ENTREPRENEURSHIP 3117

1. ENTREPRENEURSHIP3117 Steven C Seideman Extension Food Processing Specialist Cooperative Extension Service University of Arkansas

2. Entrepreneurship • An Entrepreneur is a person who organizes, operates and assumes the risks for business ventures or more simply put, a person who owns an enterprise. • Entrepreneurship is one of the most important engines that drives our country’s economy. • Through entrepreneurship, new ideas are turned into new business products, new ways are discovered to provide services to people and entirely new industries are created.

3. Entrepreneurship • In recent years, the businesses of successful entrepreneurs have not only contributed to economic vitality, but have also created most of the new jobs that employ the people of this country. • Drive down a city street sometime and look at all the small businesses that exist in a community. Most people are of the belief that big companies employ the vast majority of Americans that work, but the converse is true. Most Americans work for smaller, locally or regionally owned companies.

4. The Importance of Entrepreneurship • In every State of the Union speech, the President talks about encouraging entrepreneurship. • The federal government and most states have numerous organizations to help people start a business. • WHY ARE THEY SO INTERESTED IN HELPING ENTREPRENEURS? • The answer is plain and simple. Entrepreneurs create jobs, and people that have jobs pay taxes. Taxes are what keep our government providing goods and services such as roads, schools, police, fire protection, etc.

5. Entrepreneurial Personality • Everyone encounters problems every day. Problems tend to frustrate, confuse and annoy most people, but to an entrepreneur, they view problems as opportunities and start to look for solutions. They are truly problem solvers. • There are always wants and desires in our advancing society, and resourceful entrepreneurs will seek solutions for them. • Entrepreneurs recognize opportunities and take action.

6. Entrepreneurial Personality • Not everyone is meant to be an entrepreneur. It is hard work and takes courage, but the rewards are usually commensurate with the effort. • There are some signs of having an entrepreneurial spirit that have proven to be somewhat accurate over time.

7. Signs That You Are An Entrepreneur • 1) You come from a line of people (e.g.your parents) who didn’t like working for someone else. • 2) You’re a lousy employee – a lot of people that start new businesses have been fired from or quit several jobs. • 3) You have worked for someone else for years and have gone about as far up the ladder as you can go. • 4) You are bored in most jobs and want to have some independence and action to your life and work.

8. WHAT IS NEEDED TO BECOME AN ENTREPRENEUR? • A passion for the business- you will go through some tough times, and if you are looking for an easy job, this isn’t for you. • Some starting capital or money- It takes some money to get started. Ballpark estimate of at least $10,000. • Family support- You are going to have to “give it your all” to get a new business off the ground, and without an understanding family, you probably won’t make it.

9. WHAT IS NEEDED TO BECOME AN ENTREPRENEUR? • An idea – You have to have some idea of what you are going to make, sell or provide. • Some skill sets- You will have to have or develop some skill sets such as how to sell your product or service, accounting, hiring and firing – all those skill sets we call “management. You don’t have to know them all since you can hire some people to manage those areas that you are not skilled in. • Assistance- There are many organizations that provide expertise or assistance to entrepreneurs. You have to know where to find them.

10. WHAT IS NEEDED TO BECOME AN ENTREPRENEUR? • Personality traits such as ; Risk taker Adventurer Courageous Confident Competitive Visionary High energy level

11. Entrepreneurship • By now, you should know two things; 1)The importance of entrepreneurship to the economic growth of the United States. AND 2) Whether you have the personality to become an entrepreneur.

12. Entrepreneur Wally Amos Mary Kay Ash Henry Block Debra Fields Henry Ford Bill Gates Leon Gorman Ray Kroc J Willard Marriott Don Tyson Sam Walton Business they developed Famous Amos Chocolate Cookies Mary Kay Cosmetics H&R Block Mrs Field Inc Ford Motor Co Microsoft Corp L.L. Bean McDonalds Corp Marriott Corp Tyson’s Walmart; Sam’s Some of the Big Name Entrepreneurs

13. PHILOSOPHY OF ENTREPRENEURS • All the previous named ultra-entrepreneurs were not necessarily brilliant, but they did have a passion for the business. They found ways of delivering goods and/or services to people who wanted those services and were willing to pay for them. • The next time you go into a food store, look at all the new products on the shelves. One hundred years ago, everything was sold as a commodity. Now, the word value-added is hot, whereby entrepreneurs have found ways to make products more convenient to the consumer.

14. WHERE DO IDEAS COME FROM? • Ideas are a dime a dozen. Everyone has ideas on how to do something cheaper, easier, faster, etc. than existing companies. The difference is that entrepreneurs make their ideas become realities. • For example, take Famous Amos Cookies. Anyone can make cookies but he took his cookies to the marketplace where people who don’t have time to bake can buy them.

15. Where do Ideas Come From? • Mary Kay Ash simply took regular cosmetics, promoted parties and built a loyal sales staff. • Leon Gorman of L.L. Bean fame took upscale outdoor clothing and built an excellent mail-order business.

16. WHERE DO IDEAS COME FROM? • By now, you are thinking these were not technological break-through ideas but simply doing a concept and doing it well. • Therefore, the concept or idea you come up with doesn’t have to be the big, break-through thing the world has been waiting for. • We at the Institute of Food Science & Engineering would be happy to help “brainstorm” your idea with you, but you have to pick an area that you have a passion for.

