Entrepreneurship: A business of your own

1. Entrepreneurship: A business of your own

2. Vocabulary • Entrepreneur: a person who organizes and manages a business • Entrepreneurship: the organization and management of a business • Franchise: the right to market another company’s product or service • Small Business Administration (SBA): the prime source of information for would-be entrepreneurs

3. Vocabulary • Fraud: the act of deceiving or tricking • Commission: a percentage of sales paid to a salesperson • Zoning laws: regulate what types of business activities can be performed in certain areas • License: a certificate showing that you have permission to practice your occupation

4. Vocabulary • Fixed expenses: Bills that must be paid regularly in set amounts • Flexible expenses: vary from month to month • Assets: items you own • Liabilities: debts you owe

5. Vocabulary • Bookkeeping: Recording of income and expenses • Accounting: Analysis of the data you’ve recorded • Receipts: record of all money collected • Profit ratio: percentage of receipts that are profit • Break-even point: when income equals expenses

6. Advantages You are your own boss Freedom to make your own decisions You get to keep all profits your company earns Disadvantages As a business owner, you take on all responsibilities Many extra hours of work (at least 60 hrs per week) Emotional strain Entrepreneurship

7. Franchise • Purchasing a franchise has several advantages. It allows the entrepreneur to buy a business with a proven track record of success. • As a franchise owner, you would also receive support from the franchiser

8. Franchise • Buying a franchise also has some disadvantages. • You need a lot of money for the initial investment. You also may have to pay ongoing fees to retain the right to use the company’s name • You may be required to follow company guidelines instead of your own.

9. Franchise Some popular franchises are: • Subway • McDonalds • Taco Bell • KFC • Jackson-Hewitt Tax Service • TCBY treats • Wendy’s

10. Buying an existing business • Another opportunity open to some entrepreneurs is buying a business that is already existing • Buying an established business can eliminate much of the work and expense of starting a business.

11. US Small Business Administration (SBA) • Established 1953 • Provides financial, technical, and management assistance to help start, run, and enlarge a business • www.sbaonline.sba.gov

12. Planning your own business What does it take to succeed? • Optimism – you must believe in yourself & your business. • Self-starter – you must have initiative

13. Planning your business • Choosing a business – what is the best business for you? • Choosing a location – the importance fo location depends on the kind of business you have • Pricing your product or service – are you charging enough for your products or services?

14. Legal and Financial Issues • A number of legal and financial issues will affect you if you become an entrepreneur. • Zoning and licensing requirements must be met • Choose your business structure

15. Business Structure • The three basic business structures- • Proprietorships • Partnerships • Corporations

16. Proprietorship • Simplest type & most costly ($$$$) • You will be the sole owner • Gives you total freedom • Gives you total responsibility

17. Partnership • Share the business responsibility • You can borrow more money with two people • It can be difficult if you don’t get along with partner • The business could be jeopardized

18. Corporation • Easier time raising money • Have less risk to your personal assets • Costs more to set up • Higher taxes

19. Obtaining Financing • Use saved money (seed $) to finance your business • Apply for a loan • Use outside investors

20. Applying for a loan • Business plan • Record of fixed and flexible expenses • Record of assets and liabilities

21. Comparing Annual Profits • Year 1 Income - $100,000 Expense - $80,000 Profit $20,000 Profit ratio = 20,000/100,000 = 20% • Year 2 Income - $120,000 Expense - $98,000 Profit $22,000 Profit ratio = 22,000/120,000 = 22%

22. Professional Assistance A lawyer can be one of your most valuable resources when starting a business An accountant can help analyze his books and give advice about increasing profits An insurance agent is another professional whose advice you should seek, protect your business against theft, fire, etc.

23. Working from home Advantages Disadvantages Family concerns may disrupt your business Neighbors may object about a business next to their home Clients may feel its unprofessional Loneliness & isolation can be a possible hazard • Don’t have to pay rent • Can handle home responsibilities during the day • Certain tax advantages

24. FACTS IN REVIEW • Name 3 sources of information about entrepreneurship. • What advantages does purchasing a franchise offer an entrepreneur? • List 4 personal factors an entrepreneur should possess to succeed.

25. FACTS IN REVIEW • What services are provided by the Small Business Administration (SBA)? • Name 2 advantages and disadvantages of working from home. • Which business structure is most costly for an entrepreneur to establish?

26. FACTS IN REVIEW • What is the purpose of a business license? • Name 3 sources from which an entrepreneur might obtain financing to start a business • How is profit ratio figured? • Name 3 professionals that can assist an entrepreneur with the details fo starting and operating a business.