the story of 5 entrepreneurs…. business management january 31, 2012
TRANSCRIPT
![Page 1: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/1.jpg)
From Garage toFortune 500
The story of 5 entrepreneurs…
![Page 2: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/2.jpg)
Characteristics of Business
Business ManagementJanuary 31, 2012
![Page 3: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/3.jpg)
Define entrepreneurship.Explain the risks and rewards of entrepreneurship through a SWOT analysis.
Explain the nature of business activities.
Describe the general types of businesses.
Compare the characteristics of different types of business ownership.
Today’s Objectives
![Page 4: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/4.jpg)
Entrepreneurship
![Page 5: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/5.jpg)
EntrepreneurshipEntrepreneurship is the process of starting and managing your own business.
An entrepreneur is someone who attempts to earn money and make profits by taking the risk of owning and operating their business.
![Page 6: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/6.jpg)
Think About It…
What personality traits, qualities, or skills are needed in
order to be a successful
entrepreneur?
![Page 7: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/7.jpg)
Characteristics of EntrepreneursRisk takerDecision makerHard workerAmbitiousGoal setterEnjoys challengesCan adapt to changes
![Page 8: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/8.jpg)
Strengths Weaknesses
Opportunities Threats
SWOT Analysis
![Page 9: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/9.jpg)
Nature of Business
![Page 10: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/10.jpg)
An organization that produces or distributes a good or service for profit is called a business.
Profit (the difference between earned income and costs) is the goal of business ownership!
What is Business?
![Page 11: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/11.jpg)
Every business engages in at least three major activities.
1.Production making a product or providing a service
2.Marketing activities between the business and customers (buying / selling)
3.Finance deals with all of the money matters involved in running a business
Business Activities
![Page 12: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/12.jpg)
Types of Businesses
![Page 13: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/13.jpg)
Produce goods used by other businesses or organizations to make things◦Mining coal◦Extracting oil◦Constructing
buildings◦Building businesses◦Manufacturing
airplanes◦Assembling
televisions◦Growing crops /
raising livestock
Industrial Businesses
![Page 14: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/14.jpg)
Sell products or services to the end consumer
Engaged in marketing (wholesalers and retailers), in finance (banks and investment companies), and providing services (medical offices, fitness centers, hotels)
Commercial Businesses
![Page 15: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/15.jpg)
Service Businesses – type of commercial business that use mostly labor to offer intangible products to satisfy consumer needs
Industry – refers to all businesses within a category that do similar work (i.e., the automotive industry)
Other Key Terms
![Page 16: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/16.jpg)
Service Businesses
Industries
![Page 17: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/17.jpg)
Types of Business Ownership
![Page 18: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/18.jpg)
o Sole Proprietorship
o Partnershipo Corporation• LLC• S-Corporation• Nonprofit
Corporation• Quasi-public
Corporationo Organizational Alliances• Joint Ventures• Cooperatives
o Franchise
Types of Business Ownership
![Page 19: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/19.jpg)
Importance of Small Business Small businesses provide 55% of jobs.
There are 1/2 million businesses started each year – only the strong survive!
Within the first three years, one out of every four to five businesses will close.
About half cease operations within 6 to 7 years.
![Page 20: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/20.jpg)
Sole ProprietorshipsAbout 3/4 of all businesses in the United States are sole proprietorships.
A sole proprietorship is a business owned by one person.
Sole proprietors usually have a special skill by which they can earn a living (i.e. plumbers, contractors, wedding planners, etc.).
![Page 21: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/21.jpg)
Sole Proprietorships Owner is boss Owner receives
all profits Personally know
employees & customers
Makes all decisions
May lack necessary skills & abilities
May lack funding
Owner bears all losses (unlimited liability)
Business ends upon death of the owner
Advantages Disadvantages
![Page 22: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/22.jpg)
Partnerships A partnership is a business
owned by two or more people who share its risks and rewards.
A partnership agreement outlines the rights and responsibilities of each partner.
