Career and Financial Management Becoming an Entrepreneur

Objectives Define entrepreneur and identify key traits of successful entrepreneurs List the four ways to become a business owner Identify forms of business ownership and factors that can affect business success

Small Businesses The person who organizes and runs a business is an entrepreneur 99% of American companies are small businesses Around 500 employees or less Begin with a few employees

Traits of an Entrepreneur Being an Entrepreneur An entrepreneur’s life is challenging Traits of an Entrepreneur Sight and Foresight Decision-making Motivation

Advantages & Disadvantages Independence Stress Flexibility Administration Excitement Long Work Hours Salary Potential Financial Risk

Do You Have What it Takes? Do you make good decisions quickly? Can you supervise people well? Can you motivate people to do their work well? Do you have a good knowledge of the service or product you want to provide? Are you comfortable around strangers? Do you have unlimited ambition and drive?

The Bottom Line Being an Entrepreneur Requires specific traits Has advantages and disadvantages Not everyone has what it takes

Becoming a Business Owner Four ways to go into business Start a new business Buy an existing business Buy a franchise Join a family business

Ideas for Starting a New Business Hobby Business Product Services Personal Services Business Services

Starting a New Business ADVANTAGES Develop your own reputation Build business your own way Personal satisfaction knowing you built the business DIADVANTAGES Requires more time and effort than buying an existing business Start-up costs are high Can be difficult to borrow money No guarantee of success

Buying an Existing Business Successful businesses for sale Owner is retiring Owner is starting a new business Unsuccessful businesses for sale Losing too much money Determine if problems can be fixed before purchasing

Buying an Existing Business ADVANTAGES Puts you several steps ahead Take advantage of previous owner’s agreements Build on the goodwill of existing customers Positive reputation Trained staff DIADVANTAGES Poor location Strong competition taking away business Poor market outlook Building or equipment may need expensive repairs or replacement Poor reputation

Buying a Franchise Franchise: the legal right to sell a company’s goods and services in a particular area Many restaurants and real estate offices Pay a percentage of your profits to the parent company

Buying a Franchise ADVANTAGES Recognizable product name Established procedures and management systems Established business reputation and customer goodwill Training, advertising, financing, and support services DIADVANTAGES May be less profitable Must follow established guidelines of parent company Less personal satisfaction

Joining a Family Business ADVANTAGES Financing can be split amongst relatives Trust and loyalty between family members Working as a team can achieve more than as an individual Same goodwill and trust of customers DIADVANTAGES Additional issues on top of typical business ownership stress Not all families work well together Difficulties can affect family relationships

The Bottom Line Start a Business Buy a Business BUSINESS OWNER Family Business Franchise

Forms of Business Ownership Three basic ownership types Sole proprietorship: business is completely owned by one person Partnership: legal arrangement where two or more people share ownership of a business Corporation: business chartered by a state that legally operates apart from the owner(s)

Financing Your Business Starting a business requires money Financing sources: Personal savings Loan from friends/family Loan from commercial lenders Develop a business plan and a financial plan before applying for loans

Business and Financial Plans BUSINESS PLAN Describes product Business location Number of employees Salaries Describes competition Marketing plan Timetable for starting FINANCIAL PLAN Start-up costs Operating expenses Cost of manufacturing product Cost of selling product Additional cost in the first few months

Succeeding in Business Financing Location Business Success Competition Management

Loans from Friends/Family The Bottom Line Ownership Financing Success Sole Proprietorship Personal Savings Financing Starting a business Partnership Loans from Friends/Family Management Corporation Commercial Lenders Business Plan Financial Plan Competition Location