Entrepreneurship and Small Business
description
Transcript of Entrepreneurship and Small Business
Entrepreneurship and Small Business
Chapter 5pp. 68-83
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Learning ObjectivesLearning ObjectivesAfter completing this chapter, you’ll be After completing this chapter, you’ll be able to:able to:
1.1. DescribeDescribe an entrepreneurship and a small business.
2.2. ListList the advantages and disadvantages of entrepreneurship.
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Learning ObjectivesLearning ObjectivesAfter completing this chapter, you’ll be After completing this chapter, you’ll be able to:able to:
3.3. RecognizeRecognize the advantages and disadvantages of a small business.
4.4. ExplainExplain why small businesses may fail.
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Why It’s ImportantWhy It’s Important
Entrepreneurs and small businesses bring vital energy and innovation to the economy.
The risks involved energize entrepreneurs and small business owners to become successful.
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Key WordsKey Words
entrepreneurshipvirtual business or dot-com companysmall businessentrepreneurrisk takerprofit
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The Ins and Outs of The Ins and Outs of EntrepreneurshipEntrepreneurship
Entrepreneurships and small businesses are the majority of business firms.
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An entrepreneurship is a business started by someone who notices a need for a product or service.
The Ins and Outs of The Ins and Outs of EntrepreneurshipEntrepreneurship
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A virtual business or a dot-com company is a business that operates on the Internet.
The Ins and Outs of The Ins and Outs of EntrepreneurshipEntrepreneurship
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Online FinanceSome new Internet businesses are able to hire people without paying them a salary. LENDX Inc., based in San Francisco, Calif., serves as an online financial hub for businesses interested in leasing or buying equipment.
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When LENDX started, their first six employees worked for shares of company stock only.
AnalyzeWhy would its employees work without a salary?
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Figure5.1 ARE YOU ORIGINAL?
Take this quiz and see if you would be a good entrepreneur.
Below are traits of an entrepreneur. Rate yourself by choosing a number that best describes you. At the end you’ll add up your points to see how you fared (1 is the lowest, 5 is the highest).
Rate your score:35-40 points = true entrepreneur30-34 = willing to take risks and try something new25 and under = you take fewer risks
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The Ins and Outs of The Ins and Outs of EntrepreneurshipEntrepreneurship
An entrepreneur is a person who recognizes a business opportunity and organizes, manages, and assumes the risks of a business enterprise, with the intent of increasing the market value of the business.
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Entrepreneurs are take-charge, self-directed people.
Often an entrepreneur is a risk taker, or someone who likes to take risks.
The Ins and Outs of The Ins and Outs of EntrepreneurshipEntrepreneurship
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Want tocontroldestiny
Want tocontroldestiny
Desire toearn profitDesire to
earn profit
Areenthusiastic
Areenthusiastic Have self-
confidenceHave self-confidence
Aredetermined
Aredetermined
Recognizeopportunities Recognize
opportunities Desire
achievementDesire
achievement
TakerisksTakerisks
Have highenergy
Have highenergy
SuccessfulSuccessful EntrepreneursEntrepreneurs
SuccessfulSuccessful EntrepreneursEntrepreneurs
Successful EntrepreneursSuccessful Entrepreneurs
Graphic OrganizerGraphic Organizer
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There are many advantages to being an entrepreneur, including:
Advantages of EntrepreneurshipAdvantages of Entrepreneurship
• Satisfaction from taking a risk and becoming a success
• Showing expertise and skills
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Advantages of EntrepreneurshipAdvantages of Entrepreneurship • Working from home• Gaining profit
Profit is the money left over after a business has paid all costs of producing its goods or services.
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DisadvantagesDisadvantagesof Entrepreneurshipof Entrepreneurship
The disadvantages to being an entrepreneur are:
• Long hours• Total responsibility for the business• Financial risks
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DisadvantagesDisadvantagesof Entrepreneurshipof Entrepreneurship
The main reason why entrepreneurships fail is that they run out of money.
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Fast Review
1. What are some characteristics of entrepreneurs?
2. What are three advantages of an entrepreneurship?
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Fast Review
3. What are some disadvantages of an entrepreneurship?
4. What is the main reason that entrepreneurships fail?
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Small Business:Small Business:What You Need to KnowWhat You Need to Know
The Small Business Administration (SBA) defines a small business as an independently owned business that usually has the owner as its manager.
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Small Business:Small Business:What You Need to KnowWhat You Need to Know
A small business serves a limited geographic area, employs fewer than 500 people, and is not dominant in its industry.
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Small Business:Small Business:What You Need to KnowWhat You Need to Know
Small businesses employ more than 50 percent of the total workforce in the United States.
