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Understanding business 10th chapter 6 entrepreneurship and starting a small business

Chapter 06

Entrepreneurship and Starting

*

a
Small Business


The Age of the Entrepreneur

WHAT is ENTREPRENEURSHIP?



Entrepreneurship -- Accepting the risk of
starting and running a business.

6-2



You’re NEVER too YOUNG nor
too OLD to be an ENTREPRENEUR!
Reasons to start your business right NOW!

1. Being younger:
a.

You don’t have a mortgage or kids to take care of. You can survive on little
funds and work long hours. No disruption to your career path. It hasn’t started
yet! Use of your alma mater for resources.

2. Being older:
a.

Have greater experience and more financial resources. Use of established
networking peers and business contacts.

6-3


Why People

Take the

Entrepreneurial Challenge

WHY TAKE the RISK?
LG1



Opportunity



Profit




Independence



Challenge

6-4


Who Starts New Businesses?

AGE AT START-UP

55+

18 - 24

8%

25 - 34

71%

35 - 44

13%

45 - 54

6%
2%

6-7


WHAT DOES IT TAKE to be an ENTREPRENEUR?



Self-directed



Self-nurturing



Action-oriented



Highly energetic



Tolerant of uncertainty

6-8


Why People

Take the

Entrepreneurial Challenge

FIVE STEPS to STARTING YOUR BUSINESS while in
SCHOOL

LG1

1.

Find a problem or need.

2.

Zero in on specifics.

3.

Do research on campus, test products with
fellow students.

4.

Move forward with your ideas. Don’t wait!

5.

Sacrifice.

6-9


Turning Your Passion and
Problems into Opportunities

An IDEA is a
LG1

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.

6-10


Entrepreneurial Teams

ENTREPRENEURIAL TEAMS
LG1



Entrepreneurial team -- A group of experienced people
from different areas of business who join to form a
managerial team with the skills to develop, make and
market a new product.



An entrepreneurial team (Steve Jobs, Steve Wozniak
and Mike Markkula) were key to Apple’s success.

6-11


Micropreneurs
and Home-Based Businesses

MICROPRENEURS
LG1



Micropreneur -- 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.



Many micropreneurs are home-based business owners – writers, consultants, video
producers, architects, bookkeepers, etc.



Nearly 60% of home-based micropreneurs are men.

6-12


Entrepreneurship Within Firms

INTRAPRENEURS
LG1



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 damaging the pages.

6-13


Micropreneurs
and Home-Based Businesses

HOME-BASED BUSINESS
GROWTH

LG1



Computer technology has leveled the playing field.



Corporate downsizing has led many to venture our on their own.



New tax laws have loosened restrictions on
deducting expenses for home offices.

6-14


Micropreneurs
and Home-Based Businesses

BENEFITS of HOME-BASED BUSINESSES
LG1











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

6-16


Micropreneurs
and Home-Based Businesses

DOWNSIDES of HOME-BASED BUSINESSES
LG1



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



Homeowner’s insurance may not cover business claims – need for Errors and Omissions
Insurance
6-17


Micropreneurs
and Home-Based Businesses

LG1

THINK YOU’RE READY
to WORK from HOME?
Yes?

No?

If I don’t know the answer, I can figure it out.
I’m hardworking, self-directed and disciplined.
I’m organized and can multitask.
I don’t mind working long hours or weekends.
I regularly set goals and measure progress.
I’m happy being alone.
I’m an excellent communicator.
I can create relationships with people I’ve never met.
I’m productive on my own.
My family and friends don’t expect me to be available when I’m working at home.
6-18


Web-Based Businesses

AFFILIATE MARKETING
LG1



Affiliate Marketing -- An Internet-based marketing strategy in which a business rewards
individuals or other businesses for each visitor or customer the affiliate sends to its website.

6-20


Web-Based Businesses

BOOSTING YOUR BUSINESS’S
ONLINE PRESENCE

LG1



Establish an identity.



Be easy to find.



Steal good ideas and make them your own.



Look for additional opportunities.

Photo Courtesy of: Marc Wathieu



Remember other forms of marketing.



Be friendly and help others!
6-21


Encouraging Entrepreneurship:
What Government Can Do

GOVERNMENT and ENTREPRENEURSHIP
LG1



Immigration Act passed in 1990 created a category of “investor visas” that encourage
entrepreneurs to come to the U.S.



Enterprise Zones -- Specific geographic areas to which governments attract private
business investment by offering lower taxes and other government support.



Incubators -- Offer new businesses low-cost offices with basic services.

6-22


Progress Assessment

PROGRESS ASSESSMENT



Why are people willing to take the risks of entrepreneurship?



What are the advantages of entrepreneurial teams?



How do micropreneurs differ from other entrepreneurs?



What are some opportunities and risks of web-based businesses?

6-23


Small Versus
Big Business

What is a: SMALL BUSINESS

LG2

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 (less employees, less sales, not a
franchise, and may only be a single store front).

6-25


Importance of Small

ADVANTAGES of SMALL OVER

Business

LG2

BIG BUSINESS

• Personalized Service
• Personal Contact
• Flexibility
• Ability to respond
quickly to
opportunities

• Lower Costs
6-27


SMALL BUSINESS DISADVANTAGES

• Limited Experience
• Long Hours
• Insufficient Capital
• High Failure Rate

6-28


st
1 Year Hours Worked per Week
by Entrepreneurs
1 - 39 hours

8%

40 - 49 hours

15%

50 - 59 hours

23%

60 - 69 hours

28%

70 - 79 hours

13%

80 + hours

12%

6-29


Small Business Success &
Failure

BUSINESS FAILURES are LOWER THAN REPORTED BECAUSE…
LG2



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.”

6-31


Learning About Small Business
Operations

LEARNING ABOUT
SMALL BUSINESS

LG3



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.

6-33


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