Career and Financial ManagementBecoming an Entrepreneur

Objectives Define entrepreneur and identify key

traits of successful entrepreneurs List the four ways to become a business

owner Identify forms of business ownership

and factors that can affect business success

Small Businesses The person who organizes and runs a

business is an entrepreneur 99% of American companies are small

businesses Around 500 employees or less Begin with a few employees

Being an Entrepreneur An entrepreneur’s life is challenging

Traits of an Entrepreneur

Sight and Foresight

Decision-making Motivation

Advantages & DisadvantagesAdvantages DisadvantagesIndependence Stress

Flexibility AdministrationExcitement Long Work Hours

Salary Potential Financial Risk

Do You Have What it Takes? Do you make good decisions quickly? Can you supervise people well? Can you motivate people to do their work

well? Do you have a good knowledge of the

service or product you want to provide? Are you comfortable around strangers? Do you have unlimited ambition and drive?

The Bottom LineBeing an Entrepreneur Requires specific traits Has advantages and disadvantages Not everyone has what it takes

Becoming a Business OwnerFour ways to go into business Start a new business Buy an existing business Buy a franchise Join a family business

Ideas for Starting a New Business Hobby Business Product Services Personal Services Business Services

Starting a New BusinessADVANTAGES• Develop your own

reputation• Build business your own

way• Personal satisfaction

knowing you built the business

DIADVANTAGES• Requires more time and

effort than buying an existing business

• Start-up costs are high• Can be difficult to borrow

money• No guarantee of success

Buying an Existing Business Successful businesses for sale

Owner is retiring Owner is starting a new business

Unsuccessful businesses for sale Losing too much money

Determine if problems can be fixed before purchasing

Buying an Existing Business

ADVANTAGES• Puts you several steps

ahead• Take advantage of previous

owner’s agreements• Build on the goodwill of

existing customers• Positive reputation• Trained staff

DIADVANTAGES• Poor location• Strong competition taking

away business• Poor market outlook• Building or equipment may

need expensive repairs or replacement

• Poor reputation

Buying a Franchise Franchise: the legal right to sell a

company’s goods and services in a particular area Many restaurants and real estate offices Pay a percentage of your profits to the

parent company

Buying a FranchiseADVANTAGES• Recognizable product name• Established procedures and

management systems• Established business

reputation and customer goodwill

• Training, advertising, financing, and support services

DIADVANTAGES• May be less profitable• Must follow established

guidelines of parent company

• Less personal satisfaction

Joining a Family BusinessADVANTAGES• Financing can be split

amongst relatives• Trust and loyalty between

family members• Working as a team can

achieve more than as an individual

• Same goodwill and trust of customers

DIADVANTAGES• Additional issues on top of

typical business ownership stress

• Not all families work well together

• Difficulties can affect family relationships

The Bottom Line

BUSINESS OWNER

Start a Business

Buy a Business

Family Business Franchise

Forms of Business Ownership Three basic ownership types

Sole proprietorship: business is completely owned by one person

Partnership: legal arrangement where two or more people share ownership of a business

Corporation: business chartered by a state that legally operates apart from the owner(s)

Financing Your Business Starting a business requires money

Financing sources: Personal savings Loan from friends/family Loan from commercial lenders

Develop a business plan and a financial plan before applying for loans

Business and Financial Plans

BUSINESS PLAN• Describes product• Business location• Number of employees• Salaries• Describes competition• Marketing plan• Timetable for starting

FINANCIAL PLAN• Start-up costs• Operating expenses

• Cost of manufacturing product

• Cost of selling product• Additional cost in the first

few months

Succeeding in BusinessFinancing

Competition

Location

Management

Business Success

The Bottom LineSt

artin

g a

busin

ess

Ownership Financing Success

Sole Proprietorship

Personal Savings Financing

Partnership Loans from Friends/Family Management

Corporation Commercial Lenders• Business

Plan• Financial

Plan

Competition

Location