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Small Business:Small Business:What You Need to KnowWhat You Need to Know
Small businesses generate more than half the nation’s income.
They are the principal source of new jobs.
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Making an Ethical Decision
1. Are all employees—even those in small businesses—entitled to job benefits?
2. If you were an employee, what kind of benefits would you want?
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Making an Ethical Decision
3. If you were an employer, what benefits would you want to offer and why? What other job “perks” could you offer your employees that would not directly cost money?
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Small Business:Small Business:What You Need to KnowWhat You Need to Know
Small businesses account for about 38 percent of jobs in high technology.
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Figure5.2 SMALL BUSINESS EMPLOYMENT IN THE UNITED STATES
There are 25 million small businesses in the United States.
Which three types of small businesses provide the most jobs?
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Advantages of Small Business Advantages of Small Business Some of the advantages of owning a small business are:
• Being the boss• Offering services large companies
cannot offer• Ease of formation
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Disadvantages of Small Business Disadvantages of Small Business
When you’re a small business owner, you’re responsible for decisions.
You often work long hours and have great financial responsibility.
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About four out of five small businesses fail in their first five years.
Disadvantages of Small Business Disadvantages of Small Business
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Small business owners may mistake the freedom of being in business for oneself for the liberty of working or not.
Disadvantages of Small Business Disadvantages of Small Business
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A small business may underprice or overprice goods or services.
Going into business with little or no experience may result in the business closing.
Disadvantages of Small Business Disadvantages of Small Business
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The following are three specific reasons why a small business might not work:
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Disadvantages of Small Business Disadvantages of Small Business
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Why a small business might not work:1. Effect of Change
Consumers’ tastes change. If flexibility and change are not part of the business, then it’s likely to fail.
Disadvantages of Small Business Disadvantages of Small Business
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2. Managerial Skills NeededA small business owner must have multiple skills including:• Financing• Employee relations
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Why a small business might not work:
Disadvantages of Small Business Disadvantages of Small Business
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Managerial Skills Needed
• Production• Customer Relations
Disadvantages of Small Business Disadvantages of Small Business
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Starting with little money, spending carelessly, borrowing money without planning, and forgetting about taxes and insurance may result in a failure.
3. Inadequate Financial Planning
Disadvantages of Small Business Disadvantages of Small Business Why a small business might not work:
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Fast Review
1. How does the Small Business Administration (SBA) define a small business?
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Fast Review
2. Give an example of a service that a small business may offer that a large company cannot offer.
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Fast Review
3. Which is more difficult to form: a large business or a small business?
4. Give examples of special skills that a small business owner needs.
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Fast Review
5. List two financial reasons that small businesses fail.
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Preparing for Your Own Preparing for Your Own BusinessBusiness
A business plan is a written description of a new business venture that describes all aspects of the business.
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Checklist for Starting a VentureChecklist for Starting a VentureSome questions to consider before starting your own business are:
• What will I produce?• Who are my main competitors?• Why is my product needed?
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Checklist for Starting a VentureChecklist for Starting a Venture
• How much will my product cost to produce?
• How many people will I need to run the business?
• What physical facilities will I need?
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Checklist for Starting a VentureChecklist for Starting a Venture
• What licenses, permits, or other legal documents do I need?
• How much money will I need to get started?
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Parts of a Business PlanParts of a Business PlanThe essential parts of the business plan are:
• Summary• Company description• Products and services
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Parts of a Business PlanParts of a Business Plan
• Marketing plan• Legal plan• Management and operating plan• Financial plan
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Elements of a Business Plan
1. The summary is a one- to three-page overview of the plan.
2. The company description explains the type of company.
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Business Building BlocksBusiness Building Blocks
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3. Describe products or services in the products and services section.
4. The marketing plan describes your customers and your competition.
5. A legal plan points out how you will organize your company. continued
Elements of a Business PlanBusiness Building BlocksBusiness Building Blocks
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6. The management plan and operating plan detail the company’s key personnel.
7. Complete a financial plan.
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Elements of a Business PlanBusiness Building BlocksBusiness Building Blocks
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• Be brief and relevant.• Don’t inflate the importance or
possible success of your business.• “Write short and be honest,” is a good
rule of thumb.
Tips for Writing an Effective Business Plan
Business Building BlocksBusiness Building Blocks
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Fast Review
1. What is a business plan?
2. Name the essential elements of a business plan.
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What makes a person an entrepreneur?
What makes a company successful?
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Identify some reasons why a small business might be hard to manage.
What are some benefits of selling online?
End of Chapter 5Entrepreneurship and Small Business