Part 1 Nature of Entrepreneurship and Small Business 1
Part 1 Nature of Entrepreneurship and Small Business 1
1 Entrepreneurs: The Energizers of Small Business 2
1 Entrepreneurs: The Energizers of Small Business 2
Opportunities for Entrepreneurial Energizers 3
Rewords and Drawbacks of Entrepreneurship 6
Characteristics of Entrepreneurs 9
Readiness for Entrepreneurship 12
Diversity in Entrepreneurship 15
2 Small Business: Vital Component of the Economy 22
2 Small Business: Vital Component of the Economy 22
Definition of Small Business 23
Small Business as Producer of Goods and Services 24
Special Contributions of Small Business 29
The Small Business Failure Record 34
Causes of Business Failure 36
Part 2 Seeking Entrepreneurial Opportunities 41
Part 2 Seeking Entrepreneurial Opportunities 41
3 Startup and Buyout Opportunities 42
3 Startup and Buyout Opportunities 42
The Startup: Creating a New Business 43
Buying an Existing Business 50
Increasing the Chances of a Successful Startup: Lessons from High-Growth Firms 61
4 Franchising Opportunities 66
4 Franchising Opportunities 66
Understanding the Franchise Option 67
Advantages and Disadvantages of Franchising 69
Evaluating Franchise Opportunities 78
Understanding the Franchisor/ Franchisee Relationship 83
Selling a Franchise 83
5 Family Business Opportunities 91
5 Family Business Opportunities 91
The Family Business: A Unique Institution 92
The Culture of a Family Business 96
Family Roles and Relationships 98
Special Features of Family Firm Management 102
The Process of Leadership Succession 105
Transfer of Ownership 108
Part 3 Developing the New Venture Business Plan 113
Part 3 Developing the New Venture Business Plan 113
6 The Role of a Business Plan for a New Venture 114
6 The Role of a Business Plan for a New Venture 114
What Is a Business Plan? 115
The Need for a Business Plan 116
How Much Business Plan Is Needed? 120
Preparing a Business Plan 122
Where to Go for More Information 128
The Business Plan 136
7 Creating a Competitive Advantage 137
7 Creating a Competitive Advantage 137
Competitive Advantage 138
Market Segmentation Strategies 142
Niche Marketing 147
Customer Service Management 150
The Business Plan 158
8 Analyzing the Market and Formulating the Marketing Plan 159
8 Analyzing the Market and Formulating the Marketing Plan 159
Small Business Marketing 160
Marketing Research for the New Venture 162
Estimating Market Potential 170
Components of the Formal Marketing Plan 175
The Business Plan 181
9 Selecting the Management Team and Form of Organization 182
9 Selecting the Management Team and Form of Organization 182
The Management Team 183
Legal Forms of Organization 185
The Board of Directors 195
Federal Income Taxes and the Form of Organization 199
The Business Plan 205
10 Choosing the Location and Physical Facilities 206
10 Choosing the Location and Physical Focilities 206
The Location Decision 207
Site Selection 211
Home-Based Businesses 217
The Building and Its Layout 219
Equipment and Tools 223
The Business Plan 227
11 Accounting Statements and Financial Requirements 228
11 Accounting Statements and Financial Requirements 228
Accounting Statements: Tools for Determining Financial Needs 229
Assessing Profitability 240
A Firm s Financial Requirements 243
The Business Plan 253
12 Finding Sources of Financing 254
12 Finding Sources of Financing 254
Debt or Equity Financing? 255
Sources of Financing 259
Individuals as Sources of Funds 262
Business Suppliers and Asset-Based Lenders as Sources of Funds 265
Commercial Banks as Sources of Funds 267
Government -Sponsored Agencies as Sources of Funds 273
Other Sources of Funds 274
Keeping the Right Perspective 276
The Business Plan 280
Part 4 Small Business Marketing 281
Part 4 Small Business Marketing 281
13 Consumer Behavior and Product Strategy 282
13 Consumer Behavior and Product Strategy 282
Understanding the Customer 283
Product Management 291
Product Strategy Alternatives for Small Businesses 295
Building the Total Product Offering 299
14 Pricing and Credit Strategies 305
14 Pricing and Credit Strategies 305
Setting a Price 306
Using Break-Evan Analysis for Pricing 310
Selecting a Pricing Strategy 313
Offering Credit 316
Managing the Credit Process 320
15 Promotion: Personal Selling ,Advertising ,and Sales Promotion 329
15 Promotion: Personal Selling, Advertising, and Sales Promation 329
Promotion and the Communication Process 330
Determining Promotional Expenditures 331
