Entrepreneurship: A business of your own. Vocabulary Entrepreneur: a person who organizes and...
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Transcript of Entrepreneurship: A business of your own. Vocabulary Entrepreneur: a person who organizes and...
Entrepreneurship: A business of your own
Vocabulary
Entrepreneur: a person who organizes and manages a business
Entrepreneurship: the organization and management of a business
Franchise: the right to market another company’s product or service
Small Business Administration (SBA): the prime source of information for would-be entrepreneurs
Vocabulary
Fraud: the act of deceiving or tricking
Commission: a percentage of sales paid to a salesperson
Zoning laws: regulate what types of business activities can be performed in certain areas
License: a certificate showing that you have permission to practice your occupation
Vocabulary
Fixed expenses: Bills that must be paid regularly in set amounts
Flexible expenses: vary from month to month
Assets: items you own
Liabilities: debts you owe
Vocabulary
Bookkeeping: Recording of income and expenses
Accounting: Analysis of the data you’ve recorded Receipts: record of all money collected
Profit ratio: percentage of receipts that are profit
Break-even point: when income equals expenses
Entrepreneurship
Advantages You are your own
boss Freedom to make
your own decisions You get to keep all
profits your company earns
Disadvantages As a business owner,
you take on all responsibilities
Many extra hours of work (at least 60 hrs per week)
Emotional strain
Franchise
Purchasing a franchise has several advantages. It allows the entrepreneur to buy a business with a proven track record of success.
As a franchise owner, you would also receive support from the franchiser
Franchise
Buying a franchise also has some disadvantages.
You need a lot of money for the initial investment. You also may have to pay ongoing fees to retain the right to use the company’s name
You may be required to follow company guidelines instead of your own.
Franchise
Some popular franchises are: Subway McDonalds Taco Bell KFC Jackson-Hewitt Tax Service TCBY treats Wendy’s
Buying an existing business
Another opportunity open to some entrepreneurs is buying a business that is already existing
Buying an established business can eliminate much of the work and expense of starting a business.
US Small Business Administration (SBA) Established 1953 Provides financial, technical, and
management assistance to help start, run, and enlarge a business
www.sbaonline.sba.gov
Planning your own business
What does it take to succeed?
Optimism – you must believe in yourself & your business.
Self-starter – you must have initiative
Planning your business
Choosing a business – what is the best business for you?
Choosing a location – the importance fo location depends on the kind of business you have
Pricing your product or service – are you charging enough for your products or services?
Legal and Financial Issues
A number of legal and financial issues will affect you if you become an entrepreneur.
Zoning and licensing requirements must be met
Choose your business structure
Business Structure
The three basic business structures-
1. Proprietorships
2. Partnerships
3. Corporations
Proprietorship
Simplest type & most costly ($$$$) You will be the sole owner Gives you total freedom Gives you total responsibility
Partnership
Share the business responsibility You can borrow more money with two
people It can be difficult if you don’t get along with
partner The business could be jeopardized
Corporation
Easier time raising money Have less risk to your personal assets Costs more to set up Higher taxes
Obtaining Financing
Use saved money (seed $) to finance your business
Apply for a loan Use outside investors
Applying for a loan
Business plan Record of fixed and
flexible expenses Record of assets and
liabilities
Comparing Annual Profits
Year 1
Income - $100,000
Expense - $80,000
Profit $20,000
Profit ratio = 20,000/100,000 = 20%
Year 2
Income - $120,000
Expense - $98,000
Profit $22,000
Profit ratio = 22,000/120,000 = 22%
Professional Assistance
A lawyer can be one of your most valuable resources when starting a business
An accountant can help analyze his books and give advice about increasing profits
An insurance agent is another professional whose advice you should seek, protect your business against theft, fire, etc.
Working from home
Advantages
Don’t have to pay rent Can handle home
responsibilities during the day
Certain tax advantages
Disadvantages Family concerns may
disrupt your business Neighbors may object
about a business next to their home
Clients may feel its unprofessional
Loneliness & isolation can be a possible hazard