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WHAT is ENTREPRENEURSHIP? • Entrepreneurship -- Accepting the risk of starting and running a business. YOU’RE NEVER TOO YOUNG to be an ENTREPRENEUR Reasons to start your business when you’re young: 1.You don’t have a mortgage or kids to take care of, yet. 2.You can survive on little funds and work long hours. 3.No disruption to your career path. It hasn’t started yet! 4.Use your friends/family as resources. YOU’RE NEVER TOO OLD to be an ENTREPRENEUR EITHER! • The highest rate of entrepreneurship activity is in the 55-64 age group! • Since 1996, older Americans have opened businesses at a higher rate than 20-34 year olds. • Older entrepreneurs have greater experience and more financial resources. Source: U.S. News and World Report, October 2010. WHY TAKE the RISK? • Opportunity • Profit • Independence • Challenge WHAT DOES IT TAKE to be an ENTREPRENEUR? • Self-directed • Self-nurturing • Action-oriented • Highly energetic • Tolerant of uncertainty An IDEA is a GOOD OPPORTUNITY IF… • It fills customers’ needs. • You have the skills and resources to start a business. • You can sell the product or service at a reasonable price and still profit. • You can get your product or service to customers before the window of opportunity closes. • You can keep the business going. MICROPRENEURS • Micropreneurs -- Entrepreneurs willing to accept the risk of starting and managing a business that remains small, lets them do the work they want to do, and offers a balanced lifestyle. • About half of U.S. micropreneurs are home- based business owners – writers, consultants, video producers, architects, bookkeepers, etc. • Nearly 60% of home-based micropreneurs are men. HOME-BASED BUSINESS GROWTH • Computer technology has leveled the playing field. • Corporate downsizing has led many to venture on their own. • Social attitudes have changed. • New tax laws have loosened restrictions on deducting expenses for home offices. BENEFITS of HOME-BASED BUSINESSES • Ability to start your business immediately • Minimal start-up capital needed • No rent or excessive set-up charges • Comfortable working conditions • Reduced wardrobe expenses • No commuting • Tax benefits • Elimination of office politics • Low risk for trial and error HOME-BASED BUSINESS ISN’T EASY • Getting new customers is difficult. • Managing your time requires self-discipline. • Work and family tasks are sometimes not separated. • Government ordinances may restrict your business. • Homeowner’s insurance may not cover business-related claims. DOWNSIDES of HOME-BASED BUSINESSES • Difficult to establish work habits • Limited support system • Isolation • Work space may be limited • Clients may be uncomfortable coming to your home • Zoning restrictions • Success is based 100% on your efforts ONLINE BUSINESS • Online sales reached $172.9 billion in 2010, 7% of all retail sales. • All retail sales were up 2.5% in 2010. However, online retail sales grew 11%. INTRAPRENEURS • Intrapreneur -- A creative person who works as an entrepreneur within a corporation. • Intrapreneurs use a company’s existing resources to launch new products for the company. • Art Fry of 3M developed Post-Its when he was trying to mark pages of his hymnal without damage. SMALL BUSINESSES • Small Business -- Independently owned and operated, not dominant in its field of operation and meets certain standards of size. • Businesses are “small” in relation to other businesses in their industries. 6-14 SMALL BUSINESS STATISTICS • There are 27.8 million small businesses in the U.S. • Of all nonfarm businesses in the U.S., almost 97% are considered small. • Small businesses account for over 50% of the GDP. • Small businesses generate 60-80% of new jobs. • About 80% of U.S. workers’ first jobs were in small business. ADVANTAGES of SMALL BUSINESS • More personal customer service. • The ability to respond quickly to opportunities. Photo Courtesy of: Elliot Brown BUSINESS FAILURES are LOWER THAN the REPORTS BECAUSE… • Owner closing a business to start another is reported as a “failure.” • Changing forms of ownership is reported as a “failure.” • Retirement is reported as a “failure.” 6-17 THEY DID WHAT? Famous Business Failures • Tommy Hilfiger – First store went bankrupt • Milton Hershey – First confectionery failed • H.J. Heinz – Company went bankrupt six years after start • Walt Disney – First film company went bankrupt • Henry Ford – First 2 car companies failed • L.L. Bean – Almost went bankrupt in first year Source: World Features Syndicate. LEARNING ABOUT SMALL BUSINESS • Learn from Others – Investigate your local colleges for classes on small business and entrepreneurship; talk to and work for successful local entrepreneurs. • Get Some Experience – Gain three years experience in the field; then start a part-time small business. • Take Over a Successful Firm – Serve as an apprentice and eventually take over once the owner steps down. MAJOR BUSINESS FUNCTIONS • Planning • Financing • Knowing customers • Managing employees • Keeping records BUSINESS PLANS • Business Plan -- A detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and owners’ qualifications. • A business plan forces potential owners to think and to be specific about what they will offer. • A business plan is mandatory for talking with bankers or investors. WRITING a BUSINESS PLAN • A good plan takes a long time to prepare. • A good executive summary catches interest and tempts potential investors to read on. • Getting the plan into the right hands is almost as important as getting the right information in it. SOURCES of CAPITAL • Personal savings • Relatives • Former employers • Banks & finance companies • Government agencies • Venture capitalists The SMALL BUSINESS ADMINISTRATION • Small Business Administration (SBA) -- A U.S. government agency that advises and assists small businesses by providing management training and financial advice. HELP PLEASE! More SBA Resources and Other Helpful Groups • Small Business Investment Companies • The Office of Innovation & Entrepreneurship • SCORE • Entrepreneurship.org Source: Inc., October 2010. The MARKET • Market -- Consumers with unsatisfied wants and needs who have both resources and willingness to buy. • Set out to fill the market’s needs by offering top quality and great service at a fair price. • One of the great advantages of small businesses is the ability to know the market and quickly adapt to market needs. MANAGING EMPLOYEES • Hiring, training and motivating employees is critical. • Employees of small companies are often more satisfied with their jobs – they feel challenged and respected. • Entrepreneurs best serve themselves and the business if they recruit and groom employees for management positions. ACCOUNTING ASSISTANCE • A good accountant can help in: - Deciding whether to buy or lease equipment. - Deciding whether to own or rent a building. - Tax planning. - Financial forecasting. - Choosing sources of financing. - Writing requests for funds. LEGAL HELP • A competent lawyer can help with: - Leases - Contracts - Partnership agreements - Protection against liabilities • Owners need outside consulting advice early in the process. • Small and medium-sized firms cannot afford to hire experts as employees. MARKETING RESEARCH • Marketing decisions need to be made long before introducing a product or opening a store. • A market research study can help you: - Determine where to locate. - Whom to select as your target market. - What is an effective strategy for reaching the market. OTHER FORMS OF HELP • A commercial loan officer can help: - Design an acceptable business plan. - Give financial advice. - Lend money. • An insurance agent can help you: - Know the risks associated with the business. - How to cover risks with insurance. - How to prevent risks with safety devices. • Service Corps of Retired Executives - More than 10,500 volunteers from industry, trade associations, and education who counsel small business at no cost. (SCORE) SMALL BUSINESS PROSPECTS ABROAD • Small- and medium-sized businesses accounted for 99% of recent export growth. • Advantages of global trade for small businesses: - Overseas buyers enjoy dealing with individuals. - Small companies can usually begin shipping much faster. - They provide a wide variety of suppliers. - They can give more personal service and attention.
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