1. Chapter 1 Entrepreneurs Recognize Opportunities
Entrepreneurship
Chapter 1
Entrepreneurs Recognize Opportunities
Mariotti: Entrepreneurship

2. What Is Business?
Business—buying and selling of products and services.
Product—exists in nature or is made by human beings.
Service—work that provides time, skills, or expertise in exchange for money.
Marriotti: Entrepreneurship

3. What Is an Entrepreneur?
Employees—earn their livings working for someone else’s business.
Entrepreneurs—earn their livings starting, owning, and working for their own businesses.
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4. Entrepreneurs Add Value to Scarce Resources
All resources (wood, coal, oil, etc.) that cost money are “scarce.”
Entrepreneurs add value to scarce resources by shifting them from areas of lower to higher productivity.
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5. The Economic Questions
What should be produced?
When will it be produced?
How will it be produced?
Who will produce it?
Who gets to have what is produced?
An economy is a country’s financial structure. It is the system that produces and distributes wealth.
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6. Profit Is the Signal
Profit—amount of money earned by a business left over after bills are paid.
Profit signals that an entrepreneur is adding value to scarce resources.
Entrepreneurs try to make choices (trade-offs) that will increase profit.
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7. Why Be an Entrepreneur? Control over time Fulfillment
Creation/Ownership
Control over Compensation
-salary
-wage
-dividend
-commission
Control over Working Conditions
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8. Costs and Benefits of Entrepreneurship
Business failure
Obstacles
Loneliness
Financial Insecurity
Long Hours/Hard Work
Benefits
Independence
Satisfaction
Financial Reward
Self-Esteem
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9. Cost/Benefit Analysis
Costs—money and time you will invest
Benefits—money you will earn, knowledge and experience you will gain
Cost/Benefit Analysis—list costs and benefits in order to make decisions that are not emotional.
Opportunity Cost—cost of your next-best investment
For Cost/Benefit Analysis to be accurate, be sure to include your opportunity cost.
Marriotti: Entrepreneurship

10. Sources of Opportunity
Use new technology to produce a new product.
Use an existing technology to produce a new product.
Use an existing technology to produce an old product in a new way.
Find a new source of (cheaper) resources.
Develop a new market for an existing product.
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11. Business Opportunity= Idea + 4 Characteristics
Attractive to customers
Will work in your business environment
Can be executed in existing window of opportunity
Entrepreneur has resources and skills to create the business
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12. 5 Roots of Opportunity Problems Changes Inventions Competition
Technological advances
Where others see problems, entrepreneurs recognize opportunities.
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13. Use SWOT to Evaluate Business Ideas
Strengths
Weaknesses
Opportunities
Threats
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14. 2 Classes of Opportunities
1. External—generated by outside circumstances noticed by the entrepreneur.
2. Internal—generated by an interest or hobby of the entrepreneur.
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15. Respect Intellectual Property
Do not sell counterfeit knockoffs of popular brands.
Do not take graphics, music, or content from the Web without permission.
Know the source of goods you sell, to avoid the risk of selling stolen property.
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16. 7 Rules for Building a Successful Business
Recognize an opportunity
Evaluate it with critical thinking (SWOT)
Build a team
Write a business plan
Gather resources
Decide ownership
Create wealth
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17. What Is a Business Plan?
A document that you can use to start and operate your business.
A document you can show investors and bankers to raise money (capital) for your business.
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18. Creating Business from Opportunity: The Economics of One Unit
Entrepreneurship
Chapter 2
Creating Business from Opportunity: The Economics of One Unit
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19. Market
A group of people who may be interested in buying a particular product or service.
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20. 4 Types of Business Manufacturing—makes tangible product
Wholesale—buys in bulk from manufacturer; sells smaller quantities to retailers
Retail—sells one piece at time to consumers.
Service—sells time/expertise to consumers.
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21. The Business Definition
The offer—what will you sell?
Target market—to whom will you sell?
Production and delivery—how will you sell?
Before you can start your business, you must define it.
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22. Competitive Advantage
What can you do better than the competition that will draw customers to your business?
Think about what your customers need.
You have unique knowledge of your market!
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23. Competitive Strategy
Business definition + competitive advantage = competitive strategy
Strategy: plan for outperforming the competition
Tactics: ways to carry out strategy
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24. Recipe for Success Understand the needs of your customers.
Offer them a sustainable competitive advantage.
Deliver a product or service that meets customer needs at a fair price.
sustainable = can be kept going over time
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25. 6 Factors of Competitive Advantage
Quality
Price
Location
Selection
Service
Speed/turnaround
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26. Naming Your Business Keep it simple. Don’t use your last name.
The best name is one that tells customers what the company does, sells, or makes.
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27. What Are Your Core Beliefs?
Beliefs you will use to guide your business.
Example: My restaurant will support local organic farmers.
Core beliefs affect:
-materials you choose
-prices you charge
-how you treat customers
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28. What Is Your USP?
Unique Selling Proposition—what attracts customers away from the competition and toward your business?
Compare what your business offers to what competitors offer.
Are you at a cost advantage or disadvantage?
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29. Check Out the Competition!
The offer
Target market
Production and delivery capability
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30. Mission Statement A concise statement of: Your strategy
Your business definition
Your competitive advantage
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31. Entrepreneurs Use Profits:
To pay themselves
To expand their businesses
To start or invest in other businesses
Gross profit = price – cost of goods sold
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32. Define Your Unit of Sale
Manufacturing—one order (e.g., 100 watches)
Wholesale—a dozen (e.g., 12 watches)
Retail—one item (e.g., 1 watch)
Service—one hour of time (one hour mowing) or one completed task (one lawn mowed)
Combination—average sale per customer
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33. Average Sale Per Customer
– average cost of sale per customer
Average gross profit per customer
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34. Unit of Sale as a Combination of Different Items
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35. Cost of Goods Sold (COGS)
COGS = cost of labor and materials required to make one additional unit
COSS (cost of services sold) = cost of labor and materials required to provide one additional unit of service
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36. Economics of One Unit (EOU)
Method for seeing if a business can be profitable
If one unit of sale is profitable, the whole business is likely to be profitable.
Selling price per unit – COGS per unit = Gross profit per unit
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37. Economics of One Unit (EOU) —Manufacturing
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38. Economics of One Unit (EOU) —Wholesale
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39. Economics of One Unit (EOU) —Retail Business
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40. Economics of One Unit (EOU) —Service Business
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41. Economics of One Unit (EOU) —Example
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42. The Entrepreneur’s Strategy:
Start a business with a profitable EOU
Hire others to create the units
Increase volume of units being sold
This frees the entrepreneur to start new businesses
Result: The entrepreneur creates jobs and wealth.
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43. Chapter 3 What Is Marketing? Analyzing Customers and Your Market
Entrepreneurship
Chapter 3
What Is Marketing? Analyzing Customers and Your Market
Mariotti: Entrepreneurship

44. What Is Marketing? Satisfying the customer at a profit
The business function that identifies your customers and their wants and needs
The engine that drives ALL business decisions
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45. Features Create Benefits
Feature—fact about a product or service
Benefit—what the feature can do to meet a customer’s need
Smart marketers emphasize benefits, not features.
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46. Visualize Your Customer
Use market research to find out:
Who your customers are
-income
-age
-location
Where you can find them
What they want and need
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47. 4 Types of Market Research
Surveys and focus groups—interview people about your business
General research—libraries, internet, chamber of commerce
Statistical research—facts presented as numbers. Consumer statistics are called demographics.
Industry research—trends, growth, etc.
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48. Research Market Before Opening Your Business
Be open to criticism
Focus your brand—find the one benefit you want to market to customers
Ford’s Edsel—lacked focus, too many features, failure
Ford Mustang—tightly focused on target market (20–30-year-olds), success
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50. Build Your Brand Business name Logo Reputation Brand personality
Communicate brand to target market
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51. 7 Ways to Build a Great Brand
Provide high-quality product/service
Maintain high ethical standards
Define product/service clearly
Treat employees well
Make ads positive and informative
Associate company with a charity
Be involved in community
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52. Market Segmentation
Market segment = consumers who have similar response to a certain type of marketing
Segmentation methods
Geographic
Demographic
Psychographic
Behavioral
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53. Marriotti: Entrepreneurship

54. Product Life Cycle (PLC)
4 stages
Introduction
Growth
Maturity
Decline
Where is your product/service in the PLC? Is your market saturated?
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56. Introduction Stage – This stage of the cycle could be the most expensive for a company launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it’s a competitive sector.
Growth Stage – The growth stage is typically characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.
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57. Maturity Stage – During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage.
Decline Stage – Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets.
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58. Market Positioning
Distinguish your product/service from others offered to your market segment.
Goal: clearly communicated how your product/service differs from competitors.
Positioning statement:
Ex: (General Motors) is the (leading US automobile maker) that (provides affordable cars) to (American families)
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