Small Businesses and Entrepreneurship: Economic Rocket Fuel Essay
Small Businesses and Entrepreneurship: Economic Rocket Fuel
1. Review the benefits an entrepreneur might seek in starting a new business. Which benefits are most appealing to you? Why? Some benefits that are most appealing to me is having greater financial success, independence, flexibility, and challenge because with all of them combined, it’s beneficial to me and can help me gain more money easier.
2. Do you recognize any of the entrepreneurial personality characteristics in yourselves? Which ones? Do you think it’s possible for a person to develop the characteristics that he or she lacks? Why or why not? Yes, I have some qualities of entrepreneurial personality characterics that are self-reliance, having confidence in myself, energy, and tolerance of failure. It is possible for a person to develop those skills if they are devoted to changing their personality and are dedicated to learning the new skills.
3. What role does failure sometimes play in entrepreneurial success? What can an entrepreneur gain from failure? They see it as a chance to learn and gain from their failures to become better in the future.
4. How could you convince family and friends to support your new business launch? What kind of assurances would they need? What could you do to keep the funding relationships professional?
I would convince my family and friends to support my new business launch by proving to them that I know what I’m doing and have enough experience to launch it. I could provide them with facts and experience to reassure them and I could create goals for me to reach to keep the funding relationships professional and create a business plan for them to see.
5. Beyond personal resources, what are other funding options for small businesses? Why don’t more entrepreneurs tap into these resources? There are many other funding options such as bank loans, angel investors, and venture capital firms. Entrepreneurs don’t tap into those resources because it causes more stress for them and they constantly have to worry about paying them back with/without interest and in the long run, they may lose more money and they would just prefer personal resources.
6. Compare the opportunities and threats that small businesses face. Which opportunities are most compelling? Which threats are most intimidating? Why? Some opportunities are the market niches, personal customer service and lower overhead costs but some threats are a high risk of failure, lack of knowledge and experience as well as having too little of money. Opportunity that compelling is personal customer service because with it small business owner can build personal relationship with a customer. Another opportunity that is compelling is lower overhead costs because no one wants to spend huge amount of money and wants to spend as less as possible. The biggest threat that is intimidating is high risk of failure. When someone starts a business, he or she wants to succeed and not to fail. People are scared of losing even if they are tolerant to failure. Those that tolerant to failure don’t give easily up like others do.
7. Review the definition of niche marketer, and cite three examples of niche marketers. How has technology affected niche marketing? Market niche is a small segment of a market with fewer competitors than the market as a whole and tend to be more attractive to small firms. Three examples of niche marketers are organic cosmetics, Google, and E-Bay. Technology plays very important role today, because internet helped people to open new businesses and at the same time create more customers. It is good for businesses because they spend less money and grow faster.
8. If you were to launch a new business, would you start from scratch, buy an established independent business, or buy a franchise? Why? I would buy a franchise such as Starbucks because I know there are many people out there who love Starbucks.
9. What are the key contributions of small business to the U.S. economy? Rank the benefits in terms of importance, and provide the reasons for your ranking. Some key contributions of small business in the U.S. economy is that they create new jobs, create new innovations at twice the rate of their big business counterparts, and they tend to find more opportunities than big companies.
10. What factors account for the dramatic differences in entrepreneurship rates around the world? Do you think entrepreneurship will continue to grow worldwide? Why or why not?
Some key factors that plays an important role in different entrepreneurship rates around the world are national per capita income, entrepreneurs’ opportunity costs, and how much cultural and political environment supports entrepreneurs. I believe entrepreneurship will continue to grow worldwide because there’s always going to be that one person who has dreams he or she wants to accomplish.
1. A huge number of successful businesses—such as Apple, The Cheesecake Factory, and eBay—were built around the personal passions of their founders. Consider your own personal passions. What do you love to do? What are you great at doing? Can you shape any of your interests into a business opportunity? Why or why not? Be sure to think big. For instance, if you love hanging out with friends and listening to music, a club promotion business might make sense for you. Write a one–two page paper outlining the specific steps you need to take over the next few years to make your “dream business” real?
2. Identify a person in your neighborhood who started a business from scratch, a person who bought an existing business, and a person who bought a franchise (your local chamber of commerce can probably help you identify candidates). Interview each of the entrepreneurs to learn more about their experiences. What were the pros and cons of each approach? Would they use
the same approach if they could do it over again? Why or why not? What are their long term goals? How did the actual experiences of the entrepreneurs you interviewed compare to the material in the book? Did you hear anything surprising?
