Entrepreneurship Chapter 4 5/10/2019

Entrepreneur Someone who organizes and then runs a business. Very challenging, risky, but rewards can be great Advantages you’re in charge, great job satisfaction, can lead to good income Disadvantages Financial risk, long hours, lots of competition, no guarantees of success (almost two of every three new businesses fail within their first four years) 5/10/2019

Traits of Entrepreneurs Motivation Sight & foresight Recognize opportunities…see problems & find a way to build success on them Decision making Make business decisions every day, and the decisions must be good ones. Very self-motivated, know what they want to achieve, believe in themselves 5/10/2019

Starting a New Business The challenges Start-up costs are high The rewards Buying an Existing business Save on start-up costs & existing customer base helps too Drawbacks – poor location, competition, old equipment, reputation Buying a franchise Less risk Less gain Taking over the family business Relatives may help w/finances Conflict…difficult to leave work at work when you work w/family Challenges – if bus is new – more challenging than existing bus, high start-up costs (i.e. buying equipment, renting space, insurance), convince lenders it will work…1b. Develop your reputation (did not inherit one), personal satisfaction 2a. Save on start-up costs, goodwill from existing customers could continue (established reputation & trained staff). 2b. Poor location, competition, change in market outlook, bldg or equip may need repair, poor reputation 3 – When you buy a franchise, you are buying the right to sell another company’s products. You also will pay a percentage of your profits to the parent company. 3a. Recognized name, established procedures & management systems, business reputation & customer goodwill, training, advertising, financing 3b. May be less profitable since you have to pay a % of your profits to the parent company. 4a. Relatives may help you w/finances, trust/loyalty, work well as a team, same customer goodwill 4b. Some families don’t work well together, difficult to leave your work at work when you work with family 5/10/2019

Getting Started in Your Own Business Forms of Legal Ownership Sole Proprietorship (one person) Partnership (2 or more) Corporation Location, Location, Location Working at home (cheaper) Financing (business plan needed) Operating your own business 1a. Owned by 1 person…1b. Two or more people share ownership. Least common form of business ownership…1c. Business chartered by a state, that legally operates apart from the owner(s). They have any easier time finding financing (sell stock). 2. Consider the following: a) type of businesses in the area b) condition of streets & buildings c) cost of property d) location of the competition e) location of customers 3. Cheaper than leasing a location & more convenient, more flexibility & relaxed atmosphere…problems – some communities restrict the kinds of businesses that can operate in residential areas 4. When applying for a loan, you will need to prepare a business plan (detailed information about the business you want to run) 5. A variety of skills are needed to run your own business: reading, writing, math, listening, & speaking skills. 5/10/2019