Understanding business 10th chapter 6 entrepreneurship and starting a small business

• Entrepreneurship -- Accepting the risk of starting and running a business.. • Micropreneur -- Entrepreneurs willing to accept the risk of starting and managing a business that remains

• Entrepreneurship

Accepting the risk of starting and running a business.

WHAT is ENTREPRENEURSHIP?

The Age of the

Entrepreneur

You’re NEVER too YOUNG nor too OLD to be an ENTREPRENEUR!

Reasons to start your business right NOW!

1 Being younger:

a You don’t have a mortgage or kids to take care

of You can survive on little funds and work long hours No disruption to your career path

It hasn’t started yet! Use of your alma mater for resources

2 Being older:

a Have greater experience and more financial

resources Use of established networking peers and business contacts

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FIVE STEPS to STARTING YOUR BUSINESS while in SCHOOL

1 Find a problem or need

2 Zero in on specifics

3 Do research on campus,

test products with fellow students

4 Move forward with your

ideas Don’t wait!

• It fills customers’ needs.

• You have the skills and resources to start a business

• You can sell the product or service at a reasonable

price and still profit

An IDEA is a GOOD OPPORTUNITY IF…

• You can get your product or

service to customers before

the window of opportunity

• Entrepreneurial team A

group of experienced people from different areas of business who join to form a managerial team with the skills to develop, make and market a new product.

Jobs, Steve Wozniak and Mike Markkula) were key to Apple ’s success.

• Micropreneur Entrepreneurs willing to accept the

risk of starting and managing a business that remains small, lets them do the work they want to do, and

offers a balanced lifestyle.

• Many micropreneurs are home-based business

owners – writers, consultants, video producers,

architects, bookkeepers, etc

• Nearly 60% of home-based micropreneurs are men

• Intrapreneur A creative person who works as an

entrepreneur within a corporation.

• Intrapreneurs use a company’s existing resources to

launch new products for the company

• Art Fry of 3M developed Post-Its

when he was trying to mark pages

of his hymnal without damaging the pages

• Computer technology has leveled the playing

field.

our on their own.

HOME-BASED BUSINESS

GROWTH

loosened restrictions on deducting expenses for home offices.

Micropreneurs

and Home-Based

Businesses

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• Ability to start your business

immediately

charges

BENEFITS of HOME-BASED

BUSINESSESLG1

Micropreneurs

and Home-Based

Businesses

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• Difficult to establish work habits

claims – need for Errors and Omissions Insurance

THINK YOU’RE READY

to WORK from HOME?

Yes? No?

If I don’t know the answer, I can figure it out.

I’m hardworking, self-directed and disciplined.

I’m organized and can multitask.

I don’t mind working long hours or weekends.

I regularly set goals and measure progress.

I’m happy being alone.

I’m an excellent communicator.

I can create relationships with people I’ve never met.

I’m productive on my own.

My family and friends don’t expect me to be available

when I’m working at home.

• Affiliate Marketing An Internet-based marketing

strategy in which a business rewards individuals or

other businesses for each visitor or customer the

affiliate sends to its website.

AFFILIATE MARKETING

Web-Based

Businesses

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• Establish an identity.

make them your own.

opportunities.

BOOSTING YOUR BUSINESS’S

ONLINE PRESENCE

Photo Courtesy of: Marc Wathieu

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Web-Based

Businesses

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• Immigration Act passed in 1990 created a

category of “investor visas” that encourage

entrepreneurs to come to the U.S.

• Enterprise Zones Specific geographic areas to

which governments attract private business

investment by offering lower taxes and other

government support.

• Incubators Offer new businesses low-cost offices with basic services.

GOVERNMENT and ENTREPRENEURSHIP

Small Business

Independently owned and

operated, not dominant in its

field of operation and meets

certain standards of size.

Businesses are “small” in

relation to other businesses in

their industries (less employees,

less sales, not a franchise, and

may only be a single store

• Limited Experience

• Long Hours

• Insufficient Capital

• High Failure Rate

SMALL BUSINESS DISADVANTAGES

• Owner closing a business to

start another is reported as a

• Learn from Others – Investigate your local

colleges for classes on small business and entrepreneurship; talk to and work for successful local entrepreneurs

• Get Some Experience – Gain three years

experience in the field; then start a part-time small business

• Take Over a Successful Firm – Serve as an

apprentice and eventually take over once the owner steps down

LEARNING ABOUT SMALL BUSINESS

Suppose you worked in a company for two years and

you see signs of it faltering You and a coworker have ideas about how to succeed and are considering

quitting to start your own company

• Should you approach other coworkers about working for your new venture?

