2. Entrepreneurship and Small Business Chapter 5 pp. 68-83

3. Chapter 5 - Entrepreneurship and Small Business Slide 2 Learning Objectives After completing this chapter, you’ll be able to: 1.Describe 1.Describe an entrepreneurship and a small business. 2.List 2.List the advantages and disadvantages of entrepreneurship.

4. Chapter 5 - Entrepreneurship and Small Business Slide 3 The Ins and Outs of Entrepreneurship What is an entrepreneurship? An entrepreneurship is a business started by someone who notices a need for a product or service Entrepreneurships and small businesses make up the majority of business firms in the U.S.

5. Chapter 5 - Entrepreneurship and Small Business Slide 4 A virtual business or a dot-com company is a business that operates on the Internet Some Internet businesses are able to hire people without paying them a salary – why would they do this? The Ins and Outs of Entrepreneurship

6. Chapter 5 - Entrepreneurship and Small Business Slide 5 Online Finance DETERMINE Inc., based in San Francisco, Calif., serves as an online financial hub for businesses interestedDETERMINE Inc., in leasing or buying equipment When DETERMINE started, their first six employees worked for shares of company stock only CASE STUDY

7. Chapter 5 - Entrepreneurship and Small Business Slide 6 Entrepreneur - person who recognizes a business opportunity and organizes, manages,and assumes the risks of a business enterprise take-charge, self-directed people risk taker - someone who takes risks The Ins and Outs of Entrepreneurship

8. Chapter 5 - Entrepreneurship and Small Business Slide 7 Rate your score: 35-40 points = true entrepreneur 30-34 = willing to take risks and try something new 25 and under = you take fewer risks Where do you fall?

9. Chapter 5 - Entrepreneurship and Small Business Slide 8 Want to control destiny Want to control destiny Desire to earn profit Desire to earn profit Are enthusiastic Are enthusiastic Have self- confidence Have self- confidence Are determined Are determined Recognize opportunities Recognize opportunities Desire achievement Desire achievement Take risks Take risks Have high energy Have high energy Successful Entrepreneurs EntrepreneursSuccessful

10. Chapter 5 - Entrepreneurship and Small Business Slide 9 ???????????????????????????? What is an entrepreneurship? What is an entrepreneurship? An entrepreneurship is a business started by someone who notices a need for a product or service

11. Chapter 5 - Entrepreneurship and Small Business Slide 10 Advantages of Entrepreneurship Satisfaction from taking a risk and becoming a success (Build an enterprise) Show off expertise and skills Work from home (possibly) Gaining profit Get to be the boss Do what you enjoy Be Creative

12. Chapter 5 - Entrepreneurship and Small Business Slide 11 Disadvantages of Entrepreneurship Long hours Total responsibility for the business Financial risks What do you think the main reason is that entrepreneurships fail? They run out of money.

13. Chapter 5 - Entrepreneurship and Small Business Slide 12 ?????????????????????????? List two disadvantages of being an entrepreneur: List two disadvantages of being an entrepreneur: Total responsibility for the business Long hours Financial Risks

14. Chapter 5 - Entrepreneurship and Small Business Slide 13 Homework Tonight!! Rd. pgs. 82-87 Rd. pgs. 82-87  Review Questions on Pg. 87 (1-3)

15. Chapter 5 - Entrepreneurship and Small Business Slide 14 Learning Objectives After completing this chapter, you’ll be able to: 1.Recognize 1.Recognize the advantages and disadvantages of a small business. 2.Explain 2.Explain why small businesses may fail. 3.List the parts of a business plan

16. Chapter 5 - Entrepreneurship and Small Business Slide 15 Small Business: What You Need to Know The Small Business Administration (SBA) defines a small business as an independently owned business that usually has the owner as its manager serves a limited geographic area employs fewer than 500 people isn’t top in its industry

17. Chapter 5 - Entrepreneurship and Small Business Slide 16 Small Business: What You Need to Know Employ more than 50% of the total U.S. workforce Generate more than ½ nation’s income Are principal source of new jobs Account for 38% of jobs in high technology

