> > > > Objective 3.01: Factors Influencing Entrepreneurship

Entrepreneurship?

A person who assumes the risk of starting and operating a business for the purpose of making a profit. What is Entrepreneur?

A Raleigh Entrepreneur’s Story

Characteristics of Entrepreneurs

Goal Oriented Work hard to achieve good results.

Knowledgeable Intelligent and well informed.

Good Planning Skills Can decide in detail how to do something before starting.

Calculated Risk Taker Good at evaluating the benefits against the costs in order to be successful.

Innovative Find ways to improve and produce better work and gain the confidence of customers.

Responsible Accept the consequences of decisions.

Acquiring a Business…

1. Take over a family business –Do you have the ability to work for a member of your family? –Do you get along with members of your family who will be involved with the business? –Do you share the same goals for the business? –Can you leave the business problems at work when you go home?

2. Buy an existing business –Good alternative if you do not have a great deal of business experience. –May be less risky because it is already established. –Will you keep the current name and location of the business or change?

3. Start your own business –Do I have the motivation and persistence to start from the “ground up”? –Do I have sufficient knowledge of basic operations to undertake the business in which I am interested? –Do I have enough financial resources to start from “ground up?”

Types of Businesses

1. Sole Proprietorship

Sole Proprietor Advantages START UP: Easy PROFITS: to owner TAXES: Business pays no taxes – all taxes are paid through the owner’s individual taxes GOV REG: Limited government regulations CONTROL: Direct control Disadvantages LIABILITY: Unlimited for owner CAPITAL: Difficult to finance DISSOLUTION: Limited life (death of owner usually equals death of business)

2. Partnership Two or more owners

Partnership Advantages START UP: Easy TAXES: Business pays no taxes – all taxes are paid through the owners’ individual taxes GOV REG: Limited government regulations Disadvantages PROFITS: Shared LIABILITY: Unlimited for partners CAPITAL: Difficult to finance DISSOLUTION: Limited life (death of partner may mean end of partnership) CONTROL: Shared

3. Corporation Owned by stockholders

Corporations Advantages LIABILITY: Limited liability CAPITAL: Ease in raising capital $$$$ DISSOLUTION: Continuous existence; ownership transferred through sale of stock Disadvantages START UP: Expensive to form PROFITS: Profits depend on size of investment TAXES: Double taxation (on income of corporation and shareholders pay taxes on dividends) GOV REG: High government regulation CONTROL: Lack of control by owners (CEO makes decisions)

4. Franchise Entrepreneurs purchase the rights to open and run a location of a larger company.

Franchise Advantages START UP: Training and guidance provided; an established national name; reduced risk of failure LIABILITY: Liability is limited DISSOLUTION: Continuous existence Disadvantages PROFITS: Percentage of sales goes to Franchiser CAPITAL: Cost to purchase is high TAXES: similar to corporations GOV REG: High CONTROL: Lack of freedom in running business