SMALL BUSINESS MANAGEMENT AND ENTREPRENEURSHIP David Stokes and Nick Wilson r> SOUTH-WESTERN CENGAGE Learning- Australia Brazil Japan Korea Mexico Singapore Spain United Kingdom United States
CONTENTS Case Studies xi About the Authors xii Preface xiii Walk-through Tour xvi About the Website xviii PART 1 UNDERSTANDING SMALL BUSINESS AND ENTREPRENEURSHIP 1 1 Small Business in the Economy 3 Introduction 3 1.1 What is a small business? 3 1.2 Why bother with small businesses? 7 1.3 The revival of the small enterprise 9 1.4 Interpretations of the small business revival 14 1.5 Entrepreneurial churn in the business population 18 1.6 Transition and emerging economies 19 1.7 Summary and activities 21 1.8 Notes, references and further reading 28 2 Entrepreneurship, the Entrepreneur and the Owner-manager 30 Introduction 30 2.1 Entrepreneurship and the entrepreneur: some definitions 30 2.2 Motivations for starting a business 37 2.3 The search for the entrepreneurial archetype 44 2.4 Towards the entrepreneurial path 49 2.5 The 'Model' entrepreneur 50 2.6 Summary and activities 56 2.7 Notes, references and further reading 63 3 The Small Business and Entrepreneurial Environment es Introduction 68 3.1 A matter of life and death 69 3.2 The birth of new businesses 72 3.3 Sink or swim 86 3.4 Hostile and benign environments 90
3.5 Critical survival factors 94 3.6 Summary and activities 96 3.7 Notes, references and further reading 101 ^ 4 Innovation and the Marketplace 103 Introduction 103 4.1 Defining innovation 104 4.2 Innovation in more detail 106 4.3 Product innovation in small firms 112 4.4 Innovation and the entrepreneurship dynamic 116 4.5 Managing innovation - some issues 117 4.6 The seven sources for innovative opportunity 118 4.7 Innovating for the marketplace 121 4.8 Who is the customer? 123 4.9 Why will the customer buy from me? 125 4.10 Summary and activities 128 4.11 Notes, references and further reading 136 5 Information and Help 139 Introduction 139 5.1 Entrepreneurial information-gathering 140 5.2 Market research for small firms 142 5.3 Secondary data 145 5.4 Primary data 146 5.5 Help for small business 152 5.6 The effects of government policy 158 5.7 Summary and activities 160 / 5.8 Useful sources of information for entrepreneurs 167 5.9 Notes, references and further reading 169 PART 2 CREATING THE ENTREPRENEURIAL SMALL BUSINESS 173 6 Business Planning 175 Introduction 175 6.1 The purpose of a business plan 176 6.2 When to plan? 178 6.3 Who can benefit? 180 6.4 Why produce a plan? 181 6.5 The format of a business plan 183 6.6 Summary and activities 205 6.7 Notes, references and further reading 213
7 Successful Small Business Strategies 215 Introduction 215 7.1 Strategy and the small business 215 7.2 New venture strategy 219 7.3 Survival strategy 225 7.4 Growth strategy 229 7.5 A composite model of successful strategies 237 7.6 Summary and activities 239 7.7 Notes, references and further reading 248 8 Start-ups and Franchises 251 Introduction 251 8.1 The alternative routes to market entry 251 8.2 The start-up 253 8.3 What is franchising? 257 8.4 The franchising market 259 8.5 The pros and cons of franchising 263 8.6 Why do small business founders choose business format franchising? 266 8.7 But is it a small business? 267 8.8 Summary 268 8.9 Case studies and activities 268 8.10 Notes, references and further reading 272 9 Buying an Existing Business 275 Introduction 275 9.1 The scope for buying an existing business 276 9.2 Small business buyers 279 9.3 Assets for sale 282 9.4 Liabilities to be avoided 288 9.5 Basis of valuation of an existing business 289 9.6 Taxation aspects of a small business purchase 293 9.7 For and against buying an existing business 294 9.8 Summary and activities 296 9.9 Notes, references and further reading 304 10 Forming and Protecting a Business aoe Introduction 306 10.1 Choice of business organization 307 10.2 Limited company 307 10.3 Sole trader 312 10.4 Partnership 314 10.5 Choosing the appropriate business form: sole trader vs. partnership vs. limited company 317
10.6 Co-operatives 319 10.7 Intellectual property rights 322 10.8 Summary and activities 325 10.9 Notes, references and further reading 333 PART 3 MANAGING THE ENTREPRENEURIAL SMALL BUSINESS 337 11 Management of People and Resources 339 Introduction 339 11.1 Total management 340 11.2 Premises 341 11.3 Materials and equipment 344 11.4 Insurance 345 11.5 Business processes and information and communications technology 346 11.6 Management of people 348 11.7 Summary and activities 356 11.8 Notes, references and further reading 363 12 Marketing 365 Introduction 365 5 12.1 Small business marketing issues 366 12.2 Marketing defined 368 12.3 Entrepreneurial marketing 370 12.4 Word of mouth marketing methods 380 12.5 The impact of the internet on entrepreneurial marketing 383 12.6 Personal marketing communications 385 12.7 Impersonal marketing communications 388 12.8 Marketing channels 390 12.9 Summary and activities 392 12.10 Notes, references and further reading 399 13 Money 402 Introduction 402 13.1 Financial needs - the uses of funds 403 13.2 Accessing finance 405 13.3 Public initiatives in the UK 411 13.4 Control of financial resources 413 13.5 Managing finance 417 13.6 Entrepreneurial finance - some issues 426 13.7 Case studies and activities: part 1 428 13.8 Financial analysis 431 13.9 Summary and activities (part 2) 442 13.10 Notes, references and further reading 445
14 Business Exits and Realizing Value 448 Introduction 448 14.1 Business exits and closures 449 14.2 What adds value to a business? 454 14.3 Succession issues 457 14.4 The family business 459 14.5 Creating value for society 461 14.6 Summary and activities 461 14.7 Notes, references and further reading 467 Glossary of terms 469 Index 473