Entrepreneurship & Small Business Wednesday, June 22, 2016Wednesday, June 22, 2016Wednesday, June 22, 2016Wednesday, June 22, 2016 Chapter 5

Chapter Objectives 1. Describe an entrepreneurship and a small business. 2. List the advantages and disadvantages of an entrepreneurship. 3. Recognize the advantages and disadvantages of a small business. 4. Explain why small businesses may fail.

Entrepreneurship A business started by someone who notices a need for a product or service or wants to improve an existing one. A business started by someone who notices a need for a product or service or wants to improve an existing one.

Virtual Business/Dot Com Co. A business that operates on the Internet only. A business that operates on the Internet only. No bricks and mortar (no actual building that customers would go to). No bricks and mortar (no actual building that customers would go to).

Entrepreneur A person who recognizes a business opportunity. A person who recognizes a business opportunity. Organizes Organizes Manages Manages Assumes risks Assumes risks Wants to make a profit Wants to make a profit

Advantages Satisfaction from taking a risk and being successful. Satisfaction from taking a risk and being successful. Showing expertise and skills. Showing expertise and skills. Working from home. Working from home. Gaining profit. Gaining profit.

Profit Money left over after the business pays its expenses. Money left over after the business pays its expenses.

Disadvantages Total responsibility Total responsibility For all other employees For all other employees For the success of the business For the success of the business Long hours until successful enough to hire additional help. Long hours until successful enough to hire additional help. The entire financial risk is yours. The entire financial risk is yours.

Small Business Administration SBA SBA Helps regulate small businesses. Helps regulate small businesses. 25 million small businesses exist in the US 25 million small businesses exist in the US Makes up 50% of the workforce in the US Makes up 50% of the workforce in the US Generates more than ½ of the nation’s income. Generates more than ½ of the nation’s income. Principle source of new jobs. Principle source of new jobs. Account for 38% of jobs in high technology. Account for 38% of jobs in high technology.

Small Business An independently owned business that usually has the owner as its manager. An independently owned business that usually has the owner as its manager.

Advantages You are your own boss. You are your own boss. You have the opportunity to offer services larger companies cannot offer. You have the opportunity to offer services larger companies cannot offer. Easy to form. Easy to form.

Disadvantages Styles and trends change and the economy goes up and down – these things are out of your control and can affect your business for better or sometimes for worse. Styles and trends change and the economy goes up and down – these things are out of your control and can affect your business for better or sometimes for worse. Hard to find good, knowledgeable employees. Hard to find good, knowledgeable employees. Most people are not financially smart. Most people are not financially smart.

Preparing yourself Analyze what you want to do and find a way to do it. Analyze what you want to do and find a way to do it. Turn your dream into a reality. Turn your dream into a reality. Write a business plan. Write a business plan.

Business Plan Executive Summary Executive Summary A one to two pages that summarizes the key points of the business plan. Place it at the beginning of your plan, but write it after you have completed the other parts of the plan. A one to two pages that summarizes the key points of the business plan. Place it at the beginning of your plan, but write it after you have completed the other parts of the plan. Management Team Plan Management Team Plan Presents the qualifications of your team. Presents the qualifications of your team.

Business Plan Company Description = Explains the size, scope, and type of business you plan to start. It also explains, in short, why the business will succeed. Company Description = Explains the size, scope, and type of business you plan to start. It also explains, in short, why the business will succeed. Product & Service Plan = Describes the unique features of what you will be selling. Product & Service Plan = Describes the unique features of what you will be selling.

Business Plan Vision & Mission Statements = Establishes the purpose and overall goals of the company. Vision & Mission Statements = Establishes the purpose and overall goals of the company. Industry Overview = Discuss trends and growth within your industry. Industry Overview = Discuss trends and growth within your industry. An industry is the general category of your company. For example, Applebees is in the casual dining industry and McDonalds is in the fast food industry. An industry is the general category of your company. For example, Applebees is in the casual dining industry and McDonalds is in the fast food industry.

Business Plan Market Analysis = explain who your customer is by giving their geographic, economic, and demographic information. Also list who your competition is (specifically). Market Analysis = explain who your customer is by giving their geographic, economic, and demographic information. Also list who your competition is (specifically). Competitive Analysis = What is your advantage over your competition? Competitive Analysis = What is your advantage over your competition? Marketing Plan = explain how you will make your product and company known to your customers. Marketing Plan = explain how you will make your product and company known to your customers.

Business Plan Operational Plan = How will you get the materials needed to create your product and how will you distribute the product to customers? Operational Plan = How will you get the materials needed to create your product and how will you distribute the product to customers? Organizational Plan = What business organization type will you choose? Organizational Plan = What business organization type will you choose? Financial Plan = Proves that your new business will be financially successful. Financial Plan = Proves that your new business will be financially successful.

Business Plan Growth Plan = Shows how your business will expand in the future. Growth Plan = Shows how your business will expand in the future. Contingency Plan = How will you minimize your risks? Contingency Plan = How will you minimize your risks?