Chapter 5 Entrepreneurship and Small Business Introduction to

Chapter 5 Entrepreneurship and Small Business Introduction to Business pp. 68 -83

Learning Objectives After completing this chapter, you’ll be able to: 1. Describe an entrepreneurship and a small business. 2. List the advantages and disadvantages of entrepreneurship. Chapter 5 - Entrepreneurship and Small Business Slide 2

The Ins and Outs of Entrepreneurship • What is an entrepreneurship? An entrepreneurship is a business started by someone who notices a need for a product or service • Entrepreneurships and small businesses make up the majority of business firms in the U. S. Chapter 5 - Entrepreneurship and Small Business Slide 3

The Ins and Outs of Entrepreneurship • A virtual business or a dot-com company is a business that operates on the Internet • Some Internet businesses are able to hire people without paying them a salary – why would they do this? Chapter 5 - Entrepreneurship and Small Business Slide 4

The Ins and Outs of Entrepreneurship Entrepreneur - person who recognizes a business opportunity and organizes, manages, and assumes the risks of a business enterprise • take-charge, self-directed people • risk taker - someone who takes risks Chapter 5 - Entrepreneurship and Small Business Slide 6

Where do you fall? Rate your score: 35 -40 points = true entrepreneur 30 -34 = willing to take risks and try something new 25 and under = you take fewer risks Chapter 5 - Entrepreneurship and Small Business Slide 7

Recognize opportunities Want to control destiny Desire to earn profit Are enthusiastic Desire achievement Have high energy Successful Entrepreneurs Have selfconfidence Chapter 5 - Entrepreneurship and Small Business Take risks Are determined Slide 8

? ? ? ? ? ? ? n What is an entrepreneurship? An entrepreneurship is a business started by someone who notices a need for a product or service Chapter 5 - Entrepreneurship and Small Business Slide 9

Advantages of Entrepreneurship • Satisfaction from taking a risk and • • • becoming a success (Build an enterprise) Show off expertise and skills Work from home (possibly) Gaining profit Get to be the boss Do what you enjoy Be Creative Chapter 5 - Entrepreneurship and Small Business Slide 10

Disadvantages of Entrepreneurship • Long hours • Total responsibility for the business • Financial risks What do you think the main reason is that entrepreneurships fail? They run out of money. Chapter 5 - Entrepreneurship and Small Business Slide 11

? ? ? ? ? ? ? n List two disadvantages of being an entrepreneur: • • • Total responsibility for the business Long hours Financial Risks Chapter 5 - Entrepreneurship and Small Business Slide 12

Homework Tonight!! n Rd. pgs. 82 -87 u Review Questions on Pg. 87 (1 -3) Chapter 5 - Entrepreneurship and Small Business Slide 13

Learning Objectives After completing this chapter, you’ll be able to: 1. Recognize the advantages and disadvantages of a small business. 2. Explain why small businesses may fail. 3. List the parts of a business plan Chapter 5 - Entrepreneurship and Small Business Slide 14

Small Business: What You Need to Know The Small Business Administration (SBA) defines a small business as an independently owned business that usually has the owner as its manager • serves a limited geographic area • employs fewer than 500 people • isn’t top in its industry Chapter 5 - Entrepreneurship and Small Business Slide 15

Small Business: What You Need to Know • Employ more than 50% of the total U. S. workforce • Generate more than ½ nation’s income • Are principal source of new jobs • Account for 38% of jobs in high technology Chapter 5 - Entrepreneurship and Small Business Slide 16

? ? ? ? ? ? ? n Tell me two of the three characteristics that are used to describe a small business. Serves a limited geographic area u Employs fewer than 500 people u Isn’t tops in its industry u Chapter 5 - Entrepreneurship and Small Business Slide 18

Advantages of Small Business • Being the boss • Offering services large companies can’t • Easy to put together and form disadvantages • • You’re 100% responsible for decisions Long hours Great financial responsibility 4/5 businesses fail in first 5 years Chapter 5 - Entrepreneurship and Small Business continued… Slide 19

3 MAIN REASONS SMALL BUSINESSES FAIL 1. Effect of Change Need to be flexible, or you might fail 2. Managerial Skills Needed Financing Employee relations Production Customer Relations Chapter 5 - Entrepreneurship and Small Business Slide 21

3 MAIN REASONS SMALL BUSINESSES FAIL 3. Inadequate Financial Planning Failure = • Starting with little $$ • spending carelessly • borrowing $$ without planning • forgetting about taxes and insurance Chapter 5 - Entrepreneurship and Small Business Slide 22

business plan - written description of a new business venture that describes all aspects of the business 1) Executive Summary 2) Mission Statement 3) Company description 4) Products and Services 5) Marketing Plan 6) Business Operation (Legal plan) 7) Financial Plan 8) Risk/Contingency Plan 9) Conclusion/Timeline Chapter 5 - Entrepreneurship and Small Business Slide 23

Homework n Review questions 2 -7 n Pg. 88 Chapter 5 - Entrepreneurship and Small Business Slide 26

GOOD RESOURCES http: //www. entrepreneurship. com/ http: //smallbusiness. yahoo. com/ http: //www. commerce. state. il. us/bus/ http: //www. ccedtraining. mchenry. edu/ Chapter 5 - Entrepreneurship and Small Business Slide 27

Business Building Blocks Elements of a Business Plan 1. The summary is a one- to three-page overview of the plan. 2. The company description explains the type of company. continued Chapter 5 - Entrepreneurship and Small Business Slide 28

Business Building Blocks Elements of a Business Plan 3. Describe products or services in the products and services section. 4. The marketing plan describes your customers and your competition. 5. A legal plan points out how you will organize your company. continued Chapter 5 - Entrepreneurship and Small Business Slide 29

Business Building Blocks Elements of a Business Plan 6. The management plan and operating plan detail the company’s key personnel. 7. Complete a financial plan. continued Chapter 5 - Entrepreneurship and Small Business Slide 30

Business Building Blocks • • • Tips for Writing an Effective Business Plan Be brief and relevant. Don’t inflate the importance or possible success of your business. “Write short and be honest, ” is a good rule of thumb. Chapter 5 - Entrepreneurship and Small Business Slide 31