ENTREPRENEURSHIP AND SMALL BUSINESS by DatingGuru

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									MODULE 8
ENTREPRENEURSHIP AND SMALL
BUSINESS

             “It’s nice to be your own
                         boss”


             • What is entrepreneurship and who
             are entrepreneurs?
             • What should we know about small
             business, and how can you start one?
ENTREPRENEURSHIP AND SMALL BUSINESS

Entrepreneurship and Entrepreneurs
MODULE GUIDE 8.1

Entrepreneurs are risk takers that spot
 and pursue opportunities.
Entrepreneurs often share similar
 personal characteristics.
Women and minority entrepreneurs are
 growing in numbers.
Social entrepreneurs seek novel
 solutions to social problems.
ENTREPRENEURSHIP AND SMALL BUSINESS

Entrepreneurship and Entrepreneurs
     Entrepreneurs
         Risk takers that spot and pursue opportunities
     Entrepreneurship
         Dynamic, risk-taking, creative, growth-oriented
          behavior.
     Necessity-based Entrepreneurship
         People starting new business because they have no
          other employment options
     Social Entrepreneurs
         Seek Novel Solutions to Social Problems
ENTREPRENEURSHIP AND ENTREPRENEURS

About Entrepreneurs
     Profile of Entrepreneurial Characteristics

         Internal locus of control Believe in control of own destiny; self-directing and
          like autonomy
         High energy level Persistent, hard working, willing to exert extraordinary efforts
          to succeed
         High need for achievement Motivated to accomplish challenging goals; thrive
          on performance feedback
         Tolerance for ambiguity Risk taker; tolerate situations with high degrees of
          uncertainty
         Self-confidence Feel competent, believe in themselves, willing to make
          decisions
         Action orientation Try to act ahead of problems; want to get things done and
          not waste time
         Self-reliance Want independence; want to be their own boss, not work for
          others
         Flexibility Willing to admit problems and errors, to change course when plans
          aren’t working
         Necessity-based entrepreneurship is when people start new ventures because
          they have few or no other employment options.
ENTREPRENEURSHIP AND ENTREPRENEURS

Minority Entrepreneurs

   Businesses owned by women create over
    27.5 million jobs for U.S. workers.
   33% of women starting firms say they
    weren’t taken seriously by prior employers.
   29% of women entrepreneurs say they
    experienced the “glass ceiling.”
   Minority-owned businesses are the fastest
    growing sector of the American economy.
ENTREPRENEURSHIP AND SMALL BUSINESS

Small Business
MODULE GUIDE 8.2


  Small businesses are mainstays of the
   economy.
  Family-owned businesses can face unique
   challenges.
  Most small businesses fail within five years.
  A small business should start with a sound
   business plan.
  There are different forms of small business
   ownership.
  There are different ways of financing a
   small business.
ENTREPRENEURSHIP AND SMALL BUSINESS

Small Business

   Small Business
      One with 500 or fewer employees, is independently
       owned and operated and does not dominate its
       industry.
   Small Business Statistics
      Employ some 52 percent of private workers
      Provide 51 percent of private-sector output
      Receive 35 percent of federal government contract
       dollars
      Provide as many as 7 out of every 10 new jobs in
       the economy
ENTREPRENEURSHIP AND SMALL BUSINESS

Small Business
  Failure Rate
     Most (60% to 80%) of small businesses fail within five years of starting.
   Common Causes of Small Business Failures
   •Lack of experience
        Not having sufficient know-how to run a business in the chosen market or area
   •Lack of expertise
        Not having expertise in the essentials of business operations, including finance,
        purchasing, selling, and production
   •Lack of strategy
        Not taking the time to craft a vision and mission, nor to formulate and properly
        implement strategy
   •Poor financial control
        Failing to track the numbers and to control business finances
   •Growing too fast
        Not taking the time to consolidate a position, fine-tune the organization, and
        systematically meet the challenges of growth
   •Insufficient commitment
        Not devoting enough time to the requirements of running a competitive business
   •Ethical failure
        Falling prey to the temptations of fraud, deception, and embezzlement
SMALL BUSINESS

Small Business Life Cycle
SMALL BUSINESS

Family Owned Business

  Family Business
     A business that is owned and operated by a
      family.
  Family Business Feud
     A disagreement amongst family members as
      to how the business should be run or who
      should manage it.
SMALL BUSINESS

Types of Small Businesses
   Sole Proprietorship
      An individual or married couple pursuing business for a profit.
   Partnership
      Two or more people agree to contribute resources to start and
       operate a business together.
   General Partnership
      The owners share management responsibilities.
   Limited Partnership
      General partner manages the business
      Limited partners do not participate in day to day operations
      Limited partners share profit but losses are limited to the
       amount of their investment
SMALL BUSINESS

Types of Small Businesses

  Corporation
     A legal entity that exists separately from its
      owners
  Limited Liability Company (LLC)
     A combination of sole proprietorship,
      partnership, and corporation.
        Protects owners against personal loss other than
         what is invested in the company
        Treated as a proprietorship or partnership for tax
         purposes
SMALL BUSINESS

Financing Small Businesses

   Debt Financing
      involves borrowing money from another person, a
       bank, or a financial institution.
   Equity Financing
      involves exchanging ownership shares for outside
       investment monies.
   Venture Capitalists
      Involves making large investments in new ventures
       in return for an equity stake in the business.
SMALL BUSINESS

Financing Small Businesses

  Angel Investor
     A wealthy individual willing to invest in return
      for equity in a new venture.
  Initial Public Offering (IPO)
     An initial selling of shares of stock to the
      public at large.
Management Tips

  Challenging the myths about entrepreneurs
   • Entrepreneurs are born, not made.
      Not true! Talent gained and enhanced by experience is a foundation for
      entrepreneurial success.
   • Entrepreneurs are gamblers.
      Not true! Entrepreneurs are risk takers, but the risks are informed and
      calculated.
   • Money is the key to entrepreneurial success.
      Not true! Money is no guarantee of success. There’s a lot more to it than
      that; many entrepreneurs start with very little.
   • You have to be young to be an entrepreneur.
      Not true! Age is no barrier to entrepreneurship; with age often come
      experience, contacts, and other useful resources.
   • You have to have a degree in business to be an entrepreneur.
      Not true! But, it helps to study and understand business fundamentals.

								
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