence of Emergence of
E-commerce E-commerce
Crossovers from Crossovers from
Big Business Big Business
Opportunities for Opportunities for Minorities & Women Minorities & Women
Global Global
Opportunities Opportunities
Better Better
Survival Rates Survival Rates
Reasons for Failure and Success Reasons for Failure and Success
Failure Failure
Poor managementPoor management
NeglectNeglect
Weak control systemsWeak control systems
Insufficient capitalInsufficient capital
Success Success
Hard work, driveHard work, drive 魄力幹勁 魄力幹勁 , , and dedication
and dedication 奉獻 奉獻
Market demandMarket demand
Managerial competenceManagerial competence
Noncorporate Business Ownership Noncorporate Business Ownership
Forms of Legal Ownership Forms of Legal Ownership
Sole proprietorship: Owned and operated by one Sole proprietorship: Owned and operated by one person
person
Partnership: Sole proprietorship multiplied by the Partnership:
number of partner-owners
CorporationCorporation
Choice of Ownership Form Choice of Ownership Form
Based on the entrepreneur’s needs/desires for Based on the entrepreneur’s needs/desires for
control, ownership participation, financing sources, control, ownership participation, financing sources,
and appropriateness of the chosen form for the and appropriateness of the chosen form for the
industry in which the firm will compete industry in which the firm will compete
Sole Proprietorships Sole Proprietorships
Advantages:
Advantages:
FreedomFreedom
Simple to formSimple to form
Low start-up costsLow start-up costs
Tax benefitsTax benefits
Formation of Formation of cooperatives cooperatives
Disadvantages:
Disadvantages:
Unlimited liability: Unlimited liability: Owners
are responsible for all debts of a business
Limited resourcesLimited resources
Limited fundraising Limited fundraising capability
capability
Lack of continuityLack of continuity
Partnerships Partnerships
Advantages:
Advantages:
More talent and More talent and money
money
More fundraising More fundraising capability
capability
Relatively easy to Relatively easy to formform
Limited liability for Limited liability for limited partners limited partners
Tax benefitsTax benefits
Disadvantages:
Disadvantages:
Unlimited liability for Unlimited liability for general partner
general partner
Disagreements Disagreements among partners among partners
Lack of continuityLack of continuity
Alternatives to General Partnerships Alternatives to General Partnerships
Limited Partnership Limited Partnership
Allows for Allows for limited partnerslimited partners who invest money but are liable for who invest money but are liable for debts only to the extent of their investments
debts only to the extent of their investments
Must have at least one Must have at least one generalgeneral (or (or activeactive) ) partnerpartner, who is , who is
usually the person who runs the business and is responsible for usually the person who runs the business and is responsible for its survival and growth
its survival and growth
Master Limited Partnership Master Limited Partnership
Organization sells shares (partnership interests) to investors on Organization sells shares (partnership interests) to investors on public exchange. Investors are paid back from profits
public exchange. Investors are paid back from profits
The master partner retains at least 50 percent ownership and The master partner retains at least 50 percent ownership and runs the business, while minority partners have no management runs the business, while minority partners have no management voice
voice
Cooperatives Cooperatives
Combine the freedom of sole proprietorships Combine the freedom of sole proprietorships with the financial power of corporations
with the financial power of corporations Groups of sole proprietorships or
Groups of sole proprietorships or
partnerships agree to work together for their partnerships agree to work together for their
common benefit common benefit
Corporations Corporations
Corporation Corporation
““An artificial being, invisible, intangible, and existing An artificial being, invisible, intangible, and existing only in contemplation of the law”
only in contemplation of the law”
Corporations May:
Corporations May:
Sue and be suedSue and be sued
Buy, hold, and sell propertyBuy, hold, and sell property
Make and sell productsMake and sell products
Commit crimes and be tried and punished for themCommit crimes and be tried and punished for them
Corporations Corporations
Advantages:
Advantages:
Limited liability: Limited liability: The owners’ responsibility for the debts of a business is limited to their investment in a business
ContinuityContinuity
Stronger fundraising Stronger fundraising capability
capability
Disadvantages:
Disadvantages:
Double taxation of Double taxation of dividends
dividends
Fluid controlFluid control
Complicated and Complicated and expensive to form expensive to form