3. The Global Entrepreneurship Monitor (GEM) suggests that only a small percentage of entrepreneurs launch “high expectation” businesses—firms that they anticipate will hire 20 or more employees in the next five years. In fact, a 2005 study suggests that just 9.8% of the world’s entrepreneurs expect to create almost 75% of the jobs generated by new business ventures. Read the summary report on the Internet at the GEM website (http://www.gemconsortium.org/). Given that “high expectation” entrepreneurs can have a far-reaching impact on job creation and innovation, how can governments around the world encourage more “high expectation” entrepreneurship? Consider the impact of taxes, regulations, and government assistance.
4. In many developing countries, the majority of citizens make their living through microenterprises—informal, tiny businesses that barely yield enough to survive. Without financial services, most of these entrepreneurs find growth simply impossible. The Foundation for International Community Assistance (FINCA), a nonprofit established in 1984, stepped into the gap by providing micro-loans ($50–$500) to the poorest of the poor entrepreneurs, through village banks that are administered by the people they serve. The FINCA program has been amazingly successful at breaking the vicious cycle of poverty for its clients. Check out their story on the Web at www.villagebanking.com. Why has the FINCA approach worked so well? Do you think it would work in poor communities in the United States? Why or why not?
5. The Small Business Administration (SBA) maintains a rich, vibrant website, and supports a number of high impact programs to support small business growth. In fact, every state has at least one local SBA office. Log onto the SBA website at www.sba.gov, and spend a few moments browsing. Be sure to check out the sections on business opportunities and training. Then find the page for the SBA office nearest your school. How would this information be helpful for local small businesses? If you started a business, would you personally be likely to use any of the SBA resources? If so, which ones? Why do you think the government spends so much money supporting small business growth by providing this array of resources?
Making Lemonade from Lemons
Take a moment to write down 3 to 5 things that you find frustrating about daily life on a fairly regular basis (e.g., “It takes forever to find a parking spot on campus,” “I hate waiting online at the post office,” “My roommate borrows my favorite jeans way too often.”). Be honest . . . and use real problems.
Then break into groups of 3 to 5 students, and exchange papers. Take about 3 minutes to choose one problem on the list that you received, and to develop a product or service idea that could solve that problem. Then, together with your team, review each person’s idea and choose the one with the most potential. Working together take twenty minutes to further develop the idea into a business concept. Create a logo and a slogan for your business, and present your idea to the class, along with the problem that your business will solve. After you’ve heard the ideas from each team, vote with your classmates for the best new business idea.
A Taxing Issue
In early summer 2011, the nation faced the prospect of default and Republicans and Democrats tried to find ways to reduce deficit spending or risk a credit downgrade. One idea was to end tax breaks for those who earn more than $250,000 per year: “the rich” (according to President Obama and other key Democrats), or “job creators” (according to John Boehner and other key Republicans and Tea Party activists). At a time of protracted economic stagnation, this issue inflamed passions across the political spectrum. The key arguments:
In favor of taxing “the rich”
The existing tax rate is well below historic norms and the country simply cannot afford tax breaks for those who have benefited most from our business-friendly economic system; in the interest of shared sacrifice, tax breaks for the wealthiest must be slashed to overcome this crisis. Hiring would not be affected, since most business owners would only add new workers if they would benefit financially on a net basis, including tax payments; so if the demand is there, the jobs will be there, regardless. Many economists and bipartisan commissions agree that there is no way to close the deficit without some “revenue enhancements” (i.e., tax increases). Given the soaring federal debt, we as a society must seek every possible source of additional revenue. Against taxing “job creators”
If we improve economic growth, rather than increasing taxes, the revenues will come. Raising taxes on job creators is the worst way to close the deficit, since it will inhibit new hiring; some small business owners may even be forced to layoff workers, adding to the deficit yet further. The tax would be creating a disincentive for growth, without much corresponding gain, since the American Enterprise Institute claims that the additional revenue would produce only “a rounding error compared to the deficits in the president’s budget.” As chapter 7 explains, small businesses create more than 2/3 of the new jobs in our economy – so we should make it as easy as possible, rather than throwing up roadblocks.
Do you think it makes sense to increases taxes on those who earn more than $250,000? Please defend your answer.
Is it fair to have different tax rates for different income groups?
If you owned a small business, such as a night club, what financial factors would influence your hiring?
What Were They Thinking? By Elizabeth Drew, August 18, 2011, The New York Review of Books website, http://www.nybooks.com/articles/archives/2011/aug/18/what-were-they-thinking/?page=3, accessed September 5, 2011; Warren Buffett pushes higher tax rates, but some doubt those would be right or beneficial by Laura Green, August 21, 2011, The Palm Beach Post website, http://www.palmbeachpost.com/money/warren-buffett-pushes-higher-tax-rates-but-some-1771404.html?cxntcid=breaking_news, accessed September 5, 2011