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BA 346. Working as an Entrepreneur Week 1. Course Overview & Administrative Details. Course Structure Syllabus Adds Student Contact Info. Make sure I have your PREFERRED email address. Go to this link and put in your preferred email address http://bit.ly/fggwey.
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BA 346 Working as an Entrepreneur Week 1
Course Overview& Administrative Details • Course Structure • Syllabus • Adds • Student Contact Info
Make sure I have your PREFERRED email address • Go to this link and put in your preferred email address • http://bit.ly/fggwey
What is Entrepreneurship? According to Merriam-Webster's Online Dictionary… en·tre·pre·neur Pronunciation: \äⁿn-trə-p(r)ə-nər, -n(y)u̇r\ Function: noun Etymology: French, from Old French, from entreprendre to undertake Date: 1852 : one who organizes, manages, and assumes the risks of a business or enterprise • Is an entrepreneur just someone who runs a business? • Entrepreneur: someone who takes on the risk of a business activity to receive the rewards from that activity. • Entrepreneurship is the set of activities crucial to being an entrepreneur
Why Entrepreneurship? • Every year, more than one million businesses are started in the United States. • What is the purpose of a business? • Business vs Non-Profit • Business vs Cool Idea • What motivates people to become entrepreneurs?
Risk & Return • Return is the reward, as a percentage of the investment • Risk is uncertainty • Risk and return always balance • Risk tolerance • Investment • Speculation • Gambling
Value • Value can be measured in money. What other types of value do entrepreneurs create?
Small Business and the Economy • New Jobs: small businesses created 75% of the last 3.4 million jobs created • Small business is the engine of job creation • Occupational Structure: the sequence or organization of jobs and careers in the economy • Small businesses employ more than half of all Americans • Small businesses are key employers – they employ people who have atypical work histories or needs
Small Business and the Economy • Innovations: promotes creative destruction • Creative Destruction: the way that newly created goods, services, or firms can hurt existing competitors • Small businesses generate 13-14 times more patents than big businesses
Small Business and the Economy • New Opportunities: Entrepreneurship presents the best opportunities for many people who foresee problems fitting into mainstream jobs • Small businesses are the support for the boat that carries the economy: high-growth ventures and large companies • Small businesses provide cheaper alternatives for product ideas, manufacturing & distribution
Measuring Value • What is the Fundamental Question? • Example • You have an opportunity to buy a magic machine which is guaranteed to produce a $100 bill every month for five years. It costs nothing to run and disappears at the end of that time. What would you pay for it right now?
Measuring Value • $100/month for 5 years = $6,000 revenue • If the cash flows come in as predicted, the amount you are willing to pay determines the return • Considerations: • Desired return • Other investment opportunities • Inflation • Time to break even (payback period) • Availability of cash to invest
Measuring Value • What are we valuing? …but remember, the payments are monthly • Present Value at…
Why Not Just Invest? • Pros & cons of entrepreneurship • Pros & cons of investing • Does investing create value in our economy?
Creating Value as an Entrepreneur • Entrepreneurs are vitally important to our communities and our economy • Jobs • Innovations • New opportunities • Personal wealth & satisfaction • Entrepreneurs take on risks to achieve these things
Risk Aversion • Are entrepreneurs really risk averse? • How many businesses survive long term? • What are the reasons for failure? • Entrepreneurs are not risk averse, they are willing to take action to mitigate the risk.
From Side-project to Startup • Should your hobby be a business? • Should you start a business as a part-time effort?
From Startup to Success • 4 out of 5… • What are the reasons? • What can be done to beat the odds?
FIND A GOOD OPPORTUNITY DEVELOP A PLAN ORGANIZE NECESSARY RESOURCES RUN THE BUSINESS The Entrepreneurial Process • This is the basic process all successful entrepreneurs follow • How do we find opportunities? • How good does the plan have to be? • Where do we find resources? • How do we manage the venture?
Getting Started as an Entrepreneur • Action is great, but forethought will help you succeed • Overcoming obstacles • First steps
Begin with the End in Mind • How do you want to end up? • How will you know how you did? • How will you make it happen? • Who will be your customers? • How will you begin?
Exit Strategies • You may not want to exit • IPO • Being acquired • Selling • Less successful exits • Knowing how you did • Financial success • Other success • The Triple Bottom Line (Profit, People & the Planet)
Money • Financial Accounting • Knowing how you did • Evidence of success • Legitimacy to lenders and others • Managerial Accounting • Knowing how you are doing right now • Controlling the operation, expenses, cost structure, pricing • Finance • Knowing what you are going to make happen • Managing sources of funds • Choosing projects wisely
Operations • Operations support the financial goals • Operations Execution • What happens • Making it happen • Operations Planning • Getting everyone on the same page • What needs to happen • How to make it happen
Connecting with Customers • Customer transactions drive the operational need • Sales, advertising and marketing will connect to your customers to generate needed revenue. • “Marketing” is a misused expression • Marketing is about identifying and defining the market you want to capture • Advertising is broadcast to that market • Selling is the process of making the transaction happen • Dialog with customers is key.
Do you have what it takes? • What does it take to work as an entrepreneur? • Is it always full-time? • What are the paths to become an entrepreneur? • What if you work for someone else?
What You Should Have Learned • Business competencies • What basic business knowledge did you learn from business classes? • What skills do you have as a result? • How do you create value? • Planning & managing… • Money (finance & accounting) • Operations • Marketing
Removing barriers • Filling the gaps you find • Anticipating problems
FIND A GOOD OPPORTUNITY DEVELOP A PLAN ORGANIZE NECESSARY RESOURCES RUN THE BUSINESS How will you begin? • Recognize what you have available • Examine the opportunities • Follow the entrepreneurial process