Rewards and Challenges of Entrepreneurship

Entrepreneurship

• An entrepreneur is a person who recognizes a business opportunity and organizes, manages, and assumes the risks of starting and operating a business.

• Entrepreneurship is the process of recognizing an opportunity, testing it in the market, and gathering the resources necessary to go into business.

• Creating and running a business venture requires a variety of skills.

  • A venture is a new business undertaking that involves risk.

• Most entrepreneurs have similar characteristics.

  • These traits include leadership, decision-making, self- discipline, planning, and people skills.

• The SBA is a U.S. government agency that protects the interests of small businesses.

• It defines a small business as an independently owned business that usually has the owner as its manager.

  • A small business serves a limited geographic area and employs fewer than 500 people.

• Many entrepreneurs open virtual businesses.

  • A virtual business or dot-com company is a business that operates on the Internet.

• Online businesses have the potential to attract a huge number of customers

Rewards of Entrepreneurship

• People become entrepreneurs for a number of reasons besides making money.

  • Being the boss, doing what they enjoy, and using their creativity are just a few.

• Many successful entrepreneurs work in a related business before starting their own company.

• Most U.S. businesses are sole proprietorships, which means they are owned and operated by one person.

• Another form of business is a partnership.

  • A partnership is owned and run by two or more people.

• A corporation has many owners.

  • Corporations are run by a chief executive officer, who answers to a board of directors.

Challenges of Entrepreneurship

• One of the biggest obstacles in starting a business is obtaining financing.

• Business owners are responsible for more than just decision making.

• Duties include handling financial records as well as training employees.

• Entrepreneurs also face the challenge of feeling alone and insecure about making the right decisions

The Impact of Small Businesses

• More than 99 percent of U.S. firms are small businesses.

• Small businesses employ more than 50 percent of the U.S. workforce.

• A majority of them are one-person operations that generate more than half the nation’s income.

• Small businesses are also the principal source of new jobs.

• Some estimate that two-thirds of all new jobs are generated by small businesses.

The Business Plan

Initial Steps in Setting up a Business

• If your market research shows that your business has the potential to succeed, then develop a business plan.

  • A business plan is a written description of a new business venture that describes all aspects of the business

• A checklist is a good way to organize your thinking when you begin planning your own business.

• Entrepreneurs should keep these questions and their answers in mind as they develop and write their business plan.

  • What will I produce?

  • Who are my main competitors?

  • Why is my product or service needed?

  • How much will my product or service cost to produce?

  • How many people will I need to run the business?

  • What physical facilities will I need?

  • What licenses, permits, or other legal documents do I need?

  • How much money will I need to get started?

Parts of a Business Plan

• There are 16 essential parts of a business plan

  • The executive summary is a brief account of the key points contained in a business plan

  • The management team plan presents your qualifications and those of any partners you might have.

  • The description of the firm provides an outline of the business.

  • Describe the product or service you want to offer.

    • You should note the unique features of the product or service and possible spin-offs.

  • The vision and mission statements section states the guiding principles by which a business functions

    • A vision statement establishes the scope and purpose of a company and reflects its values and beliefs.

    • A mission statement expresses the specific aspirations of a company, the major goals it will try to reach.

  • The industry overview presents your research of the industry.

  • Market analysis presents research about your customer profile

  • Competitive analysis indicates how the proposed business has an advantage over its competitors.

  • A marketing plan discusses how a company makes its customers aware of its products or services

  • The operational plan includes the business processes that result in production and delivery of the product or service.

  • Organizational plan looks at the people who will run the firm as well as management’s philosophy

  • Financial plan presents forecasts for the business.

    • Data are usually shown in financial statements.

  • The growth plan looks at how the business will expand in the future.

  • The contingency plan looks at likely risks to the business, such as lower-than-expected sales and emergencies that might affect it.

  • The cover page should include the company’s name, address, phone number, Web site and e-mail addresses, and logo.

    • The title page follows the cover page. It includes the company name; the names, titles, and addresses of the owners; the date the plan was submitted; and the name of its preparer.

    • The table of contents details the components of the business plan.

    • Supporting documents include exhibits and other information relevant to the business.