Copyright by Paradigm Publishing, Inc. INTRODUCTION TO BUSINESS CHAPTER 6 Entrepreneurship and Business Planning

Copyright by Paradigm Publishing, Inc.

Creating a New Business Online Resources for Creating a Business Yahoo!’s Small Business site ( smallbusiness.yahoo.com) American Express ( com/smallbusiness) Small Business Administration ( Quicken Small Business ( com/small_business)

Copyright by Paradigm Publishing, Inc. Creating a New Business Pros and Cons of Being an Entrepreneur Pros May possibly earn large profits. Be your own boss. No fear of being mistreated or fired. Work in a business you created and will be directly rewarded for. Cons Possibly large losses and may lose entire investment. Income is tied to how well business is run. Lose source of income if business fails.

Copyright by Paradigm Publishing, Inc. Assessing Market Conditions Demand Competition Market share: a firm’s sales as a proportion of the total market Competition within segments Segments: subsets of a market that reflect a specific type of business and the perceived quality Labor conditions Regulatory conditions

Assessing Market Conditions New business ideas are commonly created in response to shifts in consumer preferences. When gas prices increased substantially, consumers shifted their demand away from gas guzzlers and toward fuel- efficient cars. Manufacturers of fuel- efficient hybrid cars capitalized on anticipating the shift in consumer demands. Copyright by Paradigm Publishing, Inc.

Assessing Market Conditions Effects of Market Conditions on a Firm’s Performance Copyright by Paradigm Publishing, Inc.

Developing a Competitive Advantage Produce Products Efficiently Produce Higher-Quality Products Using the Internet to Create a Competitive Advantage Advantages of a Web-Based Business Expenses of a Web-Based Business Using SWOT Analysis to Develop a Competitive Advantage

Copyright by Paradigm Publishing, Inc. Developing the Business Plan Business Plan: detailed description of the proposed business. Competitive Advantage??? Assessment of the Business Environment Economic Environment Industry Environment Global Environment

Developing the Business Plan Copyright by Paradigm Publishing, Inc.

Developing the Business Plan Copyright by Paradigm Publishing, Inc. When developing a plan for a new business or the restructuring of an existing business, an entrepreneur commonly asks for input from employees or other business associates. IT IS A TEAM EFFORT

Developing the Business Plan Once a business plan is created, the entrepreneur may present the idea to investors who may be willing to invest equity in the business. Alternatively, the entrepreneurs may present the business plan to commercial banks in an attempt to obtain business loans to finance the business. Copyright by Paradigm Publishing, Inc.

Developing the Business Plan Impact on a Firm’s Earnings Copyright by Paradigm Publishing, Inc.

Risk Management by Entrepreneurs One of the most common entrepreneurial ideas is to open a retail clothing store that sells clothes produced by other entrepreneurs. While many clothing stores have become very successful, others have failed. Perhaps the primary reasons for failure are poor planning and unrealistic expectations. Copyright by Paradigm Publishing, Inc.

Risk Management by Entrepreneurs Reliance on One Customer Reliance on One Supplier Reliance on a Key Employee Hedging against Losses Resulting from a Key Employee’s Death Hedging against the Illness or Loss of a Key Employee Exposure to E-risk

Insurance Required for Business Project Research health care cost for full-time workers. Over 50% of start ups will offer medical insurance benefits. It is an expensive addition to personnel costs. Liability, Key Man, and other insurance is also needed, but for purposes of this plan we will only require medical.