AD2-Obj.#4.01 Summarize
project resources & concerns
for entrepreneurial project
Entrepreneurship and Small
Business Management Chapter 8
Read this chapter and develop a
list of characteristics of an
entrepreneur.
Entrepreneur
• A person who undertakes the organization
and ownership of a business with the
intent of making a profit
Types of businesses
• Sole Proprietor-Only one person is responsible for the activities
of the business. This person receives all of the
profits and is responsible for any loses
-This person decides on a company name and
then applies for a Certificate of Doing Business
Under an Assumed Name. This certificate will
ensure that you are the only business in the
area using the name that you have chosen.
-What are the pros and cons of being a sole
proprietor??
Types of businesses
Partnership
• 2 or more people own a business and share the assets,
liabilities and profits
• No law required for partnership but it is good to have one
written by an attorney
• General partners-all partners have unlimited personal
liability and take full responsibility for the management of
the business. The law requires that every partnership
must have at least one general partner
• Limited partners-investors whose liabilities are limited
to their initial investment-they can’t be actively involved
in the business
Types of businesses
Corporation
• A business that is charted or registered by a
state and legally operates apart from its owners
the business can live on after the owners have
sold their interests or died)
• An attorney will guide you through the
incorporation process. The owners must file a
Certificate of Incorporation with the state the
business is in. The corp. must have a board of
directors
• Corporations raise money using stocks.
• Stocks are certificates that indicate the amount
of ownership each investor has in the business
• What type of business
will the Apparel class
have???
• Complete: Ownership
Comparison
Pick a partner and answer on
notebook paper- 1 letter per team
• Your father wants you to join the family
business, Calvert Plastics Corporation. This is
not your only opportunity, however. Your best
friend has an idea for a new business and wants
you to come in as a partner. Analyze the pros
and cons of each method of becoming an
owner. Incorporate this information in a letter
explaining to your father or your friend why you
have decided against the offer you ultimately
reject.
Warm up
• 1. What type of business does the Apparel
class have?
• 2. Define entrepreneur
Market Analysis
Research of potential:
1. Customers
2.Proposed goods or services
3.Competition
4.Market trends
5.Available suppliers
Marketing Concepts
• If a business is to succeed & make a
profit, it must focus all of its efforts on
satisfying its customers. Every business
starts with this basic marketing concept.
• One needs to know their target market
who are they and what do they want
• A market is a group of people or
companies who have a demand for some
product & are willing & able to buy it
Customer Markets
• Geographics- region, state, country, city & area
• Demographics- age, gender, family size, family
life cycle, income, occupation, education,
religion, race, nationality & social class
• Psychographics- personality, opinions, & life
style elements like activities & interest
• Buying characteristics-knowledge of actual
goods or services, personal experience with
them or responses to them
Target Market
• Specific market segment on which you are
going to concentrate your efforts
• The market segment should be
measurable- if you don’t know how many
buyers are available, you can’t know if the
business is worth pursuing
• Who are our target market at Hopewell for
the small business???
Sales Potential of our small
business product
• How well does the good or service we are
offering match up with the target market?
• Where is our product in its life cycle?
• How have products of this type been
affected by changes in the Hopewell
economy?
• Clearly products that are well matched to
their markets have a high potential for
success
Market Trends
Would all teen males wear all of these shoes?? Why or why not??
Would teen girls wear all of these shoes??
Competition
• Sales are not guaranteed success
• Your company is not the only one selling a
certain item
• Market share is a portion of the total sales
generated by all of the competing
companies in a given market
McDonalds
Burger King
SONIC
Competitor
• The best way to evaluate your potential
competition is in person
Buy their product for comparison
Make list when you are there
Survey
• Come up with 5 questions to survey our
target market about a product we might
sell
• Choose team members to survey 10
people with your questions
• Return with surveys & make a chart
Warm up
• After making several inquiries to obtain
information for your market analysis, you receive
a telephone call from a local business person
active in your field. He has heard that you are
planning to start up a new business and feels it
is not a good idea. He tells you that the local
market will not support another operation like the
one you are planning and that everybody would
be better off if you just dropped the idea. What
are your options and opinions? What would be
the best way to handle the situation?
