Becoming an Entrepreneur Unit One

Entrepreneurship The U.S. economy includes thousands of small business. ▫Many of these small businesses are owned and operated by men and women who created their own companies What makes someone an entrepreneur? What impact have entrepreneurs had in history? What impact do they have today?

What is an Entrepreneur? Entrepreneur: people who own, operate, and take the risk of a business venture Entrepreneurship: the process of running a business of one’s own. ▫Entrepreneurs try to identify unmet needs in the marketplace.  They then try to provide a service or product to meet those needs

Employees and Entrepreneurship Both may make decisions, but only the entrepreneur is directly affected by the consequences of those decisions People go into business for themselves for many reasons: ▫Set their own schedules ▫Stay at home but still earn an income ▫Pursue a personal dream ▫Any other reason

Types of Entrepreneurial Businesses Generally four types of businesses: ▫Manufacturing businesses: actually produce the products they sell ▫Wholesaling businesses: sell products to other businesses rather than the final consumer ▫Retailing businesses: sells products directly to the people who use or consume them ▫Service businesses: sell services rather than products

Other Business Areas Two other categories: ▫Agricultural businesses: generate fresh produce and other farm products ▫Mining an Extracting businesses: take resources like coal out of the ground so that they can be consumed.

Recognizing Opportunity Many companies began with one person who started a business based on a single opportunity. The 2012 U.S. Census Bureau reported: ▫22 million companies in the U.S.  Small businesses (fewer than 500 employees) make up 99.9% of these companies  Just over 18,000 U.S. companies are considered large

Entrepreneurs Who Changed America There are many business today that started small and have grown into large companies Starbucks Coffee Company ▫Local roaster and retailer of whole bean and ground coffees ▫Introduced new product, Espresso ▫In 2014, had more than 21,000 stores in over 65 countries

Entrepreneurs Who Changed America Microsoft ▫Began in 1975 with just two men, Bill Gates and Paul Allen ▫As of 2014, Microsoft had a global annual revenue of more than $86 billion and employed over $128,000 people worldwide HARPO Productions, Inc. ▫Oprah Winfrey founded HARPO in 1986 ▫She is the first woman to own and produce her own talk show

Entrepreneurial Opportunities in Our Economy Small businesses are an important part of the economic recovery. They are: ▫willing and able to make changes quickly ▫more creative than large companies Their experimentation and innovation lead to technological change and increased productivity.

Entrepreneurial Opportunities The American Recovery and Reinvestment Act of 2009 ▫$30 billion in tax relief for small businesses ▫$13 billion in loans, lines of credit, and equity capital The Small Business Administration continues to provide support to ensure that entrepreneurs have the access and opportunity they need ▫To grow operations, reach new customers, create jobs in our communities

Business Success or Failure There is always the risk of failure According to a recent study: ▫About ½ of new businesses survive at least five years ▫About 1/3 survive at least ten years ▫This means that more then ½ of all new businesses do not survive beyond 10 years Success rates can be enhanced if businesses ▫have adequate capital ▫are large enough to have employees

Characteristics of Successful Entrepreneurs Successful entrepreneurs: ▫Are independent ▫Are self-confident ▫Have determination and perseverance ▫Are goal-oriented ▫Are creative ▫Have a strong work ethic ▫Are master networkers ▫Keep up to date with technology

Characteristics of Good Team Members Entrepreneurs realize that there are other stakeholders in their businesses ▫They must work with others to get their business up and running Good team members display the following traits: ▫Commitment ▫Competency ▫Communication ▫Cooperation ▫Creativity

Advantages of Entrepreneurship Entrepreneurs are their own bosses ▫Nobody tells an entrepreneur what to do. They control their own destinies Entrepreneurs can choose a business that interests them ▫They work in fields that appeal to them. Many combine hobbies and interests with business Entrepreneurs can be creative ▫They are always implementing creative ideas that they think of themselves Entrepreneurs can make large sums of money ▫Entrepreneurship involves risk, but if the business is successful, the business owner will reap the profits

Disadvantages of Entrepreneurship Entrepreneurship is risky ▫There is the possibility of losing money and going out of business Entrepreneurs face uncertain and irregular incomes ▫They may make money one month and lose money the next Entrepreneurs work long hours ▫They can work long, irregular hours. They receive no paid days off and often work evenings and weekends Entrepreneurs must make all decisions by themselves ▫Unless they have partners, they are responsible for all decisions which can be difficult without the right expertise

Comparing Different Opportunities For each business opportunity, you should consider: ▫Will people buy my product or service? ▫How much money is required to start the business? ▫How many hours per week will it take to run the business? ▫ What are the risks associated with this business? ▫Do I have the right background to run this business? ▫How much money could I make running this business?

Setting Goals Goal: I will learn more about starting my own business SMART Goal: I will learn more about starting my own catering business by obtaining information from the Small Business Administration and talking with the owners of three local catering businesses by the end of the month

Setting Goals Goals help you stay on track and follow through with your plans SMART Goals Specific Should answer “What?” “Why?” and “How?” Measurable Should establish ways to measure your progress Attainable Should not be too far out of reach Realistic Should represent things to which you are willing to commit Timely Goals should have a time frame

Financial vs Nonfinancial Goals Specific financial goals should be set before starting a business Nonfinancial goals may include: ▫personal satisfaction ▫serving a community need ▫doing something you like ▫enjoying personal independence

Problem-Solving Model Step 6: Evaluate the Action Step 5: Take Action Step 4: Evaluate Alternatives and Select the Best Option Step 3: Identify Various Solutions Step 2: Gather Information Step 1: Define the Problem

Problem-Solving Model Define the Problem ▫write down what the problem is and why it is a problem ▫quantify the problem Gather Information ▫collect information that can help solve the problem Identify Various Solutions ▫identify all possibilities before selecting a particular solution Evaluate Alternatives and Select the Best Option ▫quantify or rank alternatives

Problem-Solving Model Take Action ▫implement the solution Evaluate the Action ▫even a well-thought-out solution may not work

Problem-Solving Skills The more often you use the problem-solving model, the better skilled at decision making you will become Communicate ▫communicate clearly and confidently ▫be a good listener Brainstorming ▫a creative problem-solving technique ▫generates a large number of fresh ideas

Learn from Mistakes You cannot be afraid to make mistakes ▫Mistakes are a learning experiences Mistakes can help you learn what to do or what not to do ▫Proves to be valuable in the problem-solving process