• Will you try to lure your old boss’s customers?

• What are the alternatives?

• What are the consequences?

• What is the most ethical choice?

GOING DOWN with the SHIP

(Making Ethical Decisions)

• Business Plan A detailed written statement that

describes the nature of the business, the target

market, the advantages the business will have

over competition, and the resources and owners

qualifications.

• A business plan forces potential owners to be

specific about what they will offer

• A business plan is mandatory for talking with

bankers or investors

Successful Business Management Requirements Starts with a Business Plan

Being with

Planning

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• A good plan takes a long time to prepare.

and tempts potential investors to read on.

WRITING the BUSINESS PLAN

the right hands is almost as important

as getting the right information in it.

Writing a

Business Plan

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• Venture capitalists Individuals or

companies that invest in new businesses in

exchange for partial ownership.

• Clarify Expectations – What will each person

contribute?

line that separates work from personal relationships?

types of decisions you’ll make jointly and on own

• Clarify Long-Term Intentions – Discuss how long

everyone will work full time and goals for the business

A FAMILY AFFAIR

What to Consider Before Starting a Family Business

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• Kickstarter, Lending Club

and Indiegogo connect

loan seekers to potential

lenders or investors

interest rates between

6.78% and 24.95%

based on credit history,

how much money is

needed, and what the

person is using it for

SOCIAL LENDING & INVESTING

(Social Media in Business)

• Market Consumers with unsatisfied wants and

needs who have both resources and willingness

to buy

• Set out to fill the market’s needs by offering

top quality and great service at a fair price

business is the ability to know the market and

to quickly adapt to market needs.

• Marketing decisions need to be made long before introducing a product or opening a store.

• A marketing research study can help you:

- Determine where to locate

- Whom to select as your target market

- What is an effective strategy for reaching the

market

MARKETING RESEARCH

Looking for Help

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• Hiring, training and motivating employees is

critical.

satisfied with their jobs – they feel challenged

and respected.

business if they recruit and groom employees

for management positions.

• Computers simplify the process by helping with

inventory control, customer records and payroll.

• A good accountant can help in:

- Deciding whether to buy or lease equipment

- Deciding whether to own or rent a building

- Tax planning

- Financial forecasting

- Choosing sources of financing

- Writing requests for funds

ACCOUNTING ASSISTANCE

Keeping

Records

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• Owners need outside consulting advice early

in the process.

to hire experts as employees.

• A competent attorney can help with:

• A commercial loan officer can help:

- Design an acceptable business plan

- Give financial advice

- Lend money

• An insurance agent can help you:

- Know the risks associated with the business

- How to cover risks with insurance

- How to prevent risks with safety devices

• Service Corps of Retired Executives

(SCORE) More than 10,500 volunteers from industry, trade associations, and education who counsel small business at no cost

OTHER FORMS OF HELP

Looking

for Help

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Progress

Assessment

A business plan is probably the most important document a small business owner will ever create There are nine sections in the business plan outline on pp 165-166.

of a business plan?

PROGRESS ASSESSMENT

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• Small Business Administration (SBA) A

U.S government agency that advises and assists small businesses by providing management training and financial advice.

provides very small loans to small business

owners.

borrower’s integrity and soundness of their

• Small Business Investment Company (SBIC)

A program through which private investment

companies licensed by the SBA lend money to small

businesses.

and can borrow up to $2 from the SBA for each $1 of

capital it has

• SBICs are able to identify a business’s trouble spots

early, giving entrepreneurs advice, and in some

cases rescheduling loan payments

The SMALL BUSINESS INVESTMENT COMPANY

• The Office of Innovation & Entrepreneurship

The Small

Business

Administration

• Small Business Development Centers (SBDC) are

funded jointly by the federal government and individual states

• SBDCs are able to evaluate the feasibility of your idea, develop your business plan and complete your funding application – for no charge

SMALL BUSINESS DEVELOPMENT CENTERS

• Small and medium-sized businesses accounted

for 99% of recent export growth.

• Advantages of global trade for small businesses:

- Overseas buyers enjoy dealing with individuals

- Small companies can usually begin shipping

much faster

- They provide a wide variety of suppliers

- They can give more personal service and

Progress

Assessment

business globally?

businesses have over large businesses in selling in global markets?

PROGRESS ASSESSMENT

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