ENTREPRENEURSHIP

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CHAPTER 5

• ENTREPRENEURSHIP

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Rewards and Challenges of Entrepreneurship

• An entrepreneur is a person who recognizes a
  business opportunity and organizes, manages, and
  assumes the risks of starting and operating a
  business. Entrepreneurship is the process of
  recognizing an opportunity, testing it in the
  market, and gathering the resources necessary to
  go into business.
• A venture is a new business undertaking that
  involves risks.

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12 Characteristics of Entrepreneurs

• Persistent
• Risk-taking
• Self-confident
• Restless
• Goal-oriented
• Action-oriented
• Responsible
• Self-demanding
• Creative
• Independent
• Inquisitive
• Enthusiastic

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Small Businesses

• Small business is an independently owned business
  that usually has the owner as its manager.
• A small business serves a limited geographic area
  and employs fewer than 500 people.

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Internet Businesses

• Virtual Business
• Dot-com company is a business that operates on
  the internet.
• According to American City Business Journals,
  small businesses that use the internet have grown
  more than 45 percent faster than those that do
  not.

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Rewards of Entrepreneurship

• Being the Boss
• Ability to be in charge (Main Reason)
• Entrepreneurs do not have to consult with others
  before making a decision.
• Doing what you Enjoy
• Having the opportunity to be Creative
• Entrepreneurs make the procedure that everyone
  else follows. Daring or creative ideas.
• Building an Enterprise
• Many successful entrepreneurs work in a related
  business before starting their own business.
• They must research before starting.
• Other Reasons
• Make their own schedule.

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Sole proprietorship vs. Partnership vs.
Corporation

• Sole proprietorships are owned and operated by
  one person.
• Do not share their companys income and expenses,
  profits or loses.
• All responsibilities and profits and benefits.
• Partnerships are owned and ran by two or more
  people.
• Corporations are run by a chief executive
  officer, who answers to a board.

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Challenges of Entrepreneurship

• Getting Funds to Start the Business
• Most people must borrow money or finance the
  money to get started. (Go in debt).
• Difficult to get loans-fear of business
  succeeding or not, and ability to repay the loan.
• Being Fully Responsible for the Business
• Must make sure that
• Floors swept, bills paid, employees hired, make
  repairs, handle financial records, train
  employees, etc.
• Other Challenges
• Feeling alone
• Making right decisions
• Work long hours
• Uncertain level of income
• 4 out of 5 small businesses fail in the first
  five years of existence. Mostly due to poor
  financial planning and management, and not being
  able to adapt to change.

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Small Businesses Facts

• More than 99 of the US firms are small
  businesses.
• Small businesses employ more than 50 of the
  workforce in the US.
• Majority are one person operations.
• Estimate 2/3 of all new jobs are generated by
  small businesses.
• Virtual businesses continues to increase.

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5.2 The Business Plan

• Business Plan is a written description of a new
  business venture that describes ALL aspects of
  the business. It is used by potential investors
  and financing agencies that new entrepreneurs go
  to for start-up funds.

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Checklist for Starting a Business

• What will I produce?
• Who are my main competitors?
• Why is my product or service needed?
• How much will my product or service cost to
  produce?
• How many people will I need to run the business?
• What physical facilities will I need?
• What licenses, permits, or other legal documents
  do I need?
• How much money will I need to get started?

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16 Essential Parts of a Business Plan

• Executive Summary
• Management Team Plan
• Company Description
• Product and Service Plan
• Vision and Mission Statements
• Industry Overview
• Market Analysis
• Competitive Analysis
• Marketing Plan
• Operational Plan
• Organizational Plan
• Financial Plan
• Growth Plan
• Contingency Plan
• Cover Page, Title Page, Table of Contents, and
  Supporting Documents

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Executive Summary

• Brief account of key points.
• Not more than 2 pages.
• Most important information from each section.
• Should persuade the reader that the business will
  succeed.
• Evidence gathered through market research.

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Management Team Plan

• Your qualifications.
• Description of team capabilities.
• How you will fill gaps in expertise.
• Hire consultants
• Form partnerships
• Advisory Boards

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Company Description

• Outline of the business.
• Size, scope, and type of business.
• Why the business will succeed??

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Product and Service Plan

• Description of the product or service you want to
  offer.
• Nature of the business should be clear.
• Unique features of the product.
• Spin-offs are additional products that may be
  offered when the business gets established.

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Vision and Mission Statements

• Guiding principles by which a business functions.
• Vision Statement-the scope and purpose of a
  company, and it beliefs and values.
• Mission Statement-specific aspirations of a
  company, the major goals.

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Industry Overview

• Present your research.
• Discuss trends and growth within the industry.
• (Industry is the companies that provide similar,
  complimentary, or different products)

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Market Analysis

• Research about your customer profile.
• Overall marketing and sales strategies.
• Analyze your customers and the competition.
• Target market information-geographics, economics,
  and demographics.

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Competitive Analysis

• How the business has an advantage over its
  competitors.

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Marketing Plan

• How a company makes its customers aware of it
  products or services.
• Market niche, pricing, company image, marketing
  tactics, media plan, and marketing budget.

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Operational Plan

• Production and delivery of the product or service.

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Organizational Plan

• People who will run the firm as well as
  managements philosophy.
• Form of business organization-proprietorship or
  corporation, etc.

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Financial Plan

• Forecast for the business.
• Data
• Proof that the business will be financially
  healthy.

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Growth Plan

• How the business will expand in the future.

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Contingency Plan

• Likely risks to the business.
• Lower than expected sales.
• Emergencies.
• Ways to minimize risks.

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Cover Page, Title Page, Table of Contents, and
Supporting Documents

• Companys Name
• Address
• Phone Number
• Website
• Email
• Logo
• The date the plan was submitted
• Name of the preparer