Marketing Plan—The Four P’s
• Product
PURSES
•PRICE
•PLACE
• Promotion
Marketing Plan—The Four P’s
Product
•Product strategy deals with the goods and services your business will provide.
•How will you identify your product and make it stand out from the competition?
•Branding is the name, symbol or design used to identify a product
•Packaging is the physical container or wrapper that holds the product
•Label is the part of the package used to present information
•Product Mix refers to all the products a company makes or sells
Marketing Plan—The Four P’s
• PRICE
•Economics affect the price
•Demand for the product is high and supply low-Will the price be higher or lower?
•How much profit does each item require?
•If buyers are price conscious ,how will you price your product?
•Your cost of item + add your expenses to make the product = the selling price
•Competition is another affect-price conscious buyers look for the best price
Must make a profit to stay in business
PRICE
• Pricing Strategies1. Cost based pricing -cost to make your
product
2. Demand based pricing- find out what
customers are willing to pay
3.Competition based pricing- determine
what your competitors are charging
PRICE
• Will you let your customer negotiate for the best
deal they can get or will your prices be for all
customers the same?
• Psychological pricing- set a price that will
affect the customers’ perceptions of a product
• Prestige pricing- higher than average price to
suggest exclusiveness, status and prestige
• Odd/ Even pricing- use odd prices as $19.99 to
suggest a bargain and even price $20.00 to
suggest higher quality
PRICE
• What type of pricing are the items below?
$1,000,000
$29,999
$100 per mile
Marketing Plan—The Four P’s
• PLACE
-involves how you will deliver your
goods to your customers.
-movement of your product –both to
your location and to your customers
-distribution strategy of your products
PLACE
• Channels of Distributions-path a product takes
from producer to final user
• Direct channel- moves a product from producer
to customer with NO one in between
• Indirect channel- a group will move products
between producers and final users—
Example-Clothing designers may use an agent
to reach wholesalers and retailers, so the
designers won’t need to maintain sales staff or
stores
PLACE
• LOCATION— Where would your item sell the
best for your target market?
• LAYOUT---How does your fashion customer
enter the store, try on items, or pay for items
while in the store? When is the store open for
business?
• AVAILABILITY---Can the customer see and
purchase the item from your location?
Can you get the product in a timely manner ?
PLACE
• On white paper –
1. Draw a floor plan for the Sweet Tooth
Candy Shop
-Where will the customers enter
-Where will the customer pay
--How will the candy be displayed
-What type of candy will be sold
Marketing Plan—The Four P’s
PROMOTION
• Tell the customers about your product
Advertising- paid nonpersonal presentation of
ideas, goods or services for a mass audience by
a sponsor
1. Advertise by PRINT —newspapers,
magazines, direct mail, billboards, directory and
transit
2. Advertise by BROADCAST —radio,
television, and computers
Types of Promotions ?
PROMOTION
• PUBLICITY
-- Placement of newsworthy items about a
business, new product, or employees in
the media
--Not paid for by the business
--Good public relations with the
community, the press and customers
PROMOTION
• SALES PROMOTION
---Use of incentives to increase sales
1. Displays
2. Coupons
3. Sweepstakes
4. Contest
5. Rebates
6. Free Samples
PROMOTION
• Personal Selling:
--Oral presentations to one or more potential
buyers with the intent of making a sale
---Designed to bring the sale to a close after
the customer has been attracted by
advertising, publicity, or sales promotion
• Bring a calculator to class for the rest of
the week
• Be prepared to do Math!!!!
Warm up
• Tom Apple decided to open his own
bakery. In the beginning, he had a lot of
business but now it is slowing down.
The store is extremely hot due to the
ovens, customers can see the dirty pans,
and boxes are cluttered everywhere.
As a business layout consultant for Mr.
Apple what would you suggest he do to
improve the business?
