CHAPTER 5 – Entrepreneurship and small Business

1. CHAPTER 5 – Entrepreneurship and small Business Unit 2

2. The Ins and Outs of an Entrepreneurship • An entrepreneurship is a business started by someone who notices a need for a product or service. • In the late 1990’s entrepreneurs took their business ideas online via virtual business or dot-com company. • 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 • Take charge, self-directed, risk taker

3. Advantages of an Entrepreneurship • Satisfaction from taking a risk and becoming a success. • Showing expertise and skills. • Working from home. • Gaining profit.

4. Disadvantages of an Entrepreneurship • Total responsibility for the business. • Long hours. • Financial risks.

5. Small Business: What You Need to Know • A small business: • Is an independently owned business that usually has the owner as its manager. • Serves a limited geographic area. • Employs fewer than 500 people. • Is not dominant in its industry.

6. Advantages of a Small Business • Being the boss. • Opportunity to offer services large companies cannot offer. • Respond quickly to customer’s needs. • Know customer on a personal level. • Ease of formation. • Licenses of operation. • Buildings must meet local zoning requirements.

7. Disadvantages of a Small Business • Effect of change. • Must be aware of change and adapt quickly. • Managerial skills needed. • Financing, employee relations, production, customer relations • Inadequate financial planning.

8. Preparing for Your Own Business • Checklist for starting a venture • What will I produce? • Who are my main competitors? • Why is my product needed? • How much will my product cost to produce? • How many people will I need to run the business? • What physical facilities will I need? • What licenses, permits, or other legal documents do I need? • How much money will I need to get started?

9. Preparing for Your Own Business • Parts of a Business Plan • Summary – one to three page overview of the plan • Company Description – explains the type of company you plan to start • Products and Services – describe the kinds of products you will sell or the services you will provide • Marketing Plan – describes your likely customers and details your competition. • Legal Plan – how you will organize your company • Sole proprietorship, partnership, or corporation

10. Preparing for Your Own Business • Parts of a Business Plan cont. • Management plan and operating plan – detail the company’s key personnel as will as their expertise and experience. Also includes the company’s daily operations, facilities, overall personnel, materials, and processing requirements. • Financial Plan – company’s financial needs, projections for revenues, costs, and profits.

11. Preparing for Your Own Business • Why do you need a business plan? • A business plan usually takes about 5 months to complete. • A bank officer will usually take less than 5 minutes to decide if they want to finish reading it. • Business plans are shown to investors (like banks) to show them that your business will succeed. • If you do not have a financial backer your business will probably not even be able to start.

12. Exercises pg. 80 • Using Business Key Words • Review What You Learned • Understanding Business Concepts • Critical Thinking