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

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Presentation on theme: "Entrepreneurship and Small Business Chapter 5 pp. 68-83."— Presentation transcript:

1 Entrepreneurship and Small Business Chapter 5 pp. 68-83

2 Introduction to Business, Entrepreneurship and Small Business Slide 2 of 56 Learning Objectives After completing this chapter, you’ll be able to: 1.Describe 1.Describe an entrepreneurship and a small business. 2.List 2.List the advantages and disadvantages of entrepreneurship. continued

3 Introduction to Business, Entrepreneurship and Small Business Slide 3 of 56 Learning Objectives After completing this chapter, you’ll be able to: 3.Recognize 3.Recognize the advantages and disadvantages of a small business. 4.Explain 4.Explain why small businesses may fail.

4 Introduction to Business, Entrepreneurship and Small Business Slide 4 of 56 Why It’s Important Entrepreneurs and small businesses bring vital energy and innovation to the economy. The risks involved energize entrepreneurs and small business owners to become successful.

5 Introduction to Business, Entrepreneurship and Small Business Slide 5 of 56 Key Words entrepreneurship virtual business or dot-com company small business entrepreneur risk taker profit

6 Introduction to Business, Entrepreneurship and Small Business Slide 6 of 56 The Ins and Outs of Entrepreneurship Entrepreneurships and small businesses are the majority of business firms.

7 Introduction to Business, Entrepreneurship and Small Business Slide 7 of 56 An entrepreneurship is a business started by someone who notices a need for a product or service. The Ins and Outs of Entrepreneurship

8 Introduction to Business, Entrepreneurship and Small Business Slide 8 of 56 A virtual business or a dot-com company is a business that operates on the Internet. The Ins and Outs of Entrepreneurship

9 Introduction to Business, Entrepreneurship and Small Business Slide 9 of 56 Online Finance Some new Internet businesses are able to hire people without paying them a salary. LENDX Inc., based in San Francisco, Calif., serves as an online financial hub for businesses interested in leasing or buying equipment. continued

10 Introduction to Business, Entrepreneurship and Small Business Slide 10 of 56 When LENDX started, their first six employees worked for shares of company stock only. Analyze Why would its employees work without a salary?

11 Introduction to Business, Entrepreneurship and Small Business Slide 11 of 56 Figure 5.1 ARE YOU ORIGINAL? Take this quiz and see if you would be a good entrepreneur. Below are traits of an entrepreneur. Rate yourself by choosing a number that best describes you. At the end you’ll add up your points to see how you fared (1 is the lowest, 5 is the highest). 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

12 Introduction to Business, Entrepreneurship and Small Business Slide 12 of 56 The Ins and Outs of Entrepreneurship An entrepreneur is a person who recognizes a business opportunity and organizes, manages, and assumes the risks of a business enterprise, with the intent of increasing the market value of the business.

13 Introduction to Business, Entrepreneurship and Small Business Slide 13 of 56 Entrepreneurs are take-charge, self- directed people. Often an entrepreneur is a risk taker, or someone who likes to take risks. The Ins and Outs of Entrepreneurship

14 Introduction to Business, Entrepreneurship and Small Business Slide 14 of 56 Want to control destiny Want to control destiny Desire to earn profit Desire to earn profit Are enthusiastic Are enthusiastic Have self- confidence Have self- confidence Are determined Are determined Recognize opportunities Recognize opportunities Desire achievement Desire achievement Take risks Take risks Have high energy Have high energy Successful Entrepreneurs EntrepreneursSuccessful Successful Entrepreneurs Graphic Organizer

15 Introduction to Business, Entrepreneurship and Small Business Slide 15 of 56 There are many advantages to being an entrepreneur, including: Advantages of Entrepreneurship Satisfaction from taking a risk and becoming a success Showing expertise and skills continued

16 Introduction to Business, Entrepreneurship and Small Business Slide 16 of 56 Advantages of Entrepreneurship Working from home Gaining profit Profit is the money left over after a business has paid all costs of producing its goods or services.

17 Introduction to Business, Entrepreneurship and Small Business Slide 17 of 56 Disadvantages of Entrepreneurship The disadvantages to being an entrepreneur are: Long hours Total responsibility for the business Financial risks

18 Introduction to Business, Entrepreneurship and Small Business Slide 18 of 56 Disadvantages of Entrepreneurship The main reason why entrepreneurships fail is that they run out of money.

19 Introduction to Business, Entrepreneurship and Small Business Slide 19 of 56 Fast Review 1.What are some characteristics of entrepreneurs? 2.What are three advantages of an entrepreneurship? continued

20 Introduction to Business, Entrepreneurship and Small Business Slide 20 of 56 Fast Review 3.What are some disadvantages of an entrepreneurship? 4.What is the main reason that entrepreneurships fail?

21 Introduction to Business, Entrepreneurship and Small Business Slide 21 of 56 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.

22 Introduction to Business, Entrepreneurship and Small Business Slide 22 of 56 Small Business: What You Need to Know A small business serves a limited geographic area, employs fewer than 500 people, and is not dominant in its industry.

23 Introduction to Business, Entrepreneurship and Small Business Slide 23 of 56 Small Business: What You Need to Know Small businesses employ more than 50 percent of the total workforce in the United States.

24 Introduction to Business, Entrepreneurship and Small Business Slide 24 of 56 Small Business: What You Need to Know Small businesses generate more than half the nation’s income. They are the principal source of new jobs.

