1 © Copyright Katherine Korman Frey/Vision Forward, LLC www.VisionForward.com Module 1: The Role of Small Business © Copyright Katherine Korman Frey/Vision Forward, LLC www.VisionForward.com 1
Dec 16, 2015
1© Copyright Katherine Korman Frey/Vision Forward, LLC
www.VisionForward.com
Module 1:
The Role of Small Business
© Copyright Katherine Korman Frey/Vision Forward, LLC www.VisionForward.com
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2© Copyright Katherine Korman Frey/Vision Forward, LLC
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Module 1 Goal:Provide the future entrepreneur with an overview of
small business and entrepreneurship, characteristics of an entrepreneur, and a general discussion of the importance of small business in America.
© Copyright Katherine Korman Frey/Vision Forward, LLC www.VisionForward.com
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3© Copyright Katherine Korman Frey/Vision Forward, LLC
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Module 1 Objectives:• Understand perceptions and definitions of
entrepreneurship.• Understand the definitions of “small business” and
why this is important.• Identify major characteristics of an entrepreneur.• Learn about the role small business plays in the U.S.
© Copyright Katherine Korman Frey/Vision Forward, LLC www.VisionForward.com
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4© Copyright Katherine Korman Frey/Vision Forward, LLC
www.VisionForward.com
Module 1 Objectives:• Understand perceptions and definitions of
entrepreneurship.• Understand the definitions of “small business” and
why this is important.• Identify major characteristics of an entrepreneur.• Learn about the role small business plays in the U.S.
© Copyright Katherine Korman Frey/Vision Forward, LLC www.VisionForward.com
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5© Copyright Katherine Korman Frey/Vision Forward, LLC
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Dictionary: Entreprenedre - “To undertake”
Perception: A person of very high aptitude who pioneers change; Anyone who wants to work for himself or herself
What is an Entrepreneur?
Source: www.QuickMBA.com
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"I have always thought of an entrepreneur as a person who starts a business to follow a vision, to make money, and to be the master of his/her own
soul (both financially and spiritually). Inherent in the venture is the risk of what the future may bring.
Therefore, I believe that an essential key to success is that the entrepreneur also be an
‘educated’ risk taker.... “
Linda Pinson
Ms. Pinson is an author ad software creator and has provided to the Small Business Administration much of their material about writing a business plan.
Source: www.QuickMBA.com
What is an Entrepreneur?
7© Copyright Katherine Korman Frey/Vision Forward, LLC
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Exercise 1-1What is an entrepreneur?
• Write down your definition of an entrepreneur:
8© Copyright Katherine Korman Frey/Vision Forward, LLC
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Module 1 Objectives:• Understand perceptions and definitions of
entrepreneurship.• Understand the definitions of “small business” and
why this is important.• Identify major characteristics of an entrepreneur.• Learn about the role small business plays in the U.S.
© Copyright Katherine Korman Frey/Vision Forward, LLC www.VisionForward.com
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9© Copyright Katherine Korman Frey/Vision Forward, LLC
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Exercise 1-2 What is a small business?
• Write down an example of a small business with which you are familiar or have read about.
10© Copyright Katherine Korman Frey/Vision Forward, LLC
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Definition of a Small Business
• Business Size• The Small Business Administration (SBA)
www.SBA.gov• The Small Business Act and NAICS• Rule of thumb: < 500 employees, < $6 to $8 million in
revenues. (Click for sample NAICS chart)
• Additional important notes about business size
11© Copyright Katherine Korman Frey/Vision Forward, LLC
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Examples of North American Industry Classification System
Source: Small Business Administration, Small Business Size Standards matched to North American Industry Classification
System, Effective January 28, 2004.
NAI CS Code
I ndustry
Annual sales or # employees (max allowed)
111110
Soybean Farming $750,000
212221
Gold Ore Mining 500 employees
423420
Office Equipment Merchant Wholesalers 100 employees
561740
Employment Placement Agencies $6,000,000
611110
Elementary and Secondary Schools $6,000,000
621111
Offices of Physicians (except Mental Health) $8,500,000
622110
General Medical and Surgical Hospitals $29,000,000
722310
Food Service Contractors $17,500,000
(Click here: Back to Small Business Def.)
