SOLUTION MANUAL FOR SMALL BUSINESS MANAGEMENT ENTREPRENEURSHIP AND BEYOND 6TH EDITION BY TIMOTHY S. HATTEN CHAPTER 1
Small Business: An Overview TEACHING TIPS
Use this chapter to begin discussion about differences between large and small businesses. Emphasize the importance of small businesses to our economy.
Emphasize the symbiotic relationship between large and small businesses.
Point out that the failure rate of small businesses is difficult to calculate with accuracy, but proper preparation can help prevent students from becoming part of those statistics.
Use the vignette, What Would You Do? at the end of the chapter to launch class discussion on the potential for business failure and importance of creating competitive advantage in the restaurant business.
LECTURE OUTLINE Opening Vignette:
GoPro creator Nick Woodman
Concept Module 1.1 What Is Small Business? LO1 Describe the characteristics of small business. A. Good question—since small businesses are the drivers of a free enterprise system. If you include sideline businesses with full-time businesses and the self-employed, almost 27 million small businesses exist in the United States. Compare that with only 18,000 businesses with 500 or more employees. (See Figure 1.1, Almost All Businesses Are Small Businesses.) B. Size Definitions 1. To be classified as ―small,‖ Small Business Administration (SBA) guidelines vary by NAICS code based on revenue and number of employees. (See Table 1.1, Small Business Size Standards.) In general, retailers and services with less than $6.5M, wholesalers with fewer than 100 employees, and manufacturers with fewer than 500 employees are classified as small. 2. To be classified as a ―business,‖ you must make a profit in 3 of 5 years, otherwise the IRS can say you have a hobby, not a business. C. Types of Industries 1. For the purposes of this book, we consider a small business one that is: independently owned and operated; has fewer than 100 employees; and has relatively little impact on its industry.