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?• 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 TraitsIndependence: 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 TraitsCreativity: 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 TraitsConfidence: 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 TraitsCommunication 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

1) Buy an Existing Business2) Buy a Franchise3) Start your own Business

Buy an Existing Business

Advantages• Already have customers

& employees

• Location, Business Equipment existing

• Working operations

• Person who sold the business may act as consultant

Disadvantages• You may be buying

problems

• “Why is this business being sold?”

• Not making a profit? (or just retiring?)

Buy a FranchiseAdvantages

• Established product/service and reputation

• Franchisor provides assistance (training)

• Quantity purchasing= discount

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

Start Your Own Business

Advantages• You get to make all of

the decisions

• You get all of the profits

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

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.

How Entrepreneuria

l are YOU?