Chapter 5
Entrepreneurship and
Small Business
pp. 68-83
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Chapter
5
Why It’s Important
Entrepreneurs and small businesses
bring vital energy and innovation to
the economy.
The risks involved energize
entrepreneurs and small business
owners to become successful.
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Key Words
entrepreneurship
virtual business or dot-com company
small business
entrepreneur
risk taker
profit
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
The Ins and Outs of
Entrepreneurship
Entrepreneurships and small businesses
are the majority of business firms.
An entrepreneurship is a business started
by someone who notices a need for a
product or service.
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
The Ins and Outs of
Entrepreneurship
A virtual business or a dot-com company
is a business that operates on the Internet.
Introduction to Business, Entrepreneurship and Small Business
Chapter
Figure
5.1
5
ARE YOU ORIGINAL?
Take this quiz
and see if you
would be a good
entrepreneur.
Below are traits of an entrepreneur. Rate yourself by choosing a number
that best describes you. At the end you’ll add up your points to see how
you fared (1 is the lowest, 5 is the highest).
Rate your score:
35-40 points
30-34
25 and under
= true entrepreneur
= willing to take risks and try something new
= you take fewer risks
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
The Ins and Outs of
Entrepreneurship
An entrepreneur is a person who
recognizes a business opportunity and
organizes, manages, and assumes the risks
of a business enterprise (risk taker), with
the intent of increasing the market value of
the business.
Introduction to Business, Entrepreneurship and Small Business
5
Successful Entrepreneurs
Chapter
Graphic Organizer
Recognize
opportunities
Desire
achievement
Want to
control
destiny
Have high
energy
Successful
Entrepreneurs
Take
risks
Desire to
earn profit
Are
enthusiastic
Have selfconfidence
Are
determined
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Advantages of Entrepreneurship
•
•
•
•
Satisfaction from taking a risk and
becoming a success
Showing expertise and skills
Working from home
Gaining profit
continued
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Disadvantages
of Entrepreneurship
• Total responsibility for the business
• Long hours
• Financial risks. Main reason why
entrepreneurs fail: they run out of
money.
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Small Business:
What You Need to Know
The Small Business Administration (SBA)
defines a small business as an
independently owned business that usually
has the owner as its manager.
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Characteristics of Small Business
• serve a limited geographic area
• employ fewer than 500 people
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Small Business:
Interesting numbers
• employ more than 50 percent of the total
workforce in the United States.
• generate more than half the nation’s income.
• principal source of new jobs.
• supply about 38 percent of jobs in high
technology.
Introduction to Business, Entrepreneurship and Small Business
Chapter
Figure
5.2
5
SMALL BUSINESS EMPLOYMENT IN THE UNITED STATES
There are 25 million
small businesses in
the United States.
Which three types of
small businesses
provide the most
jobs?
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Advantages of Small Business
Some of the advantages of owning a small
business are:
• Being the boss
• Offering services large companies
•
cannot offer
Ease of formation
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
General Disadvantages of Small
Business
• you’re responsible for decisions
• you often work long hours and have great financial
responsibility
• four out of five small businesses fail in the first 5 years
• a small business may underprice or overprice
• going into business with little or no experience may
result in the business closing
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Disadvantages of Small Business
(3 slides)
Why a small business might not work:
1. Effect of Change
Consumers’ tastes change.
If flexibility and change are not part of
the business, then it’s likely to fail.
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Disadvantages of Small Business
2. Managerial Skills Needed
• Financing
• Employee Relations
• Production
• Customer Relations
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Disadvantages of Small Business
3. Inadequate Financial Planning
Starting with little money, spending
carelessly, borrowing money without
planning, and forgetting about taxes and
insurance may result in a failure.
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Preparing for Your Own Business
A business plan is a written description of
a new business venture that describes all
aspects of the business.
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Checklist for Starting a Venture
• What will I produce?
• Who are my main competitors?
• Why is my product needed?
• How much will my product cost to produce?
• How many people will I need to run the business?
• What physical facilities will I need?
• Do I need licenses, permits, or other legal
documents?
• How much money will I need to get started?
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
Parts of a Business Plan
• Summary
• Company description
• Products and services
• Marketing plan
• Legal plan
• Management and operating plan
• Financial plan
Introduction to Business, Entrepreneurship and Small Business
Chapter
5
What makes a person an entrepreneur?
What makes a company successful?
continued
Introduction to Business, Entrepreneurship and Small Business
continued
Chapter
5
Identify some reasons why a small
business might be hard to manage.
What are some benefits of selling
online?
Introduction to Business, Entrepreneurship and Small Business