Entrepreneurs

3. Entrepreneurs People that start and run their own business.

4. Why are they important to the economy?New Businesses • Choices – • Fundamental to the market economy • Jobs • 80% of new jobs created by firms less than 5 years old

5. Why are they important to the economy?New Businesses • Inventions and Innovations • A high percentage of the most significant inventions and innovations originate in small firms. • Disney • Apple • Cray / SSI • Google

6. Who are they? • Family • Parent or close relative runs their own business • Cultural • Prejudice, & Needs of the group • Hmong grocery stores • Polish deli in NE Mpls.

7. Who are they? • Psychological • Control own destiny • Goal setters • Risk Takers

8. Sample Questions from the Farley test for risk takers • I like to improve on ideas. • I am high in energy. • If I were to gamble, I would never make small bets. • I can easily generate lots of money making ideas. • I would never bet more money than I had at the time. • I am a highly creative person. • I like to challenge authority • I believe that I control my own destiny. • I am highly adventurous. • Friends would call me a thrill seeker • Making my own decisions is very important to me.

9. Entrepreneur Example • Fred Smith • Federal Express • Told plan would never work.

10. Who are they? • Age • Most are 25 – 40 • Right combination of money and lack of obligations • 21 & under 3% Anybody here? • 21 - 25 11% • 26 - 30 21% • 31 - 35 20% • 36 - 40 18% Total 73%

11. Why do they start? • Motivation • Event • Birthday, Family, Move • Push • Fired from job, Get out of rut • Goal set • Be own boss, make million by …

12. Why do they start? • Preparation - got idea from • Prior Job 45% • Personal interest/hobby 16% • Chance happening 11% • Suggestion 7% • Family Business 6% • Education/ Courses 6% • Friends / Relatives 5%

13. Here’s my report card and an impressive list I’ve compiled of entrepreneurs who never finished high school.

14. Why do they start? • Business Climate / Suitability • Large organizations are difficult to start. • What’s the newest car company? • Business that can start small and grow. • Software, Services, Low inventory • Industry must be growing. • Do we need more ________? • New want or need • Economy should be growing • Recessions are not good for businesses. • More people start business during recession.

15. 2006 Firm Births & Deathsper week average and yearly total

16. Why do they start? • Financing Sources • Personal Savings & Assets • Friends & Relatives • Banks • Former Owners • Investors – Venture Capitalists • Suppliers – consignments

17. Why do they start? • Regional Climate – Most entrepreneurs start their business in their hometown. Familiarity with region Needs of community What does Eau Claire need? Locations Bankers Customers

18. What determines success or failure? • Evaluate the proposed idea • Product – what’s produced? • Market – who’s served? • Competition – how is business going to differentiate itself? • New service • More service • Price

19. What determines success or failure? • Purchase an established business • Get location • Customers • Goodwill • Franchise • Established product • Systems & Support • Network

20. Top Ten Franchises of 2009 according to Entrepreneur Magazine • Subway • McDonald’s • Liberty Tax Service • Sonic Drive In Restaurants • InterContinental Hotels Group • Ace Hardware • Pizza Hut • The UPS Store • Circle K • Papa Johns

21. What determines success or failure? • Experience & Education • Mix of both is seen as good • Teamwork - partners • Division of labor • Specialization • Multiple viewpoints • Access to more financing

22. What determines success or failure? • Utilize outside advice. • Small Business Administration • National Federation of Independent Businesses • SCORE • Chamber of Commerce

23. What determines success or failure? • Capital • Need for adequate financing. • Revenues low during early stages • Opening costs usually higher than expected • Family needs are still present.

24. What determines success or failure? • Hours worked per week by new business owners. • Fewer than 50 23% • 50 - 59 23% • 60 - 69 28% • 70 - 79 13% • 80 or more 12%

26. Public Corporation • firm whose shares are publicly traded (stock market) and are usually held by a large number (hundreds or thousands) of shareholders

27. Private Corporation • firm whose shares are not publicly traded, and are held by a small number of stockholders (shareholders).

28. Limited Liability Company “LLC” • Fairly recent type of business entity • combining the advantage of corporate limited liability with the one-level taxation and managerial and operational flexibility of a partnership. • It can be formed by one or more persons and, if a single owner LLC, it does not have to file a separate Federal tax return. • All members of the LLC are shielded from personal liability beyond their committed investment.

29. Limited Liability Company “LLC” • the LLC has recently become the most used form for doing business in Wisconsin. • Best suited for small group, licensing company, etc. Very flexible. • Can be easily converted to a corporation

31. Cooperatives • Members are the owners • Limit to one share per member • Patronage Refund • Profits are returned to members based on the amount of business they did with the co-op

32. Eau Claire Area Co-ops • Credit Unions (12,000) • RCU, MET, WESTCONSIN • Retail Stores (500) • MEGA (EC Consumers Co-op) • Utility • Eau Claire Electrical Coop • Touchstone Energy • Chequamegon Telephone

35. The following are co-op brands you may recognize • Ace Hardware ACE Hardware, Cleaning and Paint Supplies • Blue Diamond Growers Blue Diamond, Smokehouse • CarpetOne Carpet, vinyl, laminate, ceramic, hardwood flooring • Florida's Natural Orange juice and grapefruit juice • Land O' Lakes Land O'Lakes, Indian Maiden, Lake to Lake, Land-O-Lakes, Bridgeman, Cocoa Classics, Flash • Sun-Diamond Sun-Maid

39. 2004 Firm Births & Deathsper week average and yearly total

40. Why is small business important? According to the NFIB Small business in the United States serves many purposes. it supplies goods and services that customers demand it is a major innovator; a laboratory of economic experiment it generates the lion’s share of net new jobs it stabilizes economic cycles through relatively small employment swings           

41. Why is small business important? According to the NFIB its owners provide neighborhood and community leadership   it is an avenue of economic opportunity it enhances pluralism in economic decision-making, and it offers personal utility, i.e., personal satisfaction and happiness to its owners. (Source:  compiled by William J. Dennis, Jr., NFIB Research Foundation.)

42. S-Type Corporation • S-Type corporations are taxed as partnerships while retaining the advantages of incorporation. The S-type corporation has all of the advantages and disadvantages of the traditional corporation except in the area of taxes. For tax purposes, the S-corporation shareholders are treated similarly to partners in a partnership. There is no double taxation of an S-type corporation.

43. 2002 Firm Births & Deathsper week average and yearly total

44. 2001 Firm Births & Deathsper week average and yearly total

45. EntrepreneursPeople that start and run their own business. • Why are they important to the economy? • Who are they? • Why do they start? • What determines success or failure?

46. Patents – 2003Inventions • Patent Applications – 367,000 • Patents Issued Individuals 19,600 Corporations 148,500