![Page 23: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/23.jpg)
PartnershipsSkills & abilities pooled
Sources of capital increase◦Investment◦Credit
Unlimited liability
Disagreement among partners
All partners share risk◦May be held
responsible for partner’s mistakes
Difficulty in withdrawing from partnership
Advantages Disadvantages
![Page 24: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/24.jpg)
Did You Know? Only 15 – 20 percent of all
businesses in the United States are corporations.
Corporations are responsible for 80% of all business that is conducted in the United States.
![Page 25: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/25.jpg)
CorporationsA corporation is a company that is registered by a state and operates apart from its owners.
The owner must get a corporate charter (business license) from the state where the main office will be located.
To raise money, the owners can sell stock (shares in the company) to stockholders.
The company must have a board of directors to govern the corporation.
![Page 26: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/26.jpg)
CorporationsDouble taxation
◦Company taxed on income
◦Stockholders taxed on profits
Government regulations
Complex business to run◦Stockholders’ records
◦Charter restrictions
Advantages Disadvantages
Available sources of capital
Limited liability of stockholders
Permanency of existence
Ease in transferring ownership
![Page 27: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/27.jpg)
Other Types of CorporationsLLCS-corporationsNonprofit corporationsQuasi-public corporations
![Page 28: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/28.jpg)
Limited Liability Company
Also known as LLC
Relatively new form of ownership
Hybrid of a partnership and corporation
◦Owners protected from personal liability
◦Profits / losses pass directly to owners without taxation to the company itself
![Page 29: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/29.jpg)
Subchapter S Corporation
One type of corporation
Small business that is taxed like a partnership or sole proprietorship but has up to 35 shareholders
![Page 30: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/30.jpg)
Does not pay taxes, does not exist to make a profit
In the United States, nonprofits provide nearly 1/3 of the GDP.
Examples include:◦Loudoun County Public Schools◦United Way◦Educational Testing Service (the SATs)
◦Hospitals
Nonprofit Corporations
![Page 31: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/31.jpg)
Businesses that are important to society but lack the profit potential to attract investors
Usually operated by local, state, or federal government
Government provides financial support (subsidy)
Government imposes regulatory controls
Examples include:◦Interstate highways (Massachusetts & PA
turnpike … state-owned)◦Local water & sewer systems (Loudoun
Water)◦Los Angeles County Museum of Art
Quasi-Public Corporations
![Page 32: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/32.jpg)
Organizational Alliances
Joint VentureCooperatives
![Page 33: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/33.jpg)
Agreement among two or more businesses to work together to provide a good or a service
Each business shares the costs of doing business as well as the profits
Many web-based companies rely extensively on joint ventures.
Also commonly seen when businesses expand into foreign countries
Joint Ventures
![Page 34: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/34.jpg)
Business owned and operated by its user-members for the purpose of supplying themselves with goods and services
Operates similarly to a corporation (stockholders, charter)
Provides members with cost and profit advantages
Popular in agriculture for buying & selling crops
Cooperatives
![Page 35: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/35.jpg)
Franchises!
![Page 36: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/36.jpg)
Franchises A franchise is a legal agreement to use the name and sell the products of a parent company in a designated geographic area.
Franchisee: person who buys the rights to operate the business
Franchisor: recognized company that allows independent owners to use their name
The franchisee pays the franchisor an annual fee and a share of the profits.
![Page 37: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/37.jpg)
Franchises
Owner receives thorough business training
Uses a tested management system
Owner is guaranteed a certain geographic area
Usually widely recognized names
High initial costOwner has to follow strict rules and regulations
Judged by performance of peers
AdvantagesDisadvantage
s
![Page 38: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/38.jpg)
Did You Know? Many businesses start as
one form of business ownership, but move into other forms later.
Example: Ben & Jerry’s started as a partnership, became a Subchapter S Corporation, and then eventually became the corporation we know today.
![Page 39: The story of 5 entrepreneurs…. Business Management January 31, 2012](https://reader036.vdocuments.us/reader036/viewer/2022062718/56649e755503460f94b75d4f/html5/thumbnails/39.jpg)
3… things you learned2… examples that stood out
1… question you still haveTHE END