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					Entrepreneurship
            and

         Business
         Ownership
          Entrepreneurship
    Entrepreneurship Quiz




       Do You have an entrepreneurial spirit?
       Take the Quizzes to see if you have what it takes to
        become an entrepreneur!



2                        Entrepreneurship          Business Ownership
    DO YOU HAVE WHAT IT TAKES?

       Personal Values
       Character
       Work Ethic
       Desire to Success
       Control
       Managerial Abilities
       Time Requirements
       Tax Liability


3                        Entrepreneurship   Business Ownership
    Entrepreneur

       A person who assumes the risk of starting and
        operating a business for the purpose of making
        a profit
        –   Not all businesses are profitable at first.
        –   Most business lose money the 1st 3 years.
        –   About 50% of all new businesses fail within 5 years
                Financial Reasons
                Bad Management



4                            Entrepreneurship       Business Ownership
    Characteristics of an Entrepreneur

       Entrepreneurs are not               Some Common Characteristics
        “molded” individuals.                  =================
                                            Desire to be self employed
       Any Age
                                            Dedicated, Hard working
       Any Idea
                                            Self-starter, Motivated
       Any Dream                           Creative and intuitive
                                            Problem Solving Abilities
                                            Skilled in related field
                                            Decision-Making Ability
                                            Leadership



5                       Entrepreneurship                   Business Ownership
    Entrepreneurship

            Advantages                       Disadvantages
       Autonomy                          Responsibility
       Interest                          Long-Irregular Hours
       Creativity                        Risky
       Satisfaction                      Uncertain Income
       Use of Skills
       Profit



6                       Entrepreneurship                Business Ownership
    The first decisions

       Type of Business
        –   Sole Proprietorship or Partnership
        –   Corporation
       The size of the business
       Tax and labor laws (Legal Aspects)
       The capital and financial needs
       Are you ready to take the risk?

7                         Entrepreneurship       Business Ownership
    Small Business

       Independently owned and managed business
        that serves a limited geographic area and is
        not dominated in its industry.
        –   Less than 500 employees.




8                        Entrepreneurship   Business Ownership
    Small Business / Entrepreneurial
    Statistics

       2/3 of new jobs are created by small businesses
       Employ about 60% of the workforce
       Contribute about 40% of all sales
       Learn basic job skills in small business
       Approximately 6 million small businesses in US
       90% of business have fewer than 20 employees
       9% have between 21-500
       1% have more than 500 employees


9                        Entrepreneurship         Business Ownership
     Starting A Small Business

     1.   Purchase an existing
          business

     2.   Family Business

     3.   Franchises

     4.   Start Your Own


10                          Entrepreneurship   Business Ownership
     Purchasing A Business

            Advantages                        Disadvantages
        Customers, Suppliers,             Bad Businesses are for
         Procedures                         sale
        Train New owners                  Serious problems
        Prior Records                     Capital
        Financing is easier




11                       Entrepreneurship               Business Ownership
     Family Business

            Advantages                     Disadvantages
        Pride                          Family Decision Making
        Longevity                      Good Employees
        Assistance                     Family Politics




12                    Entrepreneurship               Business Ownership
     Starting A Franchise

        Franchise
         –   A legal agreement that gives an individual the right
             to market a company’s products or services .
         –   Franchisee
                 person who purchases a franchise agreement
         –   Franchiser
                 Person who offers the franchise agreement.




13                             Entrepreneurship                Business Ownership
     Costs of A Franchise



      Franchise Fee                 Advertising Fee



      Start-up Costs                 Royalty Fees

14               Entrepreneurship            Business Ownership
     Purchasing A Business

            Advantages                       Disadvantages
        Established products             Cost
        Management assistance            Less Freedom
        Equipment/Supplies are           Inter-relations with other
         less expensive                    franchises
        Guaranteed consistency           Franchiser is in control




15                      Entrepreneurship                 Business Ownership
     Business Start-ups

            Advantages                         Disadvantages
        Make decisions                     Risks
        Independence                       Decisions
        Satisfaction                       Costs
        Start Small
        Home-Based




16                        Entrepreneurship               Business Ownership
     Types of Ownership


           Sole
                                           Partnership
       Proprietorship



                        Corporation




17                      Entrepreneurship             Business Ownership
     Sole Proprietorship

        A business owned and managed by one individual
         –   PROPRIETOR – Owner/Manager of a Sole Proprietorship
        Oldest and most common form of business
        Personal wealth and borrowed money is needed.
         (Family)
        Success is related to Managerial Ability
        71% of all Businesses in the US are Sole
         Proprietorships