12© Copyright Katherine Korman Frey/Vision Forward, LLC
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Exercise 1-2a – PART IWhy does the definition of a small business matter?
• Using the NAICS Chart, what is the maximum allowable size for these businesses?
– Company A: Employment agency.
– Company B: Food service contractor.
(Click here: Sample NAICS chart)
13© Copyright Katherine Korman Frey/Vision Forward, LLC
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Exercise 1-2a – PART 2Does it matter what size the company is?
• Company A: Employment agency. – Revenues: $7 million.– Clients: Primarily other small businesses.– Client vendor / procurement policies: None.
The clients enjoy working with the placement agency because it is a small business, but there are no formal rules in place.
(Click here: Sample NAICS chart)
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Exercise 1-2a – PART 2 Does it matter what size the company is?
• Company B: A food service contractor.– Revenues: $10 million.– Clients: K-12 schools and universities.– Client vendor / procurement policies: 25%
small business set-asides.
(Click here: Sample NAICS chart)
15© Copyright Katherine Korman Frey/Vision Forward, LLC
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Module 1 Objectives:• Understand perceptions and definitions of
entrepreneurship.• Understand the definitions of “small business” and
why this is important.• Identify major characteristics of an entrepreneur.• Learn about the role small business plays in the U.S.
© Copyright Katherine Korman Frey/Vision Forward, LLC www.VisionForward.com
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16© Copyright Katherine Korman Frey/Vision Forward, LLC
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Major Characteristics of the Entrepreneur
• Entrepreneurial traits in a text• Entrepreneurial traits when interviewing an
entrepreneur
17© Copyright Katherine Korman Frey/Vision Forward, LLC
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Textbook Traits •Desire for responsibility •Preference for moderate risk•Confidence in ability to
succeed•Desire for immediate
feedback •High level of energy •Future orientation •Skill at organizing •Value of achievement over
money •High degree of commitment •Tolerance for ambiguity•Flexibility
Source: Zimmerer, Thomas W. and Scarborough, Norman S., Essentials of Entrepreneurship and Small Business Management, Prentice Hall, 2005.
18© Copyright Katherine Korman Frey/Vision Forward, LLC
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Entrepreneurial Traits… What Entrepreneurs Say:
•Tenacity and drive •Opportunity “vision”•Passion •Relationships•Judgment
Source: Frey, Katherine Korman, Vision Forward, LLC case studies: The Hot MommasTM Project, Cool Daddies Project, Extreme Entrepreneurs, & Innovative
Intrapreneurs, 2004-2007.
19© Copyright Katherine Korman Frey/Vision Forward, LLC
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Exercise 1-3 Major Characteristics of an Entrepreneur
• Pick a “top three” traits with which you identify.
2. Next, pick up to three traits where you would like to develop stronger skills.
3. Pick ONE trait from #1. Provide an example.
4. Pick ONE trait from #3. Brainstorm on how you can improve that trait.
20© Copyright Katherine Korman Frey/Vision Forward, LLC
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Exercise 1-3a Your Future Entrepreneurial Passion
1. List one to three areas about which you are passionate. Explain why.
2. KEEP THIS LIST.
21© Copyright Katherine Korman Frey/Vision Forward, LLC
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Module 1 Objectives:• Understand perceptions and definitions of
entrepreneurship.• Understand the definitions of “small business” and
why this is important.• Identify major characteristics of an entrepreneur.• Learn about the role small business plays in the U.S.
© Copyright Katherine Korman Frey/Vision Forward, LLC www.VisionForward.com
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22© Copyright Katherine Korman Frey/Vision Forward, LLC
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Exercise 1-4The Role of Small Business in America
Which of the below is/are FALSE? 1. Employ more than half of all private
sector employees.
