ENTREPRENEURSHIP STANDARD 1

Objective 3

TYPES OF BUSINESSES

Manufacturing

Converts materials into goods suitable for use & then sells those goods to others.

Wholesaling

Buys goods in large quantities, typically from manufacturers, & resells them in smaller batches to retailers.

Retailing

Buys goods, often from wholesalers, and resells them directly to consumers, who are the end buyers.

Service

Provides services to customers for a fee.

ADVANTAGES & DISADVANTAGES TO BUYING

AN EXISTING BUSINESSAdvantages

•Difficult start-up work has already been done.

•Buying an established means immediate cash flow.

•The business will have a financial history, which gives you an idea of what to expect & can make it easier to secure loans & attract investors.

•You will already have existing customers, contacts, suppliers, staff, equipment & stock.

•Existing employees & managers will have experience they can share.

•A market for your product or service is already established.

Disadvantages•The business might need major improvements to old plant and equipment.

•You often need to invest a large amount up front, and will also have to budget for professional fees for solicitors and accountants.

•The business may be poorly located or badly managed, with low staff morale.

•External factors, such as increasing competition or a declining industry, can affect future growth.

•Under-performing businesses can require a lot of investment to make them profitable.

•The seller's personality and their established relationships may be a major factor for the success of the business

ADVANTAGES & DISADVANTAGES OF

STARTING A NEW BUSINESSAdvantages

•Lower start-up costs - Depending on the type of business you start, costs may be lower than a franchise where there is no up-front purchasing fee or supply costs

•Independence - You make all decisions and create all business systems

•Site selection - You choose where to locate your business and what marketing procedures to follow

•No baggage - There is no history to overcome when you start a new venture

Disadvantages•High commitment - Starting your own business requires a higher commitment of time and energy

•High risk - Success depends totally on you and your business talents

•Delayed profitability - Where the market may not already be established, it may take longer to become profitable

•Limited financing - Financing for a new business is more difficult to obtain

ADVANTAGES & DISADVANTAGES TO BUYING

A FRANCHISEAdvantages

• association with a well established brand, reputation and product or service;

• assistance with site selection, lease negotiation, site development, builders and shop fitters;

• assistance with outlet design and equipment purchasing;

• initial management training and continuing management assistance;

• access to group/national market research, along with advertising and merchandising assistance;

• access to established standard procedures, operating manuals and stock control systems;

• assistance in securing finance and sometimes financial assistance in establishing the business;

• access to financing packages which may be more attractive and easier to access than for non franchised businesses; and

• access to established financial systems and checks which can provide early warning signals to highlight trouble spots.

Disadvantages• less autonomy in some business decisions (franchisees generally have to operate the business according to the franchisor's operations manual);

• restricted territory in which you may operate and/or promote your business;

• ongoing payment of fees to the franchisor;

• less control if you decide to sell your franchise business as there will be a set of procedures for you to follow, including getting the franchisor's approval of the buyer;

• if you sell the business you will usually have to pay a fee to the franchisor as outlined in the franchise agreement;

• restraint of trade provisions on the sale or termination of the franchise that may be more onerous than required if a non franchised business is sold;

• at the end of the franchise term, the franchisor is not obliged to renew the franchise, in which case the business and its goodwill revert to the franchisor.

TRENDS IN ENTREPRENEURSHIP Social Entrepreneurship

• Social entrepreneurs are individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change

• Just as entrepreneurs change the face of business, social entrepreneurs act as the change agents for society, seizing opportunities others miss to improve systems, invent new approaches, and create solutions to change society for the better. While a business entrepreneur might create entirely new industries, a social entrepreneur develops innovative solutions to social problems and then implements them on a large scale.

Historical Examples of Leading Social Entrepreneurs:

Susan B. Anthony (U.S.): Fought for Women's Rights in the United States, including the right to control property and helped spearhead adoption of the 19th amendment.

Vinoba Bhave (India): Founder and leader of the Land Gift Movement, he caused the redistribution of more than 7,000,000 acres of land to aid India's untouchables and landless.

Dr. Maria Montessori (Italy): Developed the Montessori approach to early childhood education.

Florence Nightingale (U.K.): Founder of modern nursing, she established the first school for nurses and fought to improve hospital conditions.

John Muir (U.S.): Naturalist and conservationist, he established the National Park System and helped found The Sierra Club.

Jean Monnet (France): Responsible for the reconstruction of the French economy following World War II, including the establishment of the European Coal and Steel Community (ECSC). The ECSC and the European Common Market were direct precursors of the European Union.

Green Entrepreneurship

Green: A product, service, or process that either benefits the environment or reduces the negative environmental impact of existing products, services, or processes.

Entrepreneur: A person who is willing to launch a new venture or enterprise and accept full responsibility for the outcome.

Putting these together, a green entrepreneur is someone who starts a business to make or offer a product, service, or process that benefits the environment.

Much of green is about solving old problems in new ways. For example:

How can we create energy without polluting the environment?

How can we produce or sell goods using as few resources as possible?

How can we keep our houses warm in winter and cool in summer without burning fossil fuels?

How can we build vehicles that use as little gas as possible?

Green entrepreneurs are people who have (or seek out) the knowledge, initiative, and resources to solve these problems or find innovative ways to bring existing solutions to market

TRENDS IN ENTREPRENEURSHIP Business Model - Canvas

The Business Model Canvas is a strategic management and lean startup template for developing new or documenting existing business models

It is a visual chart with elements describing a firm's or product's value proposition, infrastructure, customers, and finances.

It assists firms in aligning their activities by illustrating potential trade-offs

TRENDS IN ENTREPRENEURSHIP Lean Start-up

A business started with minimal capital & planning, & the flexibility to evolve in response to feedback from customers.

The lean startup favors getting the business up & running as soon as possible & using customer feedback to tweak the business.

Businesses that started as Lean Startups:

Zappas, Groupon, Dropbox

Crowdfunding

Crowdfunding is a method of raising capital through the collective effort of friends, family, customers, and individual investors. This approach taps into the collective efforts of a large pool of individuals—primarily online via social media and crowdfunding platforms—and leverages their networks for greater reach and exposure.

Example: Kickstarter