25 Introduction to Business, Entrepreneurship and Small Business Slide 25 of 56 Making an Ethical Decision 1.Are all employees—even those in small businesses—entitled to job benefits? 2.If you were an employee, what kind of benefits would you want? continued

26 Introduction to Business, Entrepreneurship and Small Business Slide 26 of 56 Making an Ethical Decision 3.If you were an employer, what benefits would you want to offer and why? What other job “perks” could you offer your employees that would not directly cost money?

27 Introduction to Business, Entrepreneurship and Small Business Slide 27 of 56 Small Business: What You Need to Know Small businesses account for about 38 percent of jobs in high technology.

28 Introduction to Business, Entrepreneurship and Small Business Slide 28 of 56 Figure 5.2 SMALL BUSINESS EMPLOYMENT IN THE UNITED STATES There are 25 million small businesses in the United States. Which three types of small businesses provide the most jobs?

29 Introduction to Business, Entrepreneurship and Small Business Slide 29 of 56 Advantages of Small Business Some of the advantages of owning a small business are: Being the boss Offering services large companies cannot offer Ease of formation

30 Introduction to Business, Entrepreneurship and Small Business Slide 30 of 56 Disadvantages of Small Business When you’re a small business owner, you’re responsible for decisions. You often work long hours and have great financial responsibility.

31 Introduction to Business, Entrepreneurship and Small Business Slide 31 of 56 About four out of five small businesses fail in their first five years. Disadvantages of Small Business

32 Introduction to Business, Entrepreneurship and Small Business Slide 32 of 56 Small business owners may mistake the freedom of being in business for oneself for the liberty of working or not. Disadvantages of Small Business

33 Introduction to Business, Entrepreneurship and Small Business Slide 33 of 56 A small business may underprice or overprice goods or services. Going into business with little or no experience may result in the business closing. Disadvantages of Small Business

34 Introduction to Business, Entrepreneurship and Small Business Slide 34 of 56 The following are three specific reasons why a small business might not work: continued Disadvantages of Small Business

35 Introduction to Business, Entrepreneurship and Small Business Slide 35 of 56 Why a small business might not work: 1. Effect of Change Consumers’ tastes change. If flexibility and change are not part of the business, then it’s likely to fail. Disadvantages of Small Business

36 Introduction to Business, Entrepreneurship and Small Business Slide 36 of 56 2. Managerial Skills Needed A small business owner must have multiple skills including: Financing Employee relations continued Why a small business might not work: Disadvantages of Small Business

37 Introduction to Business, Entrepreneurship and Small Business Slide 37 of 56 Managerial Skills Needed Production Customer Relations Disadvantages of Small Business

38 Introduction to Business, Entrepreneurship and Small Business Slide 38 of 56 Starting with little money, spending carelessly, borrowing money without planning, and forgetting about taxes and insurance may result in a failure. 3. Inadequate Financial Planning Disadvantages of Small Business Why a small business might not work:

39 Introduction to Business, Entrepreneurship and Small Business Slide 39 of 56 Fast Review 1.How does the Small Business Administration (SBA) define a small business? continued

40 Introduction to Business, Entrepreneurship and Small Business Slide 40 of 56 Fast Review 2.Give an example of a service that a small business may offer that a large company cannot offer. continued

41 Introduction to Business, Entrepreneurship and Small Business Slide 41 of 56 Fast Review 3.Which is more difficult to form: a large business or a small business? 4.Give examples of special skills that a small business owner needs. continued

42 Introduction to Business, Entrepreneurship and Small Business Slide 42 of 56 Fast Review 5.List two financial reasons that small businesses fail.

43 Introduction to Business, Entrepreneurship and Small Business Slide 43 of 56 Preparing for Your Own Business A business plan is a written description of a new business venture that describes all aspects of the business.

44 Introduction to Business, Entrepreneurship and Small Business Slide 44 of 56 Checklist for Starting a Venture Some questions to consider before starting your own business are: What will I produce? Who are my main competitors? Why is my product needed? continued

45 Introduction to Business, Entrepreneurship and Small Business Slide 45 of 56 Checklist for Starting a Venture How much will my product cost to produce? How many people will I need to run the business? What physical facilities will I need? continued

46 Introduction to Business, Entrepreneurship and Small Business Slide 46 of 56 Checklist for Starting a Venture What licenses, permits, or other legal documents do I need? How much money will I need to get started?

47 Introduction to Business, Entrepreneurship and Small Business Slide 47 of 56 Parts of a Business Plan The essential parts of the business plan are: Summary Company description Products and services continued

48 Introduction to Business, Entrepreneurship and Small Business Slide 48 of 56 Parts of a Business Plan Marketing plan Legal plan Management and operating plan Financial plan

49 Introduction to Business, Entrepreneurship and Small Business Slide 49 of 56 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 Business Building Blocks

50 Introduction to Business, Entrepreneurship and Small Business Slide 50 of 56 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 Elements of a Business Plan Business Building Blocks

51 Introduction to Business, Entrepreneurship and Small Business Slide 51 of 56 6.The management plan and operating plan detail the company’s key personnel. 7.Complete a financial plan. continued Elements of a Business Plan Business Building Blocks

52 Introduction to Business, Entrepreneurship and Small Business Slide 52 of 56 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. Tips for Writing an Effective Business Plan Business Building Blocks

53 Introduction to Business, Entrepreneurship and Small Business Slide 53 of 56 Fast Review 1.What is a business plan? 2.Name the essential elements of a business plan.

54 Introduction to Business, Entrepreneurship and Small Business Slide 54 of 56 continued What makes a person an entrepreneur? What makes a company successful? continued

55 Introduction to Business, Entrepreneurship and Small Business Slide 55 of 56 Identify some reasons why a small business might be hard to manage. What are some benefits of selling online?

56 End of Chapter 5 Entrepreneurship and Small Business


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