2. Create more than 50 percent of nonfarm private gross domestic product (GDP).
3. Produce 13 to 14 times more patents per employee than large patenting firms.
4. Are employers of 39 percent of high tech workers (such as scientists, engineers, and computer workers).
5. Made up 97 percent of all identified exporters and produced 29 percent of the known export value in FY 2001.
6. Provide 83% of the world’s steel.
23© Copyright Katherine Korman Frey/Vision Forward, LLC
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The Role of Small Business in AmericaYesterday:
One product at a time
The Industrial Revolution & economies of scale
Today:
Current climate for business growth
Small business ability to compete
Universities and entrepreneurship
24© Copyright Katherine Korman Frey/Vision Forward, LLC
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Exercise 1-5: Culture of Entrepreneurship
“Those associations only which are formed in civil life, without reference to political objects, are here adverted to. The political associations which exist in the United States are only a single feature in the midst of the immense assemblage of associations in that country. Americans of all ages, all conditions, and all dispositions, constantly form associations. They have not only commercial and manufacturing companies, in which all take part, but associations of a thousand other kinds — religious, moral, serious, futile, extensive, or restricted, enormous or diminutive. The Americans make associations to give entertainments, to found establishments for education, to build inns, to construct churches, to diffuse books, to send missionaries to the antipodes; and in this manner they found hospitals, prisons, and schools…. I have often admired the extreme skill with which the inhabitants of the United States succeed in proposing a common object to the exertions of a great many men, and in getting them voluntarily to pursue it. The Americans form associations for the smallest undertakings.”
Alexis De Tocqueville, Democracy In America
25© Copyright Katherine Korman Frey/Vision Forward, LLC
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The Role of Small Business in America
•Number of small businesses•Role in economy - small firms•Industry types and breakdowns (Click for Figure 1)•Women and minority-owned small businesses•The US - A culture of entrepreneurship
•Opportunity•Culture•Future Orientation•Public Support
Key Facts:
26© Copyright Katherine Korman Frey/Vision Forward, LLC
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The Role of Small Business in America
Types of Sole Proprietorships by Industry and Receipts (Revenues) 2003.
Figure 1:
Source: www.bizstats.com
Industry
Number of sole-
proprietorships %Receipts (in thousands) %
Professional, scientific & technical services 4,226,056 24% $ 148,359,796 15%
Other services 3,047,639 17% $ 85,381,003 9%
Retail trade 2,309,270 13% $ 185,175,310 19%
Construction 2,283,929 13% $ 154,225,367 16%
Health care and social assistance 1,520,435 9% $ 82,760,451 9%
(Click for previous slide)
27© Copyright Katherine Korman Frey/Vision Forward, LLC
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The Role of Small Business in America
Sources: SBA and NFIB
Thinking ahead….
Should I start a business?
Just starting out:•66% expect the venture to be full time•33% expect the venture to be part time•82.5% seek credit of some type
28© Copyright Katherine Korman Frey/Vision Forward, LLC
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Exercise 1-6:
Thinking Ahead – Motivations of Future Entrepreneurs
Source: www.bizstats.com (Click for previous slide)
•Refer to the NFIB 2003 Small-Business Policy Guide (Chapter 4, Exhibit 3.4) http://www.nfib.com/object/2753115.html
•Comment on which of the motivations listed (see link) link might apply to you if you were to start your own business.
29© Copyright Katherine Korman Frey/Vision Forward, LLC
www.VisionForward.com
Module 1 Objectives:• Understand perceptions and definitions of
entrepreneurship.• Understand the definitions of “small business” and
why this is important.• Identify major characteristics of an entrepreneur.• Learn about the role small business plays in the U.S.
© Copyright Katherine Korman Frey/Vision Forward, LLC www.VisionForward.com
29
30© Copyright Katherine Korman Frey/Vision Forward, LLC
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Brought to you by:Entrepreneur-in-the-Classroom brought to you by:
Curriculum developed by:• Katherine Korman Frey
– Founder, Vision Forward & The Hot Mommas® Project.– Associate Director Center & Adjunct Professor, The George Washington University Center for Entrepreneurial Excellence.
• Contributing content provided by: Dr. George Solomon, Dr. Susan Duffy, Dr. Ayman Tarabishy and Professor Janet Nixdorff.
Co-presenting Sponsor In Conjunction With