Types of Corporations Types of Corporations
Closely Held (Private) Corporation Closely Held (Private) Corporation Publicly Held (Public) Corporation Publicly Held (Public) Corporation
Subchapter S Corporation Subchapter S Corporation
Limited Liability Corporation (LLC) Limited Liability Corporation (LLC)
Professional Corporation Professional Corporation
Multinational (Transnational) Corporation Multinational (Transnational) Corporation
Managing a Corporation Managing a Corporation
Corporate Governance Corporate Governance
The roles of shareholders, directors, and other The roles of shareholders, directors, and other managers in corporate decision making and managers in corporate decision making and accountability
accountability
Corporate governance is established by the firm’s Corporate governance is established by the firm’s bylaws and involves three bodies:
bylaws and involves three bodies:
StockholdersStockholders ( (shareholdersshareholders): Investors who buy ): Investors who buy ownership shares in the form of stock
ownership shares in the form of stock
The board of directors:The board of directors: Group elected by stockholders to Group elected by stockholders to oversee corporate management
oversee corporate management
CorporateCorporate officers:officers: Top managers hired by the board to Top managers hired by the board to run the corporation
run the corporation
Stockholders: Owners of Corporations Stockholders: Owners of Corporations
Stock: A share of ownership in a corporation Stock: A share of ownership in a corporation Dividends: Profits distributed among
stockholders
Special Issues in Corporate Ownership Special Issues in Corporate Ownership
Joint Ventures and Strategic Alliances:
Joint Ventures and Strategic Alliances:
Strategic alliance: Strategic alliance: Two or more organizations Two or more organizations collaborate on a project for mutual gain
collaborate on a project for mutual gain
Joint venture:Joint venture: Partners share ownership of a new Partners share ownership of a new enterprise
enterprise
Employee Stock Ownership Plans Employee Stock Ownership Plans
Allows employees to own a share of the corporation Allows employees to own a share of the corporation through trusts established on their behalf
through trusts established on their behalf
Institutional Investors Institutional Investors
Control enormous resources and can buy huge Control enormous resources and can buy huge
Special Issues in Corporate Ownership (cont’d) Special Issues in Corporate Ownership (cont’d)
Mergers, Acquisitions, Divestitures, and Spin- Mergers, Acquisitions, Divestitures, and Spin- Offs:
Offs:
Merger: Merger: Two firms combine to create a new Two firms combine to create a new company
company
Acquisition:Acquisition: One firm buys another outright One firm buys another outright
Divestiture:Divestiture: Strategy whereby a firm sells one or Strategy whereby a firm sells one or more of its business units
more of its business units
Spin-off: Spin-off: A firm sells part of itself to raise capitalA firm sells part of itself to raise capital
K E Y T E R M S K E Y T E R M S
acquisition acquisition
board of directors board of directors
business plan business plan
chief executive officer (CEO) chief executive officer (CEO)
closely held (or private) closely held (or private)
corporation corporation cooperative cooperative
corporate governance corporate governance
corporation corporation
divestiture divestiture
double taxation double taxation
employee stock ownership plan employee stock ownership plan
(ESOP) (ESOP)
entrepreneurship entrepreneurship franchise
franchise
general (or active) partner general (or active) partner general partnership
general partnership institutional investor institutional investor joint venture
joint venture limited liability limited liability
limited liability corporation (LLC) limited liability corporation (LLC) limited partner
limited partner
limited partnership limited partnership
master limited partnership master limited partnership merger
merger
multinational (or transnational) multinational (or transnational)
K E Y T E R M S (cont’d) K E Y T E R M S (cont’d)
officers officers
professional corporation professional corporation
publicly held (or public) corporation publicly held (or public) corporation
S corporation S corporation
small business small business
Small Business Administration Small Business Administration
(SBA) (SBA)
Small Business Development Small Business Development
Center (SBDC) Center (SBDC)
small-business investment small-business investment
company (SBIC) company (SBIC)
sole proprietorship sole proprietorship
stockholder (or shareholder) stockholder (or shareholder) strategic alliance
strategic alliance tender offer
tender offer
unlimited liability unlimited liability
venture capital company venture capital company
