Intro To Business Ch. 5 Entrepreneurship

Learning Targets Section 5.1 – Rewards and Challenges of Entrepreneurship Define entrepreneur and entrepreneurship List at least five rewards of being an entrepreneur Identify at least five challenges of being an entrepreneur Discuss why entrepreneurs are important to the American economy

Rewards and Challenges of Entrepreneurship What is Entrepreneurship? The process of recognizing an opportunity, testing the market and gathering the resources necessary to go into business. Entrepreneur A person who recognizes a business opportunity and organizes, manages and assumes the risks of starting and operating a business Creating and running a business venture requires a variety of skills

Twelve Characteristics of Entrepreneurs Persistent Goal-Oriented Creative Risk Taking Action-Oriented Independent Self-Confident Responsible Inquisitive Restless Self-demanding Enthusiastic

Rewards and Challenges of Entrepreneurship Small Business Independently owned business that usually has its owner as its manager Serves a limited geographic area and employs less than 500 people Internet Business Also known as a virtual business or dot-com company Operates on the internet Shows how an entrepreneur can make a significant improvement to what already exists (shopping online) Have the potential to attract a huge number of customers

Rewards and Challenges of Entrepreneurship Rewards of Entrepreneurship Being the Boss Do not have to consult with others before making a decision Doing What You Enjoy An idea usually starts with an activity that you enjoy Having the Opportunity to be Creative You make the procedures Can be daring and creative Building an Enterprise Must choose between buying an existing company or starting a new one

Rewards and Challenges of Entrepreneurship Other Reasons Developing your own schedule Can work from home (home based business) Make economic contributions to the community through investments and the creation of jobs Rewarded for assuming a risk.

Rewards and Challenges of Entrepreneurship Getting Funds to Start the Business Many must borrow money to start business Loans – Hard to get because of uncertainty of success Private investors – must have good idea and business plan Being Fully Responsible for the Business Must make sure everything gets done Cleaning, paying bills, hiring employees and repairs Other Challenges for Entrepreneurs Insecurity about making the right decisions Work long hours Face uncertain income levels Risk losing investment 4 out of 5 small businesses fail within the first 5 years due to inadequate financial planning.

Learning Targets Section 5.2 – The Business Plan Discuss initial steps insetting up a business plan Identify parts of a business plan Learn how to present a business plan to potential investors

The Business Plan Business Plan Checklist for Starting a Venture A written description of a new business venture that describes all aspects of the business. It is used by potential investors and financing agencies that new entrepreneurs go to for start up money Checklist for Starting a Venture What will I produce? Who are my competitors? Why is my product or service needed? How much will my product or service 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? 5-2

The Business Plan Parts of a Business Plan: 1. Executive Summary- is a brief account of the key points contained in a business plan. Less than 2 pages. Introduction Current Situation Management Qualifications Seeking Investors Closing Statement

The Business Plan 2. Management Team Plan - discusses any partners and your teams capabilities. Key Executives Key Advisors Service Providers 3. Company Description- an outline of the business that helps investors understand the size, scope, ad type of business you plan to start. Motivations Entrepreneurial Opportunity Business History Business Concept

The Business Plan 4. Product and Service Plan- describes the products or services you want to offer. Also, spin-offs or growth potential can be mentioned. Products and Services Unique Selling Proposition Competitive Products or Services Product Development Milestones

The Business Plan 5. Vision and Mission Statements- states the guiding principles by which the business functions. * Vision Statement- establishes the scope and purpose of a company and reflects its values and beliefs. Focus on tomorrow. * Mission Statement- expresses the specific aspirations of a company, the major goals it will try to reach. Focus on today.

Examples Pepsi's Vision Statement PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today." Pepsis Mission Statement "To be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity."

The Business Plan 6. Industry Overview- this section presents your research of the industry. Projected Industry Sales and Profits Competitive Set External Environment Product Life Cycle Barriers to Entry

The Business Plan 7. Market Analysis- this section presents the customer profile which includes your overall marketing and sales strategies. Demographic Profile Psychographic Profile Customer Behaviors Target Market Opportunity

The Business Plan 8. Competitive Analysis- indicates how the proposed business has an advantage over its competitors. Direct and Indirect Competitors Value Proposition Strengths and Weaknesses Sustainable Competitive Advantage

The Business Plan 9. Marketing Plan- discusses how a company makes its customers aware of its products or services. Total Product Experience Place Strategy Promotion Strategy Promotion Plan Pricing Plan

The Business Plan 10. Operational Plan- includes the business processes that result in production and delivery of the product or service. Location Criteria Facilities and Equipment Product Development Process Operational Logistics

The Business Plan 11. Organizational Plan- discusses the people who will run the firm as well as the management’s philosophy. Job Description Human Resources Legal Structures Insurance

The Business Plan 12. Financial Plan- this section presents forecasts for the business. Data is usually shown in financial statements. Source and uses of Funds Cash Flow Income Statement/Balance Sheet Revenues/Expenses Salary/Wages Financial Analysis

The Business Plan 13. Growth Plan- this section looks at how the business will expand in the future. Investors and lenders appreciate this section. Growth Strategy Effects of Growth 14. Contingency Plan- this section looks at the likely risks to the business. Risks

Questions Why is a business plan important? Why should entrepreneurs carefully study their competitors before starting a business? Why is a growth plan more important to include in a business plan?