18                         Entrepreneurship          Business Ownership
     Advantages and Disadvantages of
     a Sole Proprietorship
        ADVANTAGES                                DISADVANTAGES
         –   Be your own boss                       –   Unlimited liability
         –   Ease of starting                       –   Raising capital
         –   Control                                –   Limited managerial ability
         –   Sole Participation in Profits                  Planning, Organizing,
             and Loss                                        Controlling, Marketing,
         –   Owners abilities (Effort)                       Financial , Motivation, and
         –   Tax breaks                                      Customer Relations.
         –   Secrecy                                –   Lack of stability
         –   Ease of dissolving                             Death, illness, retire,
         –   Personal Contacts                               bankruptcy
         –   Quick Decisions Making                 –   Time (60-80/hrs/wk)
         –   Freedom of Red Tape                    –   Employing high skilled workers

19                               Entrepreneurship                            Business Ownership
     Businesses Suited for
     Proprietorships

        Personal Services                       Proprietorships Are
         –   Dentist, Accountant,
             Painter, Carpenter, etc.
                                            1. Manageable by one person.
                                            2. Minimum Capital Required
        Sells Merchandise or
         services on a small scale
         –   Restaurants, Gas
             Stations, Flower Shops,
             etc.



20                            Entrepreneurship              Business Ownership
     Partnerships
                                      A business owned by 2 or
                                       more people
                                      Similar to a Sole
                                       Proprietorship
                                      1.4 Million + in the US
                                      Must have one General
                                       Partner
                                      Need a Partnership
                                       Agreement
                                      Finances are divided between
                                       partners



21              Entrepreneurship                     Business Ownership
     Advantages and disadvantages
     of a partnership
        ADVANTAGES                                 DISADVANTAGES
         –   More Capital/Credit                      – Unlimited Liability
         –   Combined Managerial skills               – Potential disagreements
         –   Ease of starting                         – Investment withdrawal
         –   Clear legal status                         difficulty
         –   Tax advantages                                  Frozen investment
         –   Contribution of Goodwill                –   Limited capital availability
         –   Concerned with management               –   Instability
         –   Limited Competition                     –   Uncertain Life
         –   Operating Economies                     –   Bound by Contract
                                                     –   Termination Difficulties


22                            Entrepreneurship                        Business Ownership
     Businesses Suited for Partnerships

        Same as Proprietorships
         –   Larger Scale
         –   Multiple products or
             services
         –   Multiple locations
         –   Longer working days




23                           Entrepreneurship   Business Ownership
     Corporations

        A business that is a legal entity separate from
         its owners.
         –   Corporations are invisible and Intangible
         –   Has legal rights of individuals
         –   Start corporations with a Charter
        Managed by Board of Directors
        Owned by Stock Holders (Share Holders)
        Share Holders receive a Dividend

24                         Entrepreneurship              Business Ownership
     Forming a Corporation
                                      Obtain Charter
                                       –   A states written
                                           agreement giving a
                                           corporation the right to
                                           operate as a business
                                       –   Incorporates: Individuals
                                           forming a corporation
                                      Domestic Corporation
                                       –   Operates in “birth” State
                                      Foreign Corporation
                                       –   Operates outside of “birth”
                                           State

25              Entrepreneurship                       Business Ownership
     Advantages and Disadvantages of
     Corporations
        ADVANTAGES                               DISADVANTAGES
          – Limited Liability                       – Difficulty and expensive to
          – Skilled Management                        start
            Team                                    – Lack of control
          – Transfer of ownership                   – Multiple taxation
          – Greater capital base                    – Government Involvement
          – Stability                               – Lack of Secrecy
          – Legal entity status                     – Lack of personal Interest
                                                    – Credit limitations




26                          Entrepreneurship                      Business Ownership
     S Corporations or LLC

        Also Called a Subchapter S
        Advantages of a corporation and proprietorship
        Less than 35 share holders
        Business is not taxes – Share holders are




27                     Entrepreneurship      Business Ownership
     Characteristics of Business
     Ownership
                         Proprietorship   Partnership   Corporation     S-Corporation

     Easy to Start
                                              
     Decision by
     one Person                               
     Low Initial
     Costs                                    
     Limited Liability
                                                                             
     Limited Gov’t
     Regulations                              
     Raising Capital
                                                                             
     Double
     Taxation                                                                
28                                 Entrepreneurship                   Business Ownership
     To Start A Business

        Idea
        Business Plan
         –   Written document describing your business.
         –   Purpose
                 Explains Business Idea
                 Background and History
                 Think about all aspects of business
                 Secures Financing
                 Tool for managing your business

29                             Entrepreneurship         Business Ownership
          Business
            Plan

      Business Description
      Goals
      Product/Service Plan
      Marketing Plan
      Legal Ownership
      Management and
       Operations Plan
      Financial Plan

30                  Entrepreneurship   Business Ownership
31   Entrepreneurship   Business Ownership

				
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