1. Entrepreneurship & Small Business
Business Ownership
Chapter 5 & 6

2. Learning Objectives Describe an entrepreneurship and small business.
List advantages and disadvantages of an entrepreneurship
Explain why small businesses fail.

3. Entrepreneurship
Business started by a person who notices a need for a product or service.
Soared in 1990s
Businesses took to online.
Internet became the arena to sell products and services.

4. Virtual Business Dot-com company
Business that operates on the Internet.
May exist only online
May be in addition to a company’s bricks and mortar storefront.

5. Entrepreneur Person who recognizes a business opportunity
Organizes, manages, and assumes risks
Many organize businesses that stay small.
Many will fail within a few years of opening.
Others will be a great company.

6. Entrepreneur qualities
Hard worker
Take-charge person
Self-directed person
They want to work for themselves.
Organized individual
Likes the thrill of taking risks
Energetic and creative!

7. Advantages of an Entrepreneurship
Satisfaction in taking a risk and becoming a success.
Shows expertise and skills.
Working from home.
Receive all the profits
Disadvantages
Taking a risk
Total responsibility for the business.
Long work hours!
Financial worries.

8. Why do Entrepreneurships Fail?
The main reason why entrepreneurships fail is because they run out of money.

9. Review Questions! What are some characteristics of entrepreneurs?
What are three advantages of an entrepreneurship?
What are some disadvantages of an entrepreneurship?
What is the main reason entrepreneurships fail?

10. Small Business: What you Need to Know!

11. Small Business Admin SBA Provides assistance to small business
Financial
Counseling
Guidance
Grants
Support for success

12. Small Business Independently owned
Usually has the owner as its manager.
Serves a limited geographic area
Employs fewer than 500 people
Is not dominant in its industry.
Vital part of our economy
Employ more than 50% of the total workforce

13. Advantages of Small Business
Being the Boss
Opportunity to offer services large companies can’t.
Easy to form

14. Disadvantage of Small Business
About four out of five fail in first 5 years.
Effect of Change—consumers wants and needs change.
Managerial skills are needed.
Financing, employee relations, production, customer relations.
Inadequate financial planning

15. Fast Review How does the SBA define a small business?
Give an example of a service that a small business may offer that a large company can’t offer.

16. Preparing for a Business
Once decision to start a business has been made:
Analyze what needs to be done.
Assess entrepreneurial opportunities
Careful planning from the beginning will ensure success!
Develop a business plan!

17. Business Plan Written description of a new business venture
Describes all aspects of the business
Puts focus on what needs to be done, who it will be done, and expectations
Financial agencies and potential investors require one.

18. Questions for developing a plan:
What will I produce.
Who are my main competitors.
Why is my product needed?
How much will my product cost to make?
How many employees will I need?
What licenses, permits, or other legal docs will I need?
How much money do I need to get started?

19. Business Plan
The Center for Entrepreneurial Management in New York reports that most business plans take five months to prepare.
Must be well organized
Easy to read
Follow a logical format.

20. Parts of a Business Plan
Summary
Company description
Products and services section
Marketing plan
Legal plan
Management plan and operating plan
Financial plan

21. Fast Review What is a business plan?
Name the essential parts of a business plan.

22. Specialized Business Organization
Franchises
Cooperatives
Non-profit organizations

23. Franchise
Written contract giving permission to sell someone else’s product or service.
Can be operated as a proprietorship, partnership, or corporation.
Look on page 77

24. Franchise Advantages Relatively easy to start
Franchisor often helps the franchisee get started
Franchisor helps in selling product by giving national advertising.

25. Franchise Disadvantages
Require large investments of capital to start
Very competitive
Often fail because they were not competitive or in a good location.

26. Franchise Agreement States the duties and rights of both parties
Franchisee agrees to run the business in a certain way.
Name of the business
Products or services offered
Design and color of the building
Prices of the product or service
How employees dress

27. Board of Directors
Group of people responsible for guiding the company.
Board elects executive officers
President (CEO)
Vice President
Corporate lawyer

28. Cooperatives
A co-op is a business that is owned and controlled by the very same customers who use its services.
The voice of every person makes a difference.
The economic benefits of a cooperative are given back to the members, reinvested in the co-op or used to provide member services.

29. Questions?