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20

Part l; 'l'he L-halleiige

1. Describe the characteristics of small business.
Small businesses include a wide variety of business types that are independently owned, operated, and

4. Identifr some of the opportunities available to small businesses. Small and large businesses need each other to surwive-they have a symbiotic relationship. This relationship provides opportunities tosmall businesses in that they can supply needed parts to large manufacturers and can distribute manufactured goods. Moreover, small businesses often pick up functions that large businesses outsource. Other

than 100 employees, and retailers or serrrices with annual revenues less than $3.5 million are
tlpically considered small. By itself, each individual small business has relatively little impact inits
industry.

financed. Although specific size definitions exist for each type of business, manufacturers with fewer than 500 employees, wholesalers with fewer

2. Recognize the role of small business in the U.S. economy.
Small businesses provided the economic founda_ tion on which the U.S. economy was built. Today
these businesses are creating new jobs even as large businesses continueeliminating jobs. Small busi_ nesses are more flexible than large ones in the pro_ ducts and services they offer. Most real product innovations come from small businesses.

opportunities exist for small businesses where they enjoy the advantage ofbeing able to profitably serve smaller niches than can their larger counter_ parts. For all these reasons, small businesses are rapidly becoming important playerstional trade.
business venture.

in

interna_

5. Suggest ways to court success in a small
To prevent your small
other casualty noted in
must begin with a clear tage. You must offer a product or service that people want and are willing to buy. You must do somethhg

3. Understand the importance of diversity in the marketplace and the workplace.
As the population becomes more diverse, the own_ ersand employees of small businesses are likewise becoming more diverse. Businesses owned by women and minorities are growing at a faster rate than the overall rate of business growth. Diversity is important in small business because a wide range of vieupoints and personal backgrounds can improve problem solving.

substantially better than your competition does it. You must remain flexible andinnovative, stay close to your customers, and strive for quality.

6. Name the most common causes of small business failure.

Ineffective and inefficient management, which
shows up in many ways, is the number one cause of business failure. Tnadequate financing, industry

weakness, inexperience, ma]or causes.

and neglect are other

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How would you define small business? Name a company thatseems large but might be classified as small because it has relatively little impact on its industry. Large businesses depend on small businesses. whv?
Define outsourcing, and describe its impact on small business. Why are small businesses more likely than large
businesses to be innovative?

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3.

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Explain the term creative destruction. How can being close to your customers give you acompetitive advantage? How would you show that small business is be_ coming a more important part of the economy? The text compares the failure rate for small businesses with the divorce rate in marriage and the student failure rate in college. Are these fair
comparisons?

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10. Do you have willpower and self-discipline? 11: Do you plan ahead? 12. Do you like people? 13. Do youget along well with others? 14. Would people who know you say you are outgoing? Personal Conditions 15. Are you aware that running your own business may require working more than
12 hours a day,6 days a week, and maybe Sundays and holidays?

16. Do you have the physical stamina to handle a "self-employed" workload and
sched
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le?

17. Do you have the emotional strength to deal effectively with...