1. PowerPoint Presentation
Section 1.2
Pages 12-15

2. 1.2 The Entrepreneurial Process
What you’ll learn
The process of entrepreneurship
The components of a new venture organization
How businesses succeed

3. 1.2 The Entrepreneurial Process
Why it’s important
Understanding the entrepreneurial process will help you build a more effective business that creates value.

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Why it’s important
Learning the facts about business success and failure will help you make wiser business decisions.

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Key Terms
environment
enterprise zones
opportunity
start-up resources
new venture

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Key Terms (Cont.)
business failure
discontinuance

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I. ENTREPRENEURIAL START-UP
The entrepreneurial start-up process includes five key components.
A. The entrepreneur

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B. The environment
C. The opportunity
D. Start-up resources
E. The new venture
organization

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II. THE ENTREPRENEUR
A. The entrepreneur pulls together the different components involved in creating a new business.

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B. The entrepreneur brings to the business all the behaviors and experience from his or her life to that point.

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III. THE ENVIRONMENT
A. The business environment refers to the variables affecting it that are not controlled by the entrepreneur.

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B. There are four general categories of environmental variables affecting a new venture.
1. The nature of the environment (uncertain, fast-changing, stable, highly competitive etc.)

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2. The availability of resources
3. Ways to realize value (favorable taxes, good markets, supportive government policies)
4. Incentives to create new businesses, such as enterprise zones

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Enterprise zones - Specially designated area of a community that provide tax benefits to new businesses locating there and grants for new product development.

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Springboard
Analyze the current business environment. ?
Answers will vary. Make sure students understand that entrepreneurs have no control over these variables.

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IV. THE OPPORTUNITY
A. An opportunity is an idea that has commercial value.
B. New businesses are founded on recognized opportunities in the environment.

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V. START-UP RESOURCES
A. The start-up resources an entrepreneur needs to start a business include the following.
1. Capital

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2. Skilled labor
3. Management expertise
4. Legal and financial advice
5. A facility
6. Equipment
7. Customers

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B. The most important start-up resource is customers.

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VI. THE NEW VENTURE ORGANIZATION
A. The new venture organization is the shell that surrounds all the parts of a new business.

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B. The parts of a new business include the following.
1. Products
2. Processes
3. Services

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C. Entrepreneurs are able to create value for a business through new venture organization.

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VII. HOW BUSINESSES SUCCEED
A. The myth that most new businesses fail is not true.

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B. A recent study done by Dun & Bradstreet found that more businesses succeed than fail.

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C. The problem with most reports on business failure is that they don’t define failure properly.

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VIII. WHAT IS BUSINESS FAILURE?
A. A business failure is a business that files Chapter 7 bankruptcy or loses money for creditors and their investors.

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B. Businesses that disappear from public lists are not always failures.
C. Some businesses that disappear from public lists are discontinuances.

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D. A discontinuance is a businesses that is either operating under a new name or has been purposely discontinued to start a new one.

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Discussion Starter
Name a business in the community that is considered a discontinuance--not a failure. ?
Answers will vary, but may include businesses that change names, ownership, or locations. Make sure students understand the difference.

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E. Discontinuances are not failures because they are planned and cause no harm to creditors.

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F. Failure is also sometimes mistakenly reported when an owner changes the legal status of a business.

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IX. HOW CAN ENTREPRENEURS SUCCEED?
A. The chances of a new business succeeding are good with effective planning.

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B. The number–one cause of business failure is poor management.

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C. Entrepreneurs can improve their chances of success.
1. Learn how to build a new business
2. Assemble a team that has the expertise they need

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End of Section 1.2