Personal Selling Techniques for Small Firms 334
Advertising Considerations for Small Firms 339
Soles Promotion Options for Small Firms 343
16 Distribution Channels and Global Markets 349
16 Distribution Channels and Global Markets 349
The Role of Distribution Activities in Marketing 350
Structuring a Distribution System 353
Global Marketing Challenges 355
Initial Preparations for Global Marketing 358
Sources of Trade and Financing Assistance 364
Part 5 Managing Small Business Operations 371
Part 5 Managing Small Business Operations 371
17 Professional Management in the Growing Firm 372
17 Professional Management in the Growing Firm 372
Distinctive Features of Small Firm Management 373
The Nature of Managerial Work 376
Time Management 385
Outside Management Assistance 387
18 Managing Human Resources 396
18 Managing Human Resources 396
Recruiting Personnel 397
Evaluating Prospects and Selecting Employees 401
Training and Development 404
Compensation and Incentives for Small Business Employees 407
Special Issues in Human Resources Management 409
19 Quality Management and the Operations Process 415
19 Quality Management and the Operations Process 415
Total Quality Management 416
The Operations Process 425
Improving Productivity 430
20 Purchasing and Managing Inventory 436
20 Purchasing and Managing Inventory 436
Purchasing Processes and Policies 437
Relationship with Suppliers 443
Objectives of Inventory Management 445
Controlling Inventory Costs 446
21 Computer-Based Technology for Small Businesses 454
21 Computer—Based Technology for Small Businesses 454
Overview of Available Technology 455
Computer Systems: Hardware and Software 458
Communication Among Computers 463
Office and Production Technology 465
Purchasing and Managing Technology 468
Trends in Computer—Based Technology 471
Part 6 Financial Management in the Entrepreneurial Firm 475
Part 6 Financial Management in the Entrepreneurial Firm 475
22 Evaluating Financial Performance 476
22 Evaluating Financial Performance 476
Accounting Activities in Small Firms 477
Assessing a Firm s Financial Performance 482
23 Working-Capital Management and Capital Budgeting 498
23 Working—Capital Management and Capital Budgeting 498
The Working —Capital Cycle 499
Managing Cash Flow 505
Managing Accounts Receivable 510
Managing Inventory 511
Managing Accounts Payable 513
Capital Budgeting 514
Appendix 23A: Time Value of Money: Finding the Present Value of a Dollar 524
Appendix 23B: Discounted Cash—Flow Techniques: Computing a Project s Net Present Value and Internal Rate of Return 527
24 Risk and Insurance Management 534
24 Risk and Insurance Management 534
Defining and Classifying Risk 535
Risk Management 542
Insurance for the Small Business 544
Part 7 Social and Legal Environment 553
Part 7 Social and Legal Environment 553
25 Social and Ethical Issues 554
25 Social and Ethical Issues 554
Social Responsibilities and Small Business 555
The Special Challenges of Environmentalism and Consumerism 558
The Small Business Context for Ethical Decisions 559
Putting Ethical Precepts into Practice 563
26 Working Within the Law 571
26 Working Within the Law 571
Government Regulation and Small Business Opportunity 572
Government Regulation and Protection of the Marketplace 576
Business Agreements and the Law 586
The Challenge of Taxation 588
Cases 593
Case 1 King s Beauty Supple 593
Case 2 Construction Equipment Dealership 595
Case 3 Stitch Craft 597
Case 4 Operating a Kiosk Franchise 600
Case 5 The Brown Family Business 603
Case 6 Robinson Associates, Inc 605
Case 7 The Fantastic Catalogue Company 610
Case 8 ScrubaDub Auto Wash 614
Case 9 VMG Products 618
Case 10 Logan Beach 619
Case 11 WJP Partners 622
Case 12 Walker Machine Works 624
Case 13 Silver Lining 627
Case 14 The Jordan Construction Account 629
Case 15 Litter Ridder 631
Case 16 NavaSoft Systems Inc 634
Case 17 Central Engineering 636
Case 18 Gibson Mortuary 639
Case 19 Douglas Electrical Supply,Inc 642
Case 20 Mather s Heating and Air Conditioning 644
Case 21 Franklin Motors 646
Case 22 The Style Shop 648
Case 23 Barton Sales and Service 653
Case 24 Fox Manufacturing 657
Case 25 The Martin Company 660
Case 26 Diaper Dan 662
Appendixes 665
Appendix A Sample Business Plan 665
Appendix B Present Value of ?1 683
Appendix C Present Value of an Annuity of ?1 for n Periods 687
Endnotes 691
Endnotes 691
Photo Credits 699
Photo Credits 699
Glossary 701
Glossary 701
Index 717
Index 717