18. Chapter 5 - Entrepreneurship and Small Business Slide 17 There are 25 million small businesses in the United States.

19. Chapter 5 - Entrepreneurship and Small Business Slide 18 ??????????????????????????? Tell me two of the three characteristics that are used to describe a small business. Tell me two of the three characteristics that are used to describe a small business.  Serves a limited geographic area  Employs fewer than 500 people  Isn’t tops in its industry

20. Chapter 5 - Entrepreneurship and Small Business Slide 19 Advantages of Small Business Being the boss Offering services large companies can’t Easy to put together and form disadvantages You’re 100% responsible for decisions Long hours Great financial responsibility 4/5 businesses fail in first 5 years continued…

21. Chapter 5 - Entrepreneurship and Small Business Slide 20 disadvantages of Small Business may UNDERPRICE or OVERPRICE G&S Little experience may result in closing

22. Chapter 5 - Entrepreneurship and Small Business Slide 21 1.Effect of Change Need to be flexible, or you might fail 2. Managerial Skills Needed Financing Employee relations Production Customer Relations 3 MAIN REASONS SMALL BUSINESSES FAIL

23. Chapter 5 - Entrepreneurship and Small Business Slide 22 3. Inadequate Financial Planning Failure = Starting with little $$ spending carelessly borrowing $$ without planning forgetting about taxes and insurance 3 MAIN REASONS SMALL BUSINESSES FAIL

24. Chapter 5 - Entrepreneurship and Small Business Slide 23 business plan - written description of a new business venture that describes all aspects of the business 1) Executive Summary 2) Mission Statement 3) Company description 4) Products and Services 5) Marketing Plan 6) Business Operation (Legal plan) 7) Financial Plan 8) Risk/Contingency Plan 9) Conclusion/Timeline

25. Chapter 5 - Entrepreneurship and Small Business Slide 24 QUESTIONS TO ASK What will I produce? Who are my main competitors? Why is my product needed? How much will my product cost to make? How many people will I need? What physical facilities will I need? Licenses, permits, or other legal docs? How much money will I need to start?

26. Chapter 5 - Entrepreneurship and Small Business Slide 25 ?????????????????????????? What are the advantages of owning a small business? What are the advantages of owning a small business? Being the boss Offering services large companies can’t Easy to put together and form

27. Chapter 5 - Entrepreneurship and Small Business Slide 26 Homework Review questions 2-7 Review questions 2-7 Pg. 88 Pg. 88

28. Chapter 5 - Entrepreneurship and Small Business Slide 27 http://www.entrepreneurship.com/ http://smallbusiness.yahoo.com/ http://www.commerce.state.il.us/bus/ http://www.ccedtraining.mchenry.edu/ GOOD RESOURCES

29. Chapter 5 - Entrepreneurship and Small Business Slide 28 Elements of a Business Plan 1.The summary is a one- to three-page overview of the plan. 2.The company description explains the type of company. continued Business Building Blocks

30. Chapter 5 - Entrepreneurship and Small Business Slide 29 3.Describe products or services in the products and services section. 4.The marketing plan describes your customers and your competition. 5.A legal plan points out how you will organize your company. continued Elements of a Business Plan Business Building Blocks

31. Chapter 5 - Entrepreneurship and Small Business Slide 30 6.The management plan and operating plan detail the company’s key personnel. 7.Complete a financial plan. continued Elements of a Business Plan Business Building Blocks

32. Chapter 5 - Entrepreneurship and Small Business Slide 31 Be brief and relevant. Don’t inflate the importance or possible success of your business. “Write short and be honest,” is a good rule of thumb. Tips for Writing an Effective Business Plan Business Building Blocks

33. Chapter 5 - Entrepreneurship and Small Business Slide 32 continued What makes a person an entrepreneur? What makes a company successful? continued

34. End of Chapter 5 Entrepreneurship and Small Business