1. Entrepreneurial Concepts
Chapter 33

2. What is Entrepreneurship?
The process of starting & managing your own business (big or small)

3. Who are Entrepreneurs
People who attempt to earn & make profits by taking the risk of owning & operating a business.

4. 60% of those who start a business are between the ages of
25 & 40

5. These people are most likely to have
Work experience
Personal drive
Financial resources
Willing to take business risks (adventurous)

6. Why not people over 40? They are already established in life
Have money and experience but are reluctant to take risks.

7. Most businesses that survive
Only employ a few people
Provide a living only for the business owner and his/her family
1200 new business are started in the US every day…but of them will close their doors in the first years
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8. Advantages of Entrepreneurship
Personal Freedom – you pick your line of work, set the hours, YOU decide what you’ll do each day
Personal Satisfaction – entrepreneurs have a passion for their business, they do it because they love it
Potential for increased income – hard work and a good business concept will hopefully keep you from becoming a statistic
Increased self-esteem – owning a business is gratifying, knowing that the business success is because of you

9. Disadvantages of Entrepreneurship
Great risk and potential loss of income – high failure rate among new businesses
Long, Irregular hours – 16+ hour days are the norm
Need for daily discipline – many time consumnig tasks, there is no calling in sick!

10. Characteristic of a successful Entrepreneur
Organizational skills
Tremendous personal drive
Leadership ability
Skills/knowledge specific to operating a business
May have “entrepreneurship” in their blood lines

11. What is self evaluation?
Assessing one’s skills, interests & personal qualities as they relate to business ownership.

12. Business Ownership Options
Starting your own independent business
Advantage: you make all the decisions
Disadvantage: takes the most skill to succeed
Purchasing a Franchise
Advantage: proven system & resources
Disadvantage: usually requires a large amount of capital, may give up control over many aspects of the business.

13. Business Ownership Options
Purchasing an existing business
Advantage: may have a good reputation/name recognition
Disadvantage: can inherit serious problems
Taking over the family business
Advantage: reputation & system in place
Disadvantage: may strain relationships with family members

14. Forms of Business Ownership
Sole Proprietorship – business owned/operated by one person
Examples: plumber, tax consultant, pet groomer
Advantages:
Easy to start
Make all decisions
Lower taxes
Less government regulation
Receives all profit
Disadvantages:
May lack in all skills needed
Limited capital (money)
Unlimited liability - your financial liability (responsibility) is not limited to your investments, it also extends to your total assets - YOUR PERSONAL PROPERTY!

15. Forms of Business Ownership
Partnership – Legal agreement between two or more people to be jointly responsible for a business
General Partnership – each partner shares profit and losses
Limited Partnership – each “limited” partner is responsible for any debts up to the amount he/she invested in the company.
Limited partners have limited say in the daily operations of the business
At least one person must be a general partner

16. Partnership Advantages: Combines skills of more than one owner
Access to more capital
Taxed and regulated less than corporations
Disadvanges
Owners may not always agree
Partner’s actions are legally binding to other parties
Business is dissolved if one partner dies
Unlimited liability for general partners

17. Business Ownership Options
Corporation – business that is chartered by a state and legally operates as a separate entity (apart from owners)
Can be publicly or privately held
Stockholders – owners of a corporation
Have limited liability
Board of Directors – governing body of a corporation
CEO (Chief Executive Officer & Other Officers – hired by the board of directors to oversee the management of a corporation

18. Corporation (cont.)
Foreign Corporation – incorporated under the laws of a state other than the one in which it does business.
LLC (Limited Liability Corporation) – relatively new form of corporation, combines the positive qualities of partnerships & corporations
Owners are called members
Taxed like a partnership
Owners have a limited liability

19. Corporation (cont.) Advantages: Limited Liability
Easier to raise capital
Easy of entry/exit
Usually more resources to insure professional management
Disadvantages:
Complexity of forming
Increased government regulation
Double taxation
Complex recordkeeping requirements

20. DBA (Doing Business As) – registration process by which the county officially recognizes that your business exists
A small fee protects the name of your business for a period of time

21. Forming a Corporation
File the Articles of Incorporation – with state department of commerce showing:
Name and address of business
Purpose
Names of initial board
Stock issued to each director
Once processed and accepted by the state, the Articels of Incorporation become a Charter, and the corporation becomes a legal entity

22. Why must you license? Protect the public
Establish minimum standards of education and training
Maintain health and welfare of all citizens
Regulate where a business can locate
Protect the neighborhoods and the environment