Business Environment and the entrepreneur

Purpose To learn about the different types of businesses and how they are organized.

Differing purposes For profit: Operates to earn money for their owners or shareholders Not for profit: Operates for the greater good and does not operate for a profit Write three examples of both

Business Environment Free enterprise system: People are free to produce the goods and services they chose. Business owners must attract customers Two things needed to survive Profit: Money earned over what was spent (the opposite is loss) Must attract and keep individuals willing to take the risk run the business

Entrepreneurship Entrepreneurs: Transforms ideas for products and services into real-world businesses Pros Cons You own your own business You create opportunities for earning money You control and create your work schedule You serve the people you serve You select the people who you work with You benefit from the rewards of your own hard work You choose your own work hours. You probably need to work long hours You lose the security of steady wages and medical benefits and employer provides You market your own services or products You pay your own operating expenses You must be motivated and energetic each day You face the possibility of losing your money

Traits of the Entrepreneur Tenacity: The never say quit attitude Passion: It's commonly assumed that successful entrepreneurs are driven by money. But most will tell you they are fueled by a passion for their product or service, by the opportunity to solve a problem and make life easier, better, cheaper. Tolerance of ambiguity: This classic trait is the definition of risk-taking--the ability to withstand the fear of uncertainty and potential failure.

Traits of the Entrepreneur Vision: One of the defining traits of entrepreneurship is the ability to spot an opportunity and imagine something where others haven't. Self-belief: Self-confidence is a key entrepreneurial trait. You have to be sure your product is something the world needs and that you can deliver it to overcome the naysayers, who will always deride what the majority has yet to validate.

Traits of the Entrepreneur Flexibility: Business survival, like that of the species, depends on adaptation. Rule-breaking: Entrepreneurs exist to defy conventional wisdom. In fact only 13% of all businesses are successful.

The Entrepreneurial Process Aware of their environment Evaluate alternatives Seek best solutions Turn ideas into action

Types of Business Operations Service Business: provides needed services for a fee Merchandising Businesses: Buys finished products and resells them to individuals or other businesses Manufacturing Businesses: Buys raw materials, such as wood or iron ore and transforms them into finished products through the use of labor and capital.

Types of Business Operations Service Business: provides needed services for a fee Merchandising Businesses: Buys finished products and resells them to individuals or other businesses Manufacturing Businesses: Buys raw materials, such as wood or iron ore and transforms them into finished products through the use of labor and capital.

Forms of Business Organizations Sole Proprietorship: One owner business Advantages Disadvantages Easy to set up All profits go to the owner Owner has total control Few regulations to follow Limited expertise Hard to raise money Owner has all of the risk Hard to attract talented employees

Forms of Business Organizations Partnership: A business owned by two or more people, called partners, who agree to operate the business as co-owners. Advantages Disadvantages Easy to start Skills and talented are pooled More money available Conflicts between partners Profits must be shared Owners share risk

Forms of Business Organizations Corporation: Is a business organization that is recognized by law as having a life of its own. Must get permission from the state to operate, known as a charter Generally start as a sole proprietorship or a partnership Stocks are sold to raise capital Advantages Disadvantages Easier to raise money Easy to expand Easy to transfer ownership Losses limited to investment Cost more to start up Complex to organize More regulations Higher taxes