From the course: Finance Essentials for Small Business

All businesses start small

From the course: Finance Essentials for Small Business

All businesses start small

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- All businesses start small. - Here are some examples with which you may be familiar. - [Man On Left] Apple was started in 1976 by two friend, Steve Jobs and Steve Wozniak, working at least part of the time in the garage of Steve Jobs' parents' home in Los Altos, California. - Apple's first financing arrangement came when Steve Jobs convinced an electronic parts supplier to give him parts on credit. Agreeing that he would pay for the parts when he and Steve Wozniak sold the first batch of completed computers, the Apple 1. - [Man On Left] Well in 1981 Microsoft was a 32-person software company that had recently moved to Bellevue, Washington from its original headquarters in Albuquerque, New Mexico. - [Man With Glasses] Exxon Mobil was created through the entrepreneurial energy of one person, John D. Rockefeller, in Cleveland clear back in 1862. - This small oil company, started by Rockefeller with just $4,000 of his personal savings, eventually got so big that the US federal government decided it was a monopoly and broke it into several pieces. Both Exxon Mobil and Chevron are remnants of the original Standard Oil Company started by Rockefeller. - [Man With Glasses] Walmart was also started through the energy of one person, Sam Walton. After World War II, Sam borrowed $20,000 from his father-in-law and bought a variety store in Newport, Arkansas. By 1962, Sam Walton had built a chain of 16 variety stores. - Sam had become convinced that there were big opportunities in opening discount retail locations in the smaller US towns and cities that were being overlooked by the traditional retailers, such as Sears. Walton pitched his idea to a couple of retail chains, but he couldn't generate any interest. - He finally had to fund the start-up of his first discount store with his own money, putting up 95% of the financing with another 3% coming from his skeptical brother, Bud, and 2% from the person he hired to manage the store. - Now, let's keep in mind that a business doesn't have to become large and famous to be success. Solid small and medium-sized businesses are the foundation of communities. - But however you define success, for each success story there are hundreds of small businesses that die before they ever really get going. - The most common reason for a small business to fail is that the underlying product or service just doesn't satisfy a market need. In other words, customers don't want the product or service. - But small business are also often killed because of predictable and preventable business mistakes. Insufficient capital, poor cash management, poor record keeping and controls, improper product pricing, and uncontrolled growth. - So, let's learn about the factors that frequently kill small businesses.

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