1. ENTREPRENEURSHIP
Chapter 5

2. OBJECTIVES
Describe an entrepreneurship and a small
business.
 List the advantages and disadvantages of
entrepreneurship.
 Recognize the advantages and disadvantages of a
small business.
 Explain why small businesses may fail.
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3. TEST
Do you have what it takes to be an entrepreneur?
 TEST
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4. ENTREPRENEUR

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business started by someone who notices a need
for a product or service
Entrepreneurships and small businesses are the
majority of business firms
a person who:
recognizes a business opportunity
 organizes, manages, and assumes the risks of a
business enterprise, with the intent of increasing the
market value of the business.


5. SUCCESSFUL ENTREPRENEURS
Desire achievement
 Are enthusiastic
 Are determined
 Recognize opportunities
 Desire to earn profit
 Take risks
 Have self-confidence


6. ENTREPRENEUR
Advantages
 Satisfaction from
taking a risk and
becoming a success
 Show expertise and
skills
 Working from home
 Gain profit
Disadvantages
 Total responsibility
 Long hours
 Financial risk

Most fail because they
run out of money

7. SMALL BUSINESS ADMINISTRATION (SBA)

Site
Defines small business as
 Business where the owner is also the manager
 Fewer than 500 employees
 Employ 55 percent of workforce in US
 Generate more than half the nation’s income - 54% of
all US sales
 Principal source of new jobs – since 1990 big business
eliminated 4 million jobs, small businesses added 8
million new jobs.
 Small business sector is growing rapidly. While
corporate America has been "downsizing", the rate of
small business "start-ups" has grown, and the rate for
small business failures has declined.

8. SMALL BUSINESS
Advantages
 You’re the boss
 Offer services larger companies can’t
 Formation - easy

9. SMALL BUSINESS CON’T
Disadvantages
 Responsible for everything
 Long hours and financial risk
 Four out of five fail in first five years
 Mistake freedom for the liberty of working or not.
 Underprice/overprice goods or services
 Little or no experience

10. SMALL BUSINESS MIGHT FAIL

Effect of change


Consumers’ taste change and they don’t
Managerial skills
Finance
 Employee relations
 Production
 Customer relations

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Inadequate financial planning
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Starting with little money
Spending carelessly
Borrowing without thinking about paying back
Taxes
Insurance

11. BUSINESS PLAN
Written description of business venture
describing all aspects of business.
 Parts
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Summary
Company description
Market analysis
Management and operating plan
Products and services
Marketing plan
Funding request
Financial plan

12. QUESTIONS THAT SHOULD BE ANSWERED
IN BUSINESS PLAN
What will I produce?
 Who are my main competitors?
 Why is my product needed?
 How much will my product cost to produce?


Overhead
How many people will I need to run the business?
 What physical facilities will I need?
 What licenses, permits or other legal documents
do I need?
 How much money will I need to get started?


13. QUIZ
Give me an example of an entrepreneur.
 What is an advantage of being a small business
owner?
 What is a disadvantage of being a small business
owner?
 What might be one reason a small business fails?
Explain!
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