17. UNDERSTAND THE BUSINESS • Many would-be food entrepreneurs call me about a great recipe they have for a product and are eager to build a facility to start manufacturing it. This would be a mistake. • You can get your product co-packed by someone else who already makes similar products sparing you the expense of building a facility costing a minimum of $100,000. • The emphasis for an entrepreneur should be in the areas of marketing and selling the product. It is the hardest thing to do but also the most profitable.

18. UNDERSTAND THE BUSINESS • Let me reemphasize this one point. You can get your food product co-packed relatively cheap. Your time and energy is best spent on marketing and selling your product. You may have a great product, but it will not sell itself. Somehow, you have to let people know it is available and where to get it. We will discuss this in more detail in the business plan.

19. WORRIED ABOUT THE BIG GUYS? • Some entrepreneurs worry that they cannot compete with the big manufacturers. • Understand that businesses, over time, will evolve. The big food companies of 50 years ago have gone by the wayside and next businesses have taken over their territory. • Remember the big food retailers of the 1950s and 1960s- A&P and Kroger? They are not nearly as large as they once were due to other food retailers like Albertsons, Ralphs, Wegmans that were entrepreneurs in the 1950s and 1960s.

20. THE BUSINESS PLAN

21. The Business Plan • If you plan to become an entrepreneur in the food business, we suggest that you first work on a business plan. • We will now go through a business plan. We suggest that you struggle through it and try to do as much on it as possible. Spend some time and think hard about it. It is the first step on a long adventure that you could truly enjoy. Force yourself to write this plan up as best you can. You might be surprised how much you can learn while doing it.

22. The Business Plan • The business plan organizes your business idea on paper. It helps other people and you to understand the resources and steps needed to create your business and its chances for success once it is started. • Why have a business plan? 1)The plan will be helpful in securing needed startup funding. 2)The plan will help you to think through all of the aspects of the business and develop confidence that your idea is a good one. 3) The plan will serve as a guide once the business is up and operating.

23. The Business Plan • If done correctly, the task of developing a business plan should be fun and enjoyable. • It may not appear to be easy because it will require a great deal of research, thinking and writing but when it is done, we will think of it as a masterpiece. • You will probably end up talking to a lot of people and going to a lot of places, such as libraries, government sources and professional associations. • There are 9 parts to a business plan. We will now go through each of them.

24. Part 1; The Cover Page • Write down the company name, address, phone number, your name and any other contact information that you have. • Even if you don’t have all of information, write done what you know. You can always come back and fill in later.

25. Part 2; Table of Contents • List the sections of the business plan to follow. • Just label the top of the page for now. You can come back and fill in the remainder a little later on.

26. Part 3; Executive Summary • This is a mini-version of your plan, presenting in summarized form all of the key information about the business so that the reader can get a quick overview of the business plan. • For now, just label the top of the page. When you get all the other sections filled in, this will just be a summary of the rest of the plan.

27. Part 4; Description of the Nature of Your Business • Describe the business concept, the product or service to be sold, the competitive advantages of the business and anything more you want to describe your business.

28. Part 5; Description of the Business Personnel • Write out who will be running the business. • Describe all the different functions (accounting, manufacturing, sales, etc.) and tasks that will need to be accomplished to run the business. • Assign people to the tasks and functions and describe their previous experience and skills.

29. Part 6; Description of the Market and Competition • Present the results of your market research comparing your product to other ones in the marketplace.. • Identify the target market for what your business will produce (Retail, Food Service, Brokers, convenience stores, etc.) • Describe other businesses that will be competing for customers in the same target market.

30. Part 7: Description of Your Marketing Plan • Highlight the most important benefits of the product or service that the company will produce (this is the focus of your marketing plan). • Identify the types of advertising and promotional appeals and tools that will be used. • Indicate how advertising and promotion will make the customer aware of the product or service, help customers understand how the product or service differs from that of the competitors and convince customers to buy your product or service.

31. Part 8; Basic Financial Information for the Business • Predict expenses for starting the company, pricing and break-even analysis. • Present a cash flow forecast. • Forecast revenues, expenses and profits.

32. Part 9; Additional Supporting Information • Include documents or illustrations that you think will help the reader understand and have more confidence in the information and forecasts of your plans and in the chances of your business’ success.

33. The Business Plan • That’s it. Not too complicated. • The hard part is to get started and take some time to think it through. • Take each part one at a time. Write down what you can and then seek to acquire more knowledge. • There are lots of places to go for help such as the Internet, talking to people in the business, talking to people in state government agencies that have resource libraries and have good consulting services, some of which are free.

34. Arkansas Assistance Sources • The Institute of Food Science and Engineering at the University of Arkansas (Fayetteville) can help you with the technical aspects of idea and product development. Contact Steve Seideman at 479/575-4221 or seideman@uark.edu. • Other modules are also available in this series to assist entrepreneurs in areas such as marketing, Quality Control, etc. • The Arkansas Small Business Development Center (501/324-9043; www.asbdc.ualr.edu) has several locations throughout the state that can help with business plans, markets, resource libraries, grants and other forms of financial assistance and consulting.

36. Online Help *Entrepreneurship Education Training and Resources; www.itbn.com/edge *Ewing Marion Kauffman Foundation www.kauffman.org *CEL Clearinghouse for Entrepreneurship Education; www.celcee.edu *Edward Lowe Foundation Small Business www.lowe.org *Small Business Administration www.sbaonline.gov

37. CONCLUSIONS • This module should have emphasized the personality traits of entrepreneurs and the importance of entrepreneurship to our economy. • In addition, brief outline of a business plan was included to show you the highlights in any business plan. • There is plenty of expert, free advice available to help get you started.