Balance Sheet
Definition: An accounting
statement that lists the assets,
liability and capital accounts (such
as retained earnings) for a
business for a specific point in
time
Cash Flow statement
• An accounting statement that forecasts cash
receipts and disbursements for a specified
period.
• The statement is used for planning purposes to
determine if a business will need to borrow
money in order to maintain its operations during
times of heavy expenses or low sales.
• Often accompanied by a graph or chart to
represent the data at a glance.
Entrepreneurship book
Ch. 5 page 56
• General expenses
• Practice 1 page 57
• Take revenue total and subtract each
expense to find earnings before taxes
• Write answer on a sheet of paper
Entrepreneurship book
Ch. 5 page 57
•
•
•
•
Break Even Point
Cost before profit
Practice 2
Total production cost divided by selling
price equal break even point
• Write answer and calculations on paper
Break even point
• Volume of sales required so that the
expenses of the business are equal to the
income received.
Fabric + labor + building cost = items sold
+
+
• There is neither a profit nor a loss.
=
Interest on a loan
• Business owners borrow money for different
reasons---buy more inventory, remodel a
building, or buy new equipment
• Principal—amount of money borrowed
• Interest—money paid for the use of the principal
• Interest==principal($) x rate(%) X time (years)
• i=prt
• Practice 3 page 58
• Put answer and calculations on paper
Stock Turnover
• Stock turnover —how often the inventory
has been sold and replaced over a certain
amount of time
• ST rate is found by dividing total net sales
for a period by the average inventory on
hand
•
Total net sales______
Average inventory on hand
Practice 4 page 58 Write Down Answer
Income statement
• An accounting statement that shows the
profit or loss for a business, by subtracting
costs from its earnings, over a specific
period of time, typically for a quarter or
year.
Earnings- Cost = Income
Fixed expenses
• Costs that stay the same or very nearly
the same regardless of the level of output
or sales.
• For example: if you don't use water in
making widgets, your water bill should stay
the same whether you make 20 widgets or
500 widgets
• Example: Building mortgage payment is
the same each month
Variable Expenses
• Those costs that fluctuate depending on
the level of output or sales.
• For example: if your business sells homebaked cookies, your costs for flour and
sugar will depend entirely on how many
cookies you bake for resale, How?
• Example: Gasoline is a variable cost for a
landscaping business, How?
Math for Entrepreneurs
• Entrepreneurs Chapter 5- page 55-67
Define the terms to know page 54
Copy the formulas to answer the practices
and keep on the same sheet to have for
test information.
Complete Practices 1,2,3, and 4
Use Bulletin board paper and put formulas
on the wall for review practice
Math for Entrepreneurs
• Entrepreneurs Chapter 5- page 55-67
• Complete Practices 5, 6, 7,8
Entrepreneurs Ch. 5- page 55-67
• Markdowns- lower retail price by a certain
percentage
Retail price X markdown% = $ markdown
Practice 10
Practice 10
• Practice 10
• Percentage mark down:
Selling price X markdown%= $
markdown
New Sale price
Original sale price- $ of markdown=
new sale price
Math for Entrepreneurs
• Entrepreneurs Chapter 5- page 55-67
• Discounts- reduction in the retail of a
particular product
Retail price X discount % = $ discount
Math for Entrepreneurs
• Entrepreneurs Chapter 5- page 55-67
• Counting change back
• Practice 13The purchase total for your customer is
$31.18. She hands you two $20.00 bills.
How would you count back her change.
Math for Entrepreneurs
• Entrepreneurs Chapter 5- page 55-67
Balancing the Cash Drawer- Do daily
Cash
$ 574.13
Checks
613.77
Credit sales
+ 433.18
Total receipts
?
Cash refunds
75.00
Adjusted receipts
?
Opening cash fund - 150.00
Actual receipts
?
Math for Entrepreneurs
• Entrepreneurs Chapter 5- page 55-67
• Practice 14The actual receipts total is $1,396.08
Suppose the tape register total was
$1,397.33. What would that mean?