Entrepreneurship and Small Business Chapter 5 Introduction to Business

What is: An entrepreneurship is a business started by someone who notices a need for a product or service.

WHAT DO YOU DO? ENTREPRENEURS: ENTREPRENEURS: Recognize an opportunity Recognize an opportunity Organize Organize Manage Manage Assume Risk Assume Risk Attempt to increase market value of the business Attempt to increase market value of the business

Remember Small businesses represent the majority of businesses in the United States!

Business Today A virtual business or a dot-com company is a business that operates on the Internet. Examples:

Want to control destiny Want to control destiny Desire to earn profit Desire to earn profit Are enthusiastic Are enthusiastic Have self- confidence Have self- confidence Are determined Are determined Recognize opportunities Recognize opportunities Desire achievement Desire achievement Take risks Take risks Have high energy Have high energy Successful Entrepreneurs EntrepreneursSuccessful Successful Entrepreneurs Warm-up- Copy into notebook! Are there any that should be added?

Advantages of Entrepreneurship 1. Satisfaction from taking a risk and becoming a success. 2. Showing expertise and skills. 3. Being your own boss and possibly working from home. 4. Gaining profit. Profit- money left over after a business has paid its costs or expenses. Profit- money left over after a business has paid its costs or expenses.

Disadvantages of Entrepreneurship 1. Total Responsibility for the business. 2. Long hours. 3. Financial Risks. n #1 reason why entrepreneurs fail- they run out of money!

1. 1.What are some characteristics of entrepreneurs? 2. 2.What are three advantages of an entrepreneurship? 3. 3.What are some disadvantages of an entrepreneurship? 4. 4.What is the main reason that entrepreneurships fail? Classwork

n n The Small Business Administration (SBA) defines a small business as an independently owned business that usually has the owner as its manager. Small Businesses

1. Serve a small geographic area 2. Employ less than 500 people 3. Do not dominate the industry n ***Small business employ more than 50% of the U.S. workforce. Small Businesses

Advantages Being the boss Offering services large companies cannot offer Ease of formation

Disadvantages n n About four out of five small businesses fail in their first five years. 1-10%, 2-30%, 3-55%, 4-85% Effect of Change Managerial Skills Needed Inadequate Financial Planning

A business plan is a written description of a new business venture that describes all aspects of the business. Business Plan

n n 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? 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? Questions

The essential parts of the business plan are: Company description Products and services Marketing plan Legal plan Management and operating plan Financial plan Summary

Tips for Writing an Effective Business Plan Be brief and relevant Don’t inflate the importance or possible success of your business “Write short and be honest,” is a good rule of thumb.