Entrepreneurship

1. Entrepreneurship Chapter 11 Effective Leadership: Managing Resources and Employees Mariotti: Entrepreneurship

2. Leadership Qualities • Confidence • Optimism • Self-esteem • Good time management skills—leaders get more done in less time Marriotti: Entrepreneurship

3. Sample Pert Chart Marriotti: Entrepreneurship

4. How Will You Pay Yourself? The decision you make regarding how to pay yourself from your business will affect your financial recordkeeping: • Commission (a percentage of every sale). Treated as a variable cost (varies with sales). • Salary (fixed amount of money paid once a week or once a month/year). Treated as a fixed operating cost (does not vary with sales). • Wage (fixed amount per hour). Treated as a cost of goods sold (COGS). • Dividend—share of company profits. Deducted from net profit (after taxes). Marriotti: Entrepreneurship

5. Laws and Taxes Affecting Employees • Payroll Taxes: If you hire employees, you must deduct payroll tax from their earnings and contribute it to Social Security. • Fair Labor Standards Act: Requires employers to pay minimum wage and not hire anyone under 16-years-old full-time. • Equal Pay Act of 1963: Requires employers to pay men and women the same amount for the same work. • Antidiscrimination Laws: Protect employees from discrimination due to age, race, religion, national origin, color, gender, physical disabilty. Marriotti: Entrepreneurship

6. Ways to Bring Employees Into Your Business • Bring in partners who have skills that compliment yours. • Hire experts to work on specific tasks on a contract or hourly basis (“work for hire”). • Hire part-time employees “at will,” meaning the relationship continues indefinitely but can be ended by either party with 2 weeks notice. • Hire full-time employees “at will.” Marriotti: Entrepreneurship

7. Encourage Great Employee Performance • Find the right people for the right jobs. • Provide fair salary and good working conditions. • Share your vision for the company. • Give employees incentives, such as profit sharing. • Give them control over their work. • Give them defined responsibilities. Marriotti: Entrepreneurship

8. The Hiring Process Define the job Post the job Screen resume Interview candidates Check references Negotiate salary Hire Orientation How to Find Employees: Campus recruiting Agencies Internet job listings Executive search firms Recruitment: Finding Good Employees Marriotti: Entrepreneurship

9. Firing and Laying Off Employees • You cannot fire someone just because you don’t like him/her. • Unsupported firing exposes your company to wrongful termination lawsuits. • Conduct regular employee performance reviews so you have proof of poor performance. • If employee violates rules, inform him/her in writing and keep copy for your records. Marriotti: Entrepreneurship

10. Human Resources (HR) Department that handles: • Compensation and payroll • Benefits: health insurance, sick days, vacation, etc. • Organizational development • Training and development • Labor law compliance Marriotti: Entrepreneurship

11. Useful HR Strategies • Diversity—encourage gender, ethnic diversity • Benchmarking—evaluate employees and how their performance compares to competition. • Retention—develop programs to encourage valued employees to stay with the company Marriotti: Entrepreneurship

12. Encourage Employees to be Socially Responsible • Offer employees incentives to volunteer in their communities. • Recycle in the office. • Donate portion of business profits to a charity that employees support. • Refuse to animal test products. • Establish a safe, healthy workplace. Marriotti: Entrepreneurship

13. Management • The art of planning and organizing a business so it can meet its goals. • Entrepreneurs tend to be creative people who get bored with day-to-day details of running a business. Smart entrepreneurs understand this and hire managers. • A corporation can sell stock to raise capital to hire managers. Marriotti: Entrepreneurship

14. 10 Management Functions: POLDSCCRIM • Planning • Strategic plans—3–5 year • Tactical plans—one year or less • Operational plans—day to day budgets, schedules • Organizing • Leading (3 basic styles): • Power oriented • Routine oriented • Achievement oriented • Directing Marriotti: Entrepreneurship

15. 10 Management Functions: POLDSCCRIM (cont.) • Staffing • Controlling • Coordinating • Representing • Innovating • Motivating Marriotti: Entrepreneurship

16. Management Styles Coercive—pressure/commanding • Pro: effective in disasters or with employees who need forceful management • Con: hurts employee morale, creativity Authoritative—leader sets goal, leads team • Pro: works well if leader is expert • Con: not good if leader is not an expert and is trying to lead people who are Affiliative—puts people first • Pro: gets employees on board • Con: can fail to give adequate direction Marriotti: Entrepreneurship

17. Management Styles (cont.) Democratic—gives employees strong voice in company • Pro: builds morale • Con: can result in endless meetings and stagnation Pacesetting—leader sets high standards, challenges employees to meet them • Pro: great when employees are self motivated • Con: can overwhelm less committed employees Coaching—focuses on helping employees learn and grow • Pro: good with new employees • Con: can create resistance among long-term employees Marriotti: Entrepreneurship

18. Ethics: Standards for Determining Right from Wrong • Your ethics become your company’s ethics. • Your behavior sets the tone for the company’s behavior. • A behavior may be legal and still not ethical. Ex: It is not illegal to be rude to customers. • Ethical business behavior makes good business sense! Customers return to businesses that treat them ethically. • Treat employees well, too. Employees who feel used by their employers will not do their best work. Marriotti: Entrepreneurship

19. Corporate Ethical Scandals • Enron • WorldCom-MCI • Tyco • Global Crossing In 2002 these companies were found to have published false financial statements, inflating their earnings and misleading investors. Stock investors and employees who had put retirement funds in company stock lost millions. These scandals were failures of corporate governance: the companies did not have rules and safeguards in place to prevent executives from lying, cheating, and stealing. Marriotti: Entrepreneurship

20. Corporate Governance • Never just take company profits to pay yourself. • Do not treat your business earnings as your personal income. • Choose a wage, salary, or dividend arrangement and document it in your financial records. • Keep accurate financial records, checked once a year by a reputable accountant. • Establish financial controls: • Always have 2 people open the mail, so no one can steal checks. • Require all checks sent by the business to be signed by 2 people. • Create advisory board of people with strong ethics. Marriotti: Entrepreneurship