Chapter 4

Entrepreneurship

Section 1: What is Entrepreneurship

Entrepreneur

Advantages of Entrepreneurership

You are in charge

Job Satisfaction

Good Income

Disadvantages of Entrepreneurship

Financial Risk

Work long hours

Competition

No guarantees

Traits of Entrepreneurs

Motivation = Vision

Sight and Foresight = Research and Planning

Decision Making = Going for it

Section 2: Ways of Becoming a Business Owner

1. Starting a new business.

2. Buying an existing business.

3. Buying a franchise.

4. Taking over the family business.

Starting a New Business

Challenge:Time and effort

Start up costs

Borrow money

Risky

Rewards

Create your own business

Build your own business

Personal satisfaction

Buying an Existing Business

Research before you buy

A Fast Start

Save on Start up costsLease

Furnishings

Customer Goodwill

Drawbacks

Location

Competition

Market Outlook

Expensive Repairs

Poor Reputation

Buying a Franchise

FranchiseExisting advantages

Pay a percentage of profits

Follow the company’s guidelines

Less Risk

Recognized product name

Management systems

Business reputation

Training and support services

Financing

Less Gain

Less satisfaction

Profits go to company

Taking Over the Family Business

Smooth transitionFinance

Loyal

Teamwork

ProblemsBusiness Relationships

Section 3: Getting Started in Your Own Business

Sole ownership

Partnership

Location

Forms of Legal Ownership

Three Choices1. Sole Proprietorship

2. Partnership

3. Corporation

Sole Proprietorship

• Sole Proprietorship

75%

Partnership

PartnershipLeast common

Corporation

CorporationShareholders

Easier Financing

Location, Location, Location

Near customers

Type of business

Condition of streets and buildings

Location of Competition

Location of customers

Working at Home

Cheaper/Convenient

Some community restrictions

Financing

Savings

Loans from a friend

Loan from a commercial lender

Business Plan

Financial Plan

Operating Expenses

Operating Your Own Business

Skills Needed1. Reading

2. Writing

3. Math

4. Listening

5. Speaking

Knowledge

Income StatementRevenueGross ProfitNet ProfitBalance SheetAssetsFixed AssetsLiabilitiesEquityNet WorthCash Flow