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Entrepreneurship

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					 An entrepreneur is
 someone who
 opens his own
 business.
 Goal oriented
 High achiever
 Risk taker
 Responsible
 Independent
 Creative
 Determined
   More than half of all
    small business are
    found in the Retail and
    Service industries.

   Studies show that most
    entrepreneurs spend
    more than 50 hours per
    week working.
   Making a living doing
    something you enjoy

   Having the opportunity to
    be creative

   Being your own boss

   Having job security
   Working long hours

   Risking your investment

   Being fully responsible for
    the success or failure of
    the business

   Having uncertain income
Marketing Review
   The four basic marketing decisions. Known as
    “The Four P’s”
     Product
     Place
     Price
     Promotion
   Focusing all marketing decisions on the
    specific group of people you want to
    reach.

   Example: toys are usually marketed
    towards children, etc.
   Target markets are identified using:
     Demographic data: age, gender, race,
      education
     Psychographic data: lifestyles, religion, etc.
     Geographic data: where they live/ place
Going Into Business
 Starting a business
  of your own
 Taking over a family
  business
 Buying a business
Ways to Finance a Business
Two methods of financial loans:
  1. Equity sources of capital
  2. Debt sources of capital
   Equity sources of capital – exchange money
    for part ownership of business.
     Example: Personal savings, friends or relatives,
      private investors (aka angels), partners, or venture
      capitalists.
     Equity = Ownership
     Personal savings is the #1 source of capital for a
      new business.
   Venture capitalists – professional investors
    who invest for a period of time then cash out
    expecting to earn 30%-50% of their
    investment.
     The main thing venture capitalists look for when
     choosing a business in which to invest is a good
     management team.
 Debt sources allow
  entrepreneurs to borrow
  money with promise to
  repay PLUS interest.
 Example: banks, trade
  credit, commercial finance
  companies, or the Small
  Business Administration
   When deciding whether to offer a business loan to a
    company a bank first considers the 5 C’s of
    Financing:
     Capacity – customer’s ability to pay in view of their
        income and obligations.
       Character – the repayment history of a person or business.
        The bank needs to believe in the character of the
        entrepreneur and the people associated with the business.
       Capital – bank’s look for businesses that don’t have too
        much debt.
       Collateral – what things of value can the bank claim if a
        business doesn’t repay the loan.
       Conditions – business environment, potential for growth,
        amount of competition, location, form of ownership, etc.
   Trade Credit – when a vendor allows a
    business to pay for merchandise within a
    certain amount of time.
   Small Business Association (SBC) –
    independent federal agency that provides
    entrepreneurs with financial assistance,
    management counceling and training.
   Commercial Finance Companies – an
    alternative to banks
     Give loans to higher risk cases than banks
     Charge more than banks for the money that they
     lend to a business (higher interest)
Financial Terms to Know
 Fiscal Year – the 12 month
  financial period in which a
  business operates.
 Cash Flow Statement –
  financial statement that
  describes the flow of cash into
  and out of a business.
 Stock – certificates indicating
  the amount of equity
  (ownership) each investor has
  in a business.
 Balance Sheet – shows how
  much a business is worth at
  any given time.
 Bank Statement – monthly
  record of checks that were
  written from and deposits that
  were made into a certain
  account.
   Pro forma – financial worksheets created for
    a business plan based on projected figures.
   Profit/Loss Statement (aka Income
    Statement) – a comparison of revenues and
    expenses over a specific period of time
    (monthly, quarterly, or annually) to see if a
    business had made a profit.
Considerations of a New Business
 Economic Base – the major source of income for
  the community
 Trade Area – the region or section of the
  community from which you plan to draw your
  customers
     Example: internet, neighborhood shopping areas,
      shopping centers, central shopping districts
   Financial Incentives – tax breaks, business grants,
    low interest loans, and business assistance
    programs that may be offered to new businesses in
    a particular community
   Demographic Info. – population, per capita
    income, and educational level of the community
    are examples of demographic info. that should be
    considered before opening a new business.
 How many employees do I plan to employ?
 What skills/qualifications are needed by my
  employees?
 What skills/qualifications does the labor pool
  possess?
 Labor Supply – number of people available to
  work
 Competition – stores
  that vie for the same
  consumer dollar that
  your business wants
 Direct Competitors –
  stores that sell similar
  products
   Number of direct competitors
   Size of competing businesses
   How your business will compete with its
    competition
Promoting Your
Small Business
 Advertising
 Publicity
 Sales Promotion
 Personal Selling
 Two Types of Advertising:
1. Print Media
2. Broadcast Media
Print Media – newspapers,
 magazines, direct mail,
 outdoor ads, anything that is
 printed
 ▪ Newspaper ads are priced
   according to use of color, run
   date, column inches (size)
Broadcast Media – television
 and radio
 ▪ Most expensive time to
   advertise on TV is “Prime
   Time”, 7 – 11 p.m.
 ▪ Most expensive time to
   advertise on radio is early in
   the morning and late
   afternoon
   Cooperative Advertising – an
    arrangement made between a
    manufacturer and a business to share
    advertising costs.
   Factors to consider when determining an
    advertising budget for a business are:
     Grand opening costs
     Advertising rates
     Agency fees
     Cost of promotional pieces
 When choosing the mix for your
 business, it is important to keep in
 mind:
  Target market
  Promotional channels
  Cost
 Pre-opening Plan – used before a business opens
  to establish a positive image and bring in
  customers the first day
 On-going Plan – used to maintain and build sales
  for a business

				
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posted:10/6/2012
language:English
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