Insight to Business

Starting A BusinessTypes of BusinessesPlanning For SuccessFinancing A Business

Paperwork

Section 1: The American Dream

• Entrepreneur – risk-takers who have ideas, develop plans, and take action to pursue moneymaking opportunities.

They view ownership as the most promising path to financial success, independence and true job satisfaction.

They handle every detail of the job

Section 1: The American Dream

• Most American millionaires are:• Frugal• Hardworking• Small business owners• Risk-taker• Self-sacrificing• Clear vision

Section 1: The American Dream• Typical small businesses owned by

entrepreneurs are:• Air conditioning, heating, refrigeration & plumbing• Apparel• Arts, crafts & hobbies• Automotive trades• Barber shops & beauty salon• Building & construction• Communications & electronics• E-commerce• Export & import trade• Farms & ranches• Florists• Funeral Homes• Newspapers & printing• Sales & consulting

Section 1: The American Dream

• Benefits to Being An Entrepreneur• Choice of residence• Choose work location• Can work from home• Be in charge• Family businesses bring members together• Potential to earn more money than others• Knowledge gained not found in books• Pride

Section 1: The American Dream• Detriments to Being An Entrepreneur

• High level of self-discipline• Blame for any mistakes• Consumes time and energy• Long workdays• Small salary (especially in beginning)• Operation on shoestring budget• Negotiations

• 25% of all small businesses fail within 2 years• 50% fail within 5 years

Section 2: The 3 Forms of Business Ownership

• There are 3 forms of business– Sole Proprietorship

– Partnership

– Corporation• Franchise

• Can YOU name 3 businesses from each category?

Section 2: The 3 Forms of Business Ownership

• Sole Proprietorship - when a single person is both the owner and a worker.

– POSITIVES:• Easiest to form• Least difficult to manage

– NEGATIVES:• Financial responsibility rests on owner• Unlimited liability

Section 2: The 3 Forms of Business Ownership

• Partnership - when 2 or more people own an operate a business.

– POSITIVES:• Combined input in creation and problem solving• Greater source of financing

– NEGATIVES:• Shared control & profits• Shared financial responsibility & loss

Section 2: The 3 Forms of Business Ownership

• Corporation - when a large number of people own and operate a business under a state-issued license or charter.

– It can be owned by millions of people in the form of stockholders - those who have bought a share of investment in the corporation called stock.

– The business becomes a separate “person” under the law distinct and apart from its owners.

• Unlike sole proprietors and partnerships, stockholders have limited liability meaning their losses extend no farther than their investments.

Section 2: The 3 Forms of Business Ownership

• Corporation continued…

– POSITIVES:• Easy to generate funds• Expansion

– NEGATIVES• Little control by individuals• Lots of red tape and paperwork

Section 2: The 3 Forms of Business Ownership

• Franchise - a legal contract with an established, well-recognized corporation.

– Allows use of corporate name, logo and business methods in exchange for payment.

– Regulated by the Federal Trade Commission (FTC).

– Must follow all of the parent company’s rules.

– Loss of independence and input in your own business

Section 3: Planning For Success

• Entrepreneurs translate dreams & ideas into successful business practices by:

• identifying & understanding their markets • developing plans to get through down cycles.

• Your business idea could be an extension of a personal hobby or interest.

Section 3: Planning For Success

• After developing an idea you will need to test its potential against reality.

• Steps to Follow:– Evaluate your product or