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NEXT TOPIC. ENTREPRENEURISM Leaders of the parade. What is your entrepreneurial profile (EP). FIND OUT Complete the self-assessment for chapter 18 page SB10. Chapter 18. What is entrepreneurship and who are entrepreneurs? What defines a successful entrepreneur?

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  1. NEXT TOPIC ENTREPRENEURISM Leaders of the parade What is your entrepreneurial profile (EP) FIND OUT Complete the self-assessment for chapter 18 page SB10 r.l. sharman lone star college

  2. Chapter 18 r.l. sharman lone star college What is entrepreneurship and who are entrepreneurs? What defines a successful entrepreneur? What should we know about small businesses and how to start one? Some advice on starting/growing a business

  3. Entrepreneurship r.l. sharman lone star college Entrepreneurs are risk takers who pursue opportunities Entrepreneurs are gregarious Entrepreneurs have similar personality traits Women and minority entrepreneurs are growing in numbers Social entrepreneurs seek novel solutions to pressing social problems

  4. Large “bureaucratic” companies seek INTRAPRENEURS Employees who demonstrate ENTREPRENEUR characteristics --- a step ahead of the rest with new or novel ideas! r.l. sharman lone star college

  5. Who is The Entrepreneur? Thomas Edison Michael Dell, Steve Jobs P. T. Barnum TNTM r.l. sharman lone star college

  6. ENTREPRENEURS FACTOIDS ONE HALF OF COLLEGE SENIOR MEN, AND ONE THIRD OF COLLEGE SENIOR WOMEN WANT TO START THEIR OWN BUSINESS ONE THIRD OF THE 6 MILLION STARTING THEIR OWN BUSINESS ARE UNDER 30 YEARS OLD. (71% ARE 25-34) COLLEGES ARE OFFERING MORE COURSES ON ENTREPRENEURISM 92% OF THOSE STARTING THEIR OWN BUSINESS WORK MORE THAN 40 HOURS PER WEEK – MORE LIKELY 60-80 75% OF JOB CREATION (a current political issue) IS IN SMALL BUSINESS SOMEONE WHO ASSUMES THE RISK OF STARTING A BUSINESS r.l. sharman lone star college

  7. WHY PEOPLE START THEIR OWN BUSINESS • WORK AND LIVE WHERE THEY WANT • ENJOY A CHALLENGE • LEAVE A LEGACY • BE MY OWN BOSS • BECAUSE I CAN AT WHAT AGE ?? 18-24 8% 25-34 71% 35-44 13% 45-54 6% OVER 55 2% • REASONS FOR GROWTH IN SB • TECHNOLOGY • DOWNSIZING • TAX ADVANTAGES r.l. sharman lone star college

  8. ENTREPRENEURSHIPEntrepreneur Characteristics How would you rank yourself with these characteristics? Complete the self-assessment for chapter 18 page SB10 as a start. r.l. sharman lone star college Many of these people have most of the following

  9. STARTING YOUR OWN BUSINESS That’s what entrepreneurism is all about! Raises three basic questions r.l. sharman lone star college

  10. WHAT KIND OF A BUSINESS SHOULD I START? • One you know something about! • One that has a recognizable need. • Capitalize on an idea that fills an unfilled need in the marketplace. • One where you can do things cheaper or better than the current establishments. • One that offers a buy-out to a bigger fish! start small butthinkbig! r.l. sharman lone star college

  11. SMALL BUSINESSForms of Ownership NOTE: Over 70% of businesses in the US are sole proprietors. • Sole Proprietorship • An individual or married couple pursuing business for a profit.

  12. SMALL BUSINESSOther Forms of Ownership • Partnership • Two or more people agree to contribute resources to start and operate a business together.

  13. SMALL BUSINESSMore Forms of Ownership • Corporation • A legal entity that exists separately from its owners. • Limited Liability Company (LLC) • A combination of sole proprietorship, partnership, and corporation. • Protects owners against personal loss other than what is invested in the company • Treated as a proprietorship or partnership for tax purposes

  14. Do you have what it takes to start and manage a business? • The interest • The temperament • The ability • The energy • The “stick tuitiveness” • time management • to get the money r.l. sharman lone star college

  15. SMALL BUSINESSFinancing • Debt Financing • involves borrowing money from another person, a bank, or a financial institution. • Equity Financing • involves exchanging ownership shares for outside investment monies. • Venture Capitalists • Involves making large investments in new ventures in return for an equity stake in the business.

  16. SMALL BUSINESSFinancing • Angel Investor • A wealthy individual willing to invest in return for equity in a new venture. • Initial Public Offering (IPO) • An initial selling of shares of stock to the public at large.

  17. Sources of Capital Don’t let the median amount fool you. You will need lots of money! r.l. sharman lone star college

  18. Why People Start Their Own Businesses Source: BFIB/VISA Card Primer r.l. sharman lone star college

  19. THE RISK FACTOR • FAILURE RATES ARE DIFFICULT TO DETERMINE, BUT – • CONVENTIONAL WISDOM SAYS THAT 4 OUT OF 5 • BUSINESSES FAIL IN THEIR FIRST FIVE YEARS. • THE SBA REPORTS THAT 62% FAIL WITHIN 6 YEARS • A MORE RECENT STUDY CLAIMS THAT THE FAILURE • RATE IS ONLY 18% OVER THE FIRST 8 YEARS. IT IS AGREED, HOWEVER, THAT THE PRIMARY REASONS FOR FAILURE ARE: r.l. sharman lone star college

  20. SMALL BUSINESSChallenges SHOULDINCLUDELACK OFCAPITAL See page 437 in your textbook • Most small businesses fail within five years • As many as 60% to 80% fail

  21. WHAT DOES IT TAKE ? CONVENTIONAL WISDOM SAYS • ENTREPRENEURIAL ATTRIBUTES ARE: • SELF MOTIVATED AND DISCIPLINED • CONFIDENCE – BELIEVE IN YOUR OWN IDEAS • ACTION-ORIENTED - DESIRE TO BUILD A DREAM • HIGHLY ENERGETIC • ABILITY TO TOLERATE FAILURE AND UNCERTAINTY BASED ON MY EXPERIENCE, AND ENTREPRENEURS THAT I HAVE KNOWN-- I WOULD DEFINE IT THIS WAY r.l. sharman lone star college

  22. TOP TEN CHARACTERISTICS • SOMEONE WHO IS WILLING TO RISK EVERYTHING TO PURSUE A DREAM • SOMEONE WHO HAS AN INCREDIBLE DRIVE TO SUCCEED AND WIN • SOMEONE WHO DOES NOT FOLLOW THE CROWD • SOMEONE WHO DOES NOT WAIT ON OTHERS TO ACT • SOMEONE WHO WANTS TO LEAD THE PARADE, NOT MARCH IN IT OR • SIT ON THE CURB WHILE IT GOES BY. • FREQUENTLY ONE WHO SEES COLLEGE AS A WASTE OF PRECIOUS TIME • SOMEONE WHO DOES NOT ACCEPT FAILURE, BUT SEES IT AS A • LEARNING EXPERIENCE • SOMEONE WHO SEES OPPORTUNITY WHERE OTHERS SEE CONFUSION • SOMEONE WHO SEES THE CHANCE THAT SOMETHING WILL SUCCEED, • NOT THE REASONS IT MAY FAIL. • 10. OPTIMISM, NOT PESSIMISM r.l. sharman lone star college

  23. AN OBSERVATION I HAVE NEVER MET A SUCCESSFUL PERSON WHO DID NOT HAVE A PLAN!! AND I KNOW PEOPLE WITH PLANS WHO ARE NOT SUCCSESSFUL! BUT PLANNING YOUR WORK AND WORKING YOUR PLAN WILL INCREASE YOUR ODDS SIGNIFICANTLY r.l. sharman lone star college

  24. Planning • Business plan • A formal planning step that focuses on the entire venture and describes all the elements involved in starting it. r.l. sharman lone star college

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  27. SOME THINGS TO REMEMBER • WRITE A BUSINESS PLAN(CHECK THE SBA SITE?) • USE THE SBA AND SCORE • GET SOFTWARE • SOME BASICS: • GOOD RECORD KEEPING IS ESSENTIAL • -- COMPUTER SOFTWARE MAKES IT EASY • -- IF YOU CAN’T DO IT – GET SOMEONE WHO CAN • HIRE A GOOD ACCOUNTANT • -- THERE ARE MANY RULES AND REGULATIONS • WORK WITH A GOOD BUSINESS LAWYER • LINE UP SOURCES OF CAPITAL – YOU MAY NEED SEVERAL • -- GOOD IDEAS ATTRACT V.C., BUT THEY TAKE A BIG BITE • AN OLD AXIOM- LOCATION OF RETAIL BUSINESSES IS CRITICAL r.l. sharman lone star college

  28. Small Business- Competitive Advantages • Personalized Service/ Personal Contact • Flexibility • Lower Costs • Innovation Opportunities r.l. sharman lone star college

  29. Small Business-Disadvantages • Limited Experience • Long Hours • Insufficient Capital • High Failure Rate r.l. sharman lone star college

  30. SO, WHAT SHOULD YOU DO? • WAYS TO MINIMIZE THE RISK • LEARN FROM OTHERS – COMMUNITY COLLEGES ARE GREAT TRAINING • AREAS • PRESIDENT BUSH SINGLED OUT $250M FOR CC’S LAST YEAR • TALK TO OTHERS WHO HAVE BEEN THERE , DONE THAT. • GET SOME EXPERIENCE – WORK FOR OTHERS, LEARN ALL YOU CAN. • - - 42% GET THEIR IDEA FROM WORKING FOR OTHERS • - - ROT – GET 3 YEARS EXPERIENCE FIRST • - - MANY COME FROM CORPORATE MANAGEMENT (DOWNSIZING) • TAKE OVER A SUCCESSFUL FIRM ---caveat – BEWARE OF PEOPLE • WILLING TO SELL! • (DUE DILLIGENCE) • 5. GET HELP r.l. sharman lone star college

  31. Small Business Collaborators • Small Business Administration (SBA) -- WEBSITE • Service Corps of Retired Executives (SCORE) -- LOCAL CHAP[TERS • Active Corps of Executives (ACE) They are free! USE THESE RESOURCES! r.l. sharman lone star college

  32. What is a Small Business? • Independent • Not Dominant • < 500 Employees The current administration has changed the definition of small -- this has changed the competitive landscape for current SB’s r.l. sharman lone star college

  33. U.S. Small Businesses • 20 Million Full/Part-Time Businesses • Create 75% of New Jobs (This is being rethought!) • -- many SB want to stay at current levels • Represent 45% of Gross Domestic Product • 80% of Americans > 1st Job in Small Business • Women-Owned Growing Rapidly • Global opportunities r.l. sharman lone star college

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