Vocab Entrepreneurship Sole proprietorship Unlimited liability Partnership Corporation Stock Limited liability Franchise Nonprofit organization Cooperative

Vocab cont. Producer Processors Manufacturers Intermediary Wholesaler retailer

Dictionary: Entreprenedre - “To undertake” Perception: A person of very high aptitude who pioneers change; Anyone who wants to work for himself or herself What is an Entrepreneur? Source:

Characteristics of an entrepreneur: Independent, Self-confident, self- motivated, disciplined and risk takers, persistent, creative, responsible, enthusiastic, Of all the characteristics being independent or wanting to work for themselves seems to be the most dominant.

Textbook Traits Desire for responsibility Preference for moderate risk Confidence in ability to succeed Desire for immediate feedback High level of energy Future orientation Skill at organizing Value of achievement over money High degree of commitment Tolerance for ambiguity Flexibility Source: Zimmerer, Thomas W. and Scarborough, Norman S., Essentials of Entrepreneurship and Small Business Management, Prentice Hall, 2005.

Entrepreneurial Traits… What Entrepreneurs Say: Tenacity and drive Opportunity “vision” Passion Relationships Judgment Source: Frey, Katherine Korman, Vision Forward, LLC case studies: The Hot Mommas TM Project, Cool Daddies Project, Extreme Entrepreneurs, & Innovative Intrapreneurs,

Skills you should develop Communication Human Relation Math Problem-solving/ decision making Technical Basic business

Common traits 47% are under age 35 when they start (16% are under 25) 40% have only a high school diploma. 27% - some college -33% complete college 62% had a parent or relative who own a business Frequently had work experience at a young age. Influenced early in life by a role model.

Exercise 1-4 The Role of Small Business in America Which of the below is/are FALSE?  1. Employ more than half of all private sector employees.  2. Create more than 50 percent of nonfarm private gross domestic product (GDP).  3. Produce 13 to 14 times more patents per employee than large patenting firms.  4. Are employers of 39 percent of high tech workers (such as scientists, engineers, and computer workers).  5. Made up 97 percent of all identified exporters and produced 29 percent of the known export value in FY  6. Provide 83% of the world’s steel.

What is the most rewarding part of being a business owner?

Advantages Profit Satisfaction Use of all your skills

Disadvantages Long Hours Total Responsibility Financial Risks Entrepreneurs reduce failure by using calculated risks. They do extensive research before starting a business.

Researching about potential customers, products already on the market, competition, and supply/demand is called Demographics.

An essential part of starting a business is a business plan. The plan is a written guide to help you develop your goals (future plans). A business plan is required by most banks to obtain a loan.

Parts of a Business Plan

Types of business ownership: Sole proprietorship – individually owned business –Unlimited liability, unlimited profit, taxed once Partnership – 2 or more people who may have equal share in the running of the business. –Shared liability, shared profit, taxed once

The Role of Small Business in America Types of Sole Proprietorships by Industry and Receipts (Revenues) Figure 1: Source: Industry Number of sole- proprietorships% Receipts (in thousands)% Professional, scientific & technical services 4,226,05624% $ 148,359,79615% Other services 3,047,63917% $ 85,381,0039% Retail trade 2,309,27013% $ 185,175,31019% Construction 2,283,92913% $ 154,225,36716% Health care and social assistance 1,520,4359% $ 82,760,4519% (Click for previous slide )(Click for previous slide )

Franchise –Advantages: Prepackaging of a system of operation. Parent company helps owners start business Name of company draws customers –Disadvantages: Large amount of money needed to purchase. A share of the sales or yearly fee must be paid May have limited choices as to how the company is run.

Corporation – Owned by many people who all have a vote, but is treated like a separate person, which can pay taxes and own property. –Limited liability, profit based on stock portfolio, taxed twice

Cooperative – owned by a group of people to save money (pool resources) –Pay less taxes than corporations, can sell stock, –Examples: Ocean Spray, Welch’s REI

Non-Profit organized so as to give out as much as it takes in. (Churches, shelters, government, public schools, etc.) –doesn’t pay taxes, donors deduct from their taxes.

Types of Businesses Producing raw goods – (mining or fishing) Processing raw goods – (packing fish, fish oil, making iron ore bricks) Manufacturing – (automobiles, canned tuna) Intermediaries – buys, moves, stores and resells Wholesaler Retail Service – fastest growing type of business

Vocab Chapters 7 & 8 Organizational chart Centralized organization Decentralized organization Departmentalization Top, middle, operational managers

Part of the business plan is a good management plan.

Managerial Functions Planning Organizing Leading Controlling

Managerial Skills Perform a varied of tasks Work under pressure Effective communication Interpersonal skills Gather and use information “Management is doing things right; leadership is doing the right things” Peter Drucker

Depending on the amount of people a business could run formally or informally.

Formally Centralized (one manager in charge), also called line authority Departmentalized (different areas of the business working with different managers) Decentralized (projects which people come together for a short time and then move on.)

Informal A loose structure which most small businesses use. Top manager may do all; or give responsibility to others.

Draw a diagram of the organizational structure of this school.

Leadership qualities Motivation Confidence Communication Integrity

Styles of Leadership Autocratic – you run the show – you make all the decisions Democratic – everyone meets and makes the decision Free-Rein – leader sets goals for managers and they decide how best to get the job done. (hands-off)

Self-managed teams Manager becomes a team leader –Goal orientated rather than task orientated –Faster more efficient –Team members learn more skills –Simplifies decision making –Members learn to cooperate –Teams learn to solve own problems.