Chapter 5

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Chapter 5

  1. 1. ENTREPRENEURSHIP Chapter 5
  2. 2. OBJECTIVES Describe an entrepreneurship and a small business.  List the advantages and disadvantages of entrepreneurship.  Recognize the advantages and disadvantages of a small business.  Explain why small businesses may fail. 
  3. 3. TEST Do you have what it takes to be an entrepreneur?  TEST 
  4. 4. ENTREPRENEUR    business started by someone who notices a need for a product or service Entrepreneurships and small businesses are the majority of business firms a person who: recognizes a business opportunity  organizes, manages, and assumes the risks of a business enterprise, with the intent of increasing the market value of the business. 
  5. 5. SUCCESSFUL ENTREPRENEURS Desire achievement  Are enthusiastic  Are determined  Recognize opportunities  Desire to earn profit  Take risks  Have self-confidence 
  6. 6. ENTREPRENEUR Advantages  Satisfaction from taking a risk and becoming a success  Show expertise and skills  Working from home  Gain profit Disadvantages  Total responsibility  Long hours  Financial risk  Most fail because they run out of money
  7. 7. SMALL BUSINESS ADMINISTRATION (SBA)  Site Defines small business as  Business where the owner is also the manager  Fewer than 500 employees  Employ 55 percent of workforce in US  Generate more than half the nation’s income - 54% of all US sales  Principal source of new jobs – since 1990 big business eliminated 4 million jobs, small businesses added 8 million new jobs.  Small business sector is growing rapidly. While corporate America has been "downsizing", the rate of small business "start-ups" has grown, and the rate for small business failures has declined.
  8. 8. SMALL BUSINESS Advantages  You’re the boss  Offer services larger companies can’t  Formation - easy
  9. 9. SMALL BUSINESS CON’T Disadvantages  Responsible for everything  Long hours and financial risk  Four out of five fail in first five years  Mistake freedom for the liberty of working or not.  Underprice/overprice goods or services  Little or no experience
  10. 10. SMALL BUSINESS MIGHT FAIL  Effect of change   Consumers’ taste change and they don’t Managerial skills Finance  Employee relations  Production  Customer relations   Inadequate financial planning      Starting with little money Spending carelessly Borrowing without thinking about paying back Taxes Insurance
  11. 11. BUSINESS PLAN Written description of business venture describing all aspects of business.  Parts          Summary Company description Market analysis Management and operating plan Products and services Marketing plan Funding request Financial plan
  12. 12. QUESTIONS THAT SHOULD BE ANSWERED IN BUSINESS PLAN What will I produce?  Who are my main competitors?  Why is my product needed?  How much will my product cost to produce?   Overhead How many people will I need to run the business?  What physical facilities will I need?  What licenses, permits or other legal documents do I need?  How much money will I need to get started? 
  13. 13. QUIZ Give me an example of an entrepreneur.  What is an advantage of being a small business owner?  What is a disadvantage of being a small business owner?  What might be one reason a small business fails? Explain! 

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