Entrepreneurship Chapter 33.1

What you’ll Learn The meaning of entrepreneurship How to identify the risks involved in entrepreneurship Advantages and Disadvantages of entrepreneurship How to identify the personal skills necessary for entrepreneurs The scope of small business in the American economy

What is Entrepreneurship? Entrepreneurship is the process of starting and managing your own business. Everyone in the United States is free to start, own and operate a business. Entrepreneurs are people who organize, manage, and take the risk of owning and operating a business.

Major Contributions Henry T. Ford introduced the mass production of automobiles, making them affordable to the average person. Ray Kroc Documentary McDonalds History - YouTube Ray Kroc Documentary McDonalds History - YouTube Ray Kroc made McDonald’s the largest fast food restaurant chain in the world.

Major Contributions Bette Graham, a secretary, developed Liquid paper to cover errors in typed, printed, or photocopied documents. Steven Jobs and Steven Wozniak began Apple Computer, Inc. working mostly from their homes, and soon turned it into an international business.

The Risk of Entrepreneurship Starting a new business is a risk because it requires a major commitment of time, money, and effort. New business owners must be risk takers. Approximately 60 percent of those who start a business are between the ages 25 and 40. People between these ages usually have the work experience, the personal drive, the financial resources, and the willingness to take business risks.

The Risk of Entrepreneurship The threat of losing money or of not making enough money with a new business venture is very real. More than 3,000 new businesses are started each week in the United States. Studies show that two out of three new firms close their doors within four years.

Advantages Enjoy great benefits Some advantages include – Personal freedom – Personal satisfaction – Increased income – Increased Self-Esteem Entrepreneurs are not controlled by any other managers in their organizations.

Advantages They set their own work schedules and control their own fate. They make their own decisions, try out their own new ideas, and direct their energies into business activities as they see fit. Working hard generally results in making more money.

Disadvantages Include potential loss of income, long and irregular hours, and necessity for strong self-discipline. New businesses usually have a restricted cash flow because of start-up costs. New businesses could demand 12 to 16 hours a day in addition to weekends and holidays. New business owners often do not take vacations until the business proves successful.

Disadvantages The business owner may do general cleaning and maintenance because there is not enough money to hire someone else to do it. There is usually a lot of paperwork. To be a successful entrepreneur you must have strong organizational skills, tremendous drive, and very good leadership ability. You must also be in good physical and mental condition to work the necessary hours.

The Importance of Entrepreneurship in Our Economy Small businesses are those with less than 500 employees in manufacturing and less than 100 in retailing. They make up 55 percent of the labor force. Eighty percent of the new jobs created annually come from businesses that are less than five years old.

Small businesses produce 50 percent of the Gross Domestic Product (GDP). Small businesses offer the consumer more choices of goods and services. They improve products and processes. They challenge existing businesses to become more efficient and provide better goods and services. They offer on the job training to students who then use this valuable experience to open small businesses of their own. Small businesses generate jobs and create income for the community. The Importance of Entrepreneurship in Our Economy