Entrepreneurs
46
description
Entrepreneurs. People that start and run their own business. Why are they important to the economy? New Businesses. Choices – Fundamental to the market economy Jobs 80% of new jobs created by firms less than 5 years old. Why are they important to the economy? New Businesses. - PowerPoint PPT Presentation
Transcript of Entrepreneurs
EntrepreneursPeople that start and run their own business.
Why are they important to the economy?
New Businesses• Choices –
• Fundamental to the market economy
• Jobs• 80% of new jobs created by firms less than 5 years old
Why are they important to the economy?
New Businesses• Inventions and Innovations
– A high percentage of the most significant inventions and innovations originate in small firms.
• Disney
• Apple
• Cray / SSI
Who are they?• Family
• Parent or close relative runs their own business
• Cultural• Prejudice, & Needs of the group
• Hmong grocery stores
• Polish deli in NE Mpls.
Who are they?
• Psychological
–Control own destiny
–Goal setters
–Risk Takers
Sample Questions from the Farley test for risk takers
1. I like to improve on ideas.
2. I am high in energy.
3. If I were to gamble, I would never make small bets.
4. I can easily generate lots of money making ideas.
5. I would never bet more money than I had at the time.
6. I am a highly creative person.
7. I like to challenge authority
8. I believe that I control my own destiny.
9. I am highly adventurous.
10. Friends would call me a thrill seeker
11. Making my own decisions is very important to me.
Entrepreneur Example
• Fred Smith– Federal Express– Told plan would
never work.
Who are they?• Age
– Most are 25 – 40– Right combination of money and lack of
obligations – 21 & under 3% Anybody here?– 21 - 25 11% – 26 - 30 21%– 31 - 35 20%– 36 - 40 18%Total 73%
Why do they start?
• Motivation
• Event– Birthday, Family, Move
• Push– Fired from job, Get out of rut
• Goal set– Be own boss, make million by …
Why do they start?
• Preparation - got idea from• Prior Job 45%• Personal interest/hobby 16% • Chance happening 11%• Suggestion 7%• Family Business 6%• Education/ Courses 6%• Friends / Relatives 5%
Here’s my report card and an impressive list I’ve compiled of entrepreneurs who never finished high school.
Why do they start?• Business Climate / Suitability
– Large organizations are difficult to start.– What’s the newest car company?
– Business that can start small and grow.– Software, Services, Low inventory
– Industry must be growing.– Do we need more ________?
– New want or need
– Economy should be growing– Recessions are not good for businesses.
– More people start business during recession.
2006 Firm Births & Deathsper week average and yearly total
Total Less than 20 Employees
Births 12,886 670,100
12,321 640,700
Deaths 11,525 599,300
11,025 573,300
Why do they start?
• Financing Sources– Personal Savings & Assets– Friends & Relatives– Banks – Former Owners– Investors – Venture Capitalists– Suppliers – consignments
Why do they start?
• Regional Climate – Most entrepreneurs start their business in their hometown.
Familiarity with regionNeeds of community
What does Eau Claire need?
Locations BankersCustomers
What determines success or failure?
• Evaluate the proposed idea– Product – what’s produced?
– Market – who’s served?
– Competition – how is business going to differentiate itself?
– New service– More service– Price
What determines success or failure?
• Purchase an established business• Get location
• Customers
• Goodwill
• Franchise• Established product
• Systems & Support• Network
Top Ten Franchises of 2009 according to Entrepreneur Magazine
• Subway• McDonald’s• Liberty Tax Service• Sonic Drive In Restaurants• InterContinental Hotels Group• Ace Hardware• Pizza Hut• The UPS Store• Circle K• Papa Johns
What determines success or failure?
• Experience & Education• Mix of both is seen as good
• Teamwork - partners• Division of labor• Specialization• Multiple viewpoints• Access to more financing
What determines success or failure?
• Utilize outside advice.– Small Business Administration– National Federation of Independent Businesses– SCORE– Chamber of Commerce
What determines success or failure?
• Capital• Need for adequate financing.
– Revenues low during early stages
– Opening costs usually higher than expected
– Family needs are still present.
What determines success or failure?
• Hours worked per week by new business owners.– Fewer than 50 23%
– 50 - 59 23%
– 60 - 69 28%
– 70 - 79 13%
– 80 or more 12%
Public Corporation
• firm whose shares are publicly traded (stock market) and are usually held by a large number (hundreds or thousands) of shareholders
Private Corporation
• firm whose shares are not publicly traded, and are held by a small number of stockholders (shareholders).
Limited Liability Company “LLC”• Fairly recent type of business entity
• combining the advantage of corporate limited liability with the one-level taxation and managerial and operational flexibility of a partnership.
• It can be formed by one or more persons and, if a single owner LLC, it does not have to file a separate Federal tax return.
• All members of the LLC are shielded from personal liability beyond their committed investment.
Limited Liability Company “LLC”
• the LLC has recently become the most used form for doing business in Wisconsin.
• Best suited for small group, licensing company, etc. Very flexible.
• Can be easily converted to a corporation
2006 Data Proprietorship Partnerships Corporations
Number of Firms
22,075,000 2,947,000 5,841,000
Percent 71.5 % 9.5% 19 %
Business Receipts
$1,278 $4,131 $26,070
Percent 4.1% 13.1% 82.8%
Average ReceiptsPer firm
$57,893 $1,401,764 $4,463,276
Net Income $278 $667 $1933
Percent 9.6% 23.2% 67.2%
Cooperatives
• Members are the owners– Limit to one share per member
• Patronage Refund– Profits are returned to members based on the
amount of business they did with the co-op
Eau Claire Area Co-ops• Credit Unions (12,000)
– RCU, MET, WESTCONSIN
• Retail Stores (500)– MEGA (EC Consumers Co-op)
• Utility– Eau Claire Electrical Coop– Touchstone Energy– Chequamegon Telephone
2005 Data Proprietorship Partnerships Corporations
Number of Firms 21,468,000 2,764,000 5,671,000
Percent 71.8 % 9.2 % 19 %
Business Receipts(billions $) $1,223 $3,719 $24,060
Percent 4.2 % 12.8 % 83 %
Average ReceiptsPer firm $56,968 $1,345,514 $4,242,638
Net Income(billions $) $270 $546 $1,949
Percent 9.8% 19.7 % 70.5 %
2005 Data Proprietorship Partnerships Corporations
Number of Firms 21,468,000 2,764,000 5,671,000
Percent 71.8 % 9.2 % 19 %
Business Receipts(billions $) $1,223 $3,719 $24,060
Percent 4.2 % 12.8 % 83 %
Average ReceiptsPer firm $56,968 $1,345,514 $4,242,638
Net Income(billions $) $270 $546 $1,949
Percent 9.8% 19.7 % 70.5 %
• The following are co-op brands you may recognize
• Ace HardwareACE Hardware, Cleaning and Paint Supplies
• Blue Diamond GrowersBlue Diamond, Smokehouse
• CarpetOneCarpet, vinyl, laminate, ceramic, hardwood
flooring
• Florida's NaturalOrange juice and grapefruit juice
• Land O' LakesLand O'Lakes, Indian Maiden, Lake to Lake,Land-O-Lakes, Bridgeman, Cocoa Classics, Flash
• Sun-DiamondSun-Maid
2004 Data from
U.S. Statistical Abstract -online
Proprietorship Partnership Corporation
Number of 20,591,000 2,547,000 5,558,000Percentage 71.7% 8.9% 19.4%
Revenue/SalesBillions $ / %
$1,140
4.4%
$3,142
12.1%
$21,717
83.5%Net Income
ProfitBillions $ / %
$248
14.3%
$385
22.0%
$1,112
63.7%
2004 Firm Births & Deathsper week average and yearly total
Total Less than 20 Employees
Births 12,094 628,900
11,575 601,900
Deaths 10,409 541,000
9,904 515,000
Why is small business important? According to the NFIB
Small business in the United States serves many purposes.
it supplies goods and services that customers demand
it is a major innovator; a laboratory of economic experiment
it generates the lion’s share of net new jobs
it stabilizes economic cycles through relatively small employment swings
Why is small business important? According to the NFIB
its owners provide neighborhood and community leadership it is an avenue of economic opportunity it enhances pluralism in economic decision-making, and
it offers personal utility, i.e., personal satisfaction and happiness to its owners.
(Source: compiled by William J. Dennis, Jr., NFIB Research Foundation.)
S-Type Corporation• S-Type corporations are taxed as
partnerships while retaining the advantages of incorporation.
The S-type corporation has all of the advantages and disadvantages of the traditional corporation except in the area of taxes. For tax purposes, the S-corporation shareholders are treated similarly to partners in a partnership. There is no double taxation of an S-type corporation.
2002 Firm Births & Deathsper week average and yearly total
Total Firms < 20 Employees
Births 10,957 569,800
10,413 541,500
Deaths 11,286 586,900
10,713 557,100
2001 Firm Births & Deathsper week average and yearly total
Total Firms < 20 Employees
Births 11,252 585,100
10,731 558,000
Deaths 10,640 553,300
10,077 524,000
EntrepreneursPeople that start and run their own business.
• Why are they important to the economy?
• Who are they?
• Why do they start?
• What determines success or failure?
Patents – 2003Inventions
• Patent Applications – 367,000
• Patents Issued Individuals
19,600
Corporations 148,500
