Entrepreneurship. What is an Entrepreneur?. People who organize, manage, and take the risk of owning and operating a business. A person who starts a new business. Entrepreneurship is the process of starting and managing your own business. Why is Entrepreneurship Important?.
What is an Entrepreneur? • People who organize, manage, and take the risk of owning and operating a business. • A person who starts a new business. • Entrepreneurship is the process of starting and managing your own business.
Why is Entrepreneurship Important? • The wealth of the United States was built on the energy and hard work of entrepreneurs. • Examples: • Ray Kroc: McDonald’s Corporation • Henry Ford: Ford Motor Company • Walt Disney: Walt Disney Company
Who is an Entrepreneur? • Anyone can be an entrepreneur! • In the United States, everyone is free to start any legal business.
So What Does it Take? • The two most important traits are: • Commitment to the business • The entrepreneur is willing to do whatever it takes to make the business successful. • Having a product that customers will buy • Most businesses fail because customers are unwilling to purchase the product.
The Big Risk • More than 3,000 new businesses are started each WEEK in the United States. • 2 out of 3 of these businesses close their doors within four years.
3 Aspects of Entrepreneurship • 1. The identification/recognition of market opportunity and the generation of a business idea (product or service) to address the opportunity
3 Aspects of Entrepreneurship • 2. Finding and acquiring resources in the face of risk to pursue the opportunity
3 Aspects of Entrepreneurship • 3. The creation of an operating business organization to implement the business idea
Advantages • You are your own boss • Enjoy the profits from you efforts • Sense of pride in your business • Doing something you love • Flexibility in your work schedule
Disadvantages • Long hours • Responsibility/Pressure • Risk of failure • Need money to start • May have to mark hard decisions (hiring, firing, etc.)
Personality Traits Independence: the desire to be your own boss. Self Discipline: the way we train ourselves to meet certain goals. Concentration: “sticking” it out through distractions to get the job done. Persistence: never showing discouragement, always thinking of new ways to approach a problem and acting on your ideas.
Personality Traits Creativity: the ability to come up with clever, workable solutions. Businesslike Attitude: possessing the knowledge of your chosen business and having the savvy to conduct business. Hard Work: being capable of doing the work and enjoying it. Motivation: the mental and physical drive to succeed, to accomplish chosen tasks on your own terms
Personality Traits Confidence: having a firm belief in your own capabilities and your chances of success. Willingness to Take Risk: the readiness to sacrifice your own security, if need be, in order to accomplish your goals. Human-Relation Skills: the ability to get along with others, to inspire cooperation, confidence and loyalty
Personality Traits Communication Skills: the ability to express yourself and to understand others so that ideas can be shared. Technical Ability: the expertise to produce the goods and services of your business. Ability to Make Decisions: the talents to analyze complex situations and draw conclusions that will make the business succeed.
How to Start your Own Business • Buy an Existing Business • Buy a Franchise • Start your own Business
Buy an Existing Business Advantages Disadvantages You may be buying problems “Why is this business being sold?” Not making a profit? (or just retiring?) • Already have customers & employees • Location, Business Equipment existing • Working operations • Person who sold the business may act as consultant
Buy a Franchise Advantages Disadvantages Franchisor makes many of the decisions Initial cost may be high ($20,000-$75,000) Must pay royalty fee (based on your profits, 5-10%) Franchisor can terminate agreement • Established product/service and reputation • Franchisor provides assistance (training) • Quantity purchasing= discount
Start Your Own Business Advantages Disadvantages You take on all of the risk More difficult to get loans & raise money for the business Requires a great deal of time & research • You get to make all of the decisions • You get all of the profits
Start-up Costs • The costs to start a new business • Operating expenses: the costs to keep a business running • Most businesses need a loan to get started • The most common source of loans is a bank
The Business Plan • A business plan is a written document that describes a business and how it will operate. • Entrepreneurs spend up to 100 hours on their business plans. It is a valuable research and planning tool. • Includes: executive summary, description of business, industry/competitive analysis, customers/target market, marketing plan, operations plan, and financial plan
U.S. Small Business Administration • Because businesses are so important to the U.S. economy, the government created the SBA to aid small business owners. • The SBA has offices in every state • Main goal: To help business owners obtain loans; also provides management and technical assistance to more than one million small business owners.