1. Unit 1: Going Into Business For Yourself
Chapter 1 – What is Entrepreneurship?

2. Key Terms To Know: Business cycle Demand Diminishing marginal utility
Economics
Entrepreneur
Entrepreneurship
Entrepreneurial
Equilibrium
Free enterprise system
Factors of production
Goods
Gross Domestic Product
Market structure
Monopoly
Need
Oligopoly
Profit
Scarcity
Services
Supply
Venture
Want

3. Key Concepts To Know Small Business & Entrepreneurship
Economic Systems
Basic Economic Concepts
Economic Indicators & Business Cycles
What Entrepreneurs Contribute

4. Statistics 1 in 3 households own their own family business
90% of businesses are small business having less than 100 employees
62% of small businesses are home-based

5. Going into business for yourself
Considered an entrepreneur
He/she accepts the risks & responsibilities of owning the business
He/she earns profits & gains personal satisfaction
Ventures are the new businesses being started
Entrepreneurs have the 3 I’s: initiative; innovation; imagination

6. Why Be An Entrepreneur? Generates employment
Sees economic opportunities to satisfy our demands for G&S
Source of venture capital – getting money from private investors
Help give employees financial security
Changing society (internet, computers)
Catalysts to making economic progress happen

7. The Start-Up Process Skilled Entrepreneurs!
Enterprise Zones – Communities give tax benefits/grants if you open up a business there
Start-Up Resources:
Capital
Skilled Labor
Management Expertise
Legal & Financial Advice
Facilities
Equipment
Customers! 

8. Basic Economic Concepts
Goods – tangible items purchased; sold by a merchandising business
Services – intangible (nonphysical) items; sold by a service business
Goods & Services will be abbreviated: G&S

9. Basic Economic Concepts
Needs – food, shelter, clothing (basic)
Wants – would ‘like’ to have
Necessary wants – winter coat, snow boots
Optional wants – mink coat, UGG boots
Private wants – 1 person wants it
Public wants – “infrastructure” needs of society

10. Basic Economic Concepts
Values – things you prize or think are important
Goals – your aims or objectives

11. Basic Economic Concepts
Opportunity Costs – something given up because another choice is made; the 2nd option that wasn’t taken
Trade Off – cutting back on one option so that you can have some of another option
Choosing to box up some dinner so that you can save room for dessert

12. Why are these important when opening up a business??
Now, think about what type of business you may want to open up . . .
Will it satisfy peoples’ wants? Or needs?
Will you provide a service? Or sell goods?
Base your business choice on what you value
Base your business choice on what goals you have

13. 4 Economic Questions Every Economic System Must Face:
What G&S will be produced?
What amount of G&S will be produced?
How will the G&S be produced?
Who will use/purchase the G&S?

14. Basic Economic Concepts
Resources
Anything used to make or obtain needs or wants
Resources get pulled together to make a business “happen”

15. 4 Factors of Production AKA: Resources; Inputs to Production
The resources needed/used to produce G&S
They are the basic elements used to produce G&S
Need these in order to start/run a business

16. 4 Factors of Production Are:
Land (Natural Resources) – Earthly things
Renewable Resources: can be re-grown
Nonrenewable Resources: can only be used once (not re-grown)
Labor (Human Resources) – employees; labor force (16 yrs old & over working or seeking work
Capital Resources – equipment, tools, buildings, cash; ‘owned’ property
Entrepreneurship – Management skill needed to start & operate a business; being able to manage all of these things! Review the 3 I’s of these risk takers

17. Economic Systems Traditional Economic System – bartering
Pure Market System – little gov’t control
Command Economic System – total gov’t control
Mixed Economies (between market & command) – U.S. & European Union

18. The Free Enterprise System
Most democratic nations have this
People have rights to make decisions on:
What products they buy
Owning private property
Starting a business to compete with other businesses
Where voluntary exchange occurs
AKA: Capitalism; Market Economy

19. The Free Enterprise System
A Market Economy is when we have voluntary exchange
Markets are where the exchanges are happening

20. Profit Motive & Competition
Making money is the primary incentive of a market economy/free enterprise
Competition helps consumers:
Can get a better quality product
Can get lower prices
Can get a wide variety of products
Competition forces companies to improve quality & become more efficient

21. Supply & Demand S&D help us understand prices of goods
S&D interact to determine how much of a product should be produced based on how much the consumer is demanding it

22. Laws
Law of Supply – sellers want to sell (or supply) products to consumers at the highest possible price
Law of Demand – consumers want to purchase products at the lowest price possible

23. Theories of Supply & Demand
If there is a heavy demand for a product but there is a short supply of it, prices will INCREASE. Thus, demand comes down, expanding supply
If there is a heavy supply for a product but there is a low demand for it, prices will DECREASE. Thus, demand starts to increase & lower supply
Prices tend to stabilize at the EQUILIBRIUM PRICE – where supply = demand

24. Scarcity It’s a problem that all societies must face
Not enough products available for our demand for them (demand > supply)
Our resources are limited & our wants are unlimited
Must have OPPORTUNITY COSTS – give up 1 thing in order to get something else

25. 3 Market Structures
Perfect Competition – hardly exist; when identical products exist; prices aren’t affected by any particular buyer/seller
Monopoly – differentiated products; tries to dominate a small portion of the market; 1 seller of a particular commodity
Oligopoly – several large companies sell the same product/commodity

26. Economic Indicators
Gov’t looks at these to determine the overall health of our nation:
Employment Rate
Consumer Confidence
Gross Domestic Product (GDP) – the total market VALUES of G&S produced in a nation in a given year
The Federal Reserve is involved in controlling the economy by regulating the money supply via interest rates!!

27. Business Cycles
Recession – a period of decline, spending falls, demand for products falls, production of G&S slows down, layoffs occur
Depression – the lowest point a cycle can reach, high unemployment, money spent on needs is limited, production almost stops, businesses close down
Recovery – people start to find jobs & spend money on G&S
Prosperity – low unemployment rats, demand for G&S is at it’s highest point

28. Business Cycles, cont. INFLATION:
Occurs when people are spending money & are confident in the economy.
Suppliers raise prices on G&S
Prices are increasing faster than the increase in people’s paychecks!
Usually occurs during a recovery period

29. Facts About Business Failures
Business Failure – Hurts creditors as the company files Chapter 7 bankruptcy & shuts down
Discontinuance – Still is operating, but under a different name; doesn’t hurt creditors as they “reorganize” themselves; could be a Chapter 11 or 13 bankruptcy

30. Circular Flow
Copy the diagram provided by the teacher:

31. THE END!