Small business ownership Introduction

Key terms Business – the buying / selling of products / services in order to make a profit Profit – money a company has left after expenses and taxes have been paid Entrepreneur – individual who is willing to take the RISK of investing time and money in a business that has the potential to make a profit or to incur a loss Employee – people who work for someone else – they don’t assume any risk  

entrepreneurs Sense the needs of the marketplace and take risks to reach the goals that are important to them Innovative Proactive in their decision making skills The foundation of the small businesses that exist in our country’s economy These small business owners are essential to the economic strength of our country Sell products / services that customers need, at prices they are willing to pay Responsible for the introduction of many new products / services into the economy. 

Do you control your life or does your life control you  Do you control your life or does your life control you?  Which one do you think an entrepreneur does? 

What is a small business ? The public often thinks of business only in terms of “Big Business”.  The Small Business Administration (SBA) defines a Big Business as having more than 100 employees and selling more that $1 million worth  of products / services in a year. 

Advantages of Entrepreneurship Control your own destiny, create a fulfilling life Following your passions / dreams Achieve freedom from the direct supervision of a boss Strive for the potential to achieve profits greater than a salary earned from working for someone else The opportunity to help one’s community Increases competition in the marketplace 

Disadvantages of Entrepreneurship Business failure  Obstacles Financial insecurity Long hours (well over 40 per week)  Hard work Unlimited liability (exception LLC) Risk (providing funds to operate the business) 

Types of Entrepreneurial Businesses Manufacturing Wholesaling Retailing Service  Agriculture Mining   

Manufacturing Companies produce the products they sell Ex: cars, paper, food products, and more The process of converting raw materials, components, or parts into finished goods that meet a customer's expectations or specifications Manufacturing commonly employs a man-machine setup with division of labor in a large scale production

Wholesaling Buys the products in large quantities from the manufacturer and sells smaller quantities to retail stores Ex: supplying Foot Locker with sneakers  What do you think the 2 most common Wholesale Distributors are in NJ? Costco Wholesale & BJ's Wholesale

retailing Sell products directly to individuals  Ex: grocery store, clothing store  Top 100 Retailers – 2016

Services, agriculture, & mining sells intangible products    Ex: hairdressers, tutoring services, repair shops  Agriculture: generate fresh produce and farm products  Mining:  remove resources from the ground Ex: oil, coal  

Small business facts

Approximately 30 million businesses contribute billions of dollars each year to our economy.  The overwhelming majority of these businesses are small businesses.   

These small companies employ more workers than all of the country’s large corporations combined.  They are instrumental in reducing the poverty level of our country as a whole. 

Approximately 2/3 of all new small businesses will fail within the first five years  The ultimate goal of all entrepreneurs is to match their values, attitudes, needs and expectations with a business opportunity. These small businesses apply for more patents per year than corporate employees

Fun facts

Entrepreneurs must make choices • Income – there is a direct correlation between how much money and time is invested and how much potential profit there is   • Type of work – a decision about the type of work will dictate your main occupation, and will account for your time away from your families    • Lifestyle – do you like to travel or stay close to home, work at night or during the day?  Many entrepreneurs start businesses that they can operate from home.

STOP

4 P's of marketing The 4Ps of marketing is a model for enhancing the components of your ‘marketing mix’ – the way in which you take a new product or service to market. It helps you to define your marketing options in terms of price, product, promotion, and place so that your offering meets a specific customer need or demand. Video example

1) Customer 2) Company 3) Competitor The 3 C's of marketing 1) Customer 2) Company 3) Competitor These 3 variables are dynamic and inter dependent on each other, meaning if one changes, the other has to change If you don’t capture the audience, someone else will. Hence pay equal attention to all three – your customer, your competitor and yourself

Please have a general understanding of the following words: Dreamer                                   Perseverance Responsible  Employee  Entrepreneur  Independent                 Self-Confident       Goal-Oriented                                       Innovative   High energy level      Determination  Flexible  Success-oriented  Creativity  Technical skills  Organizational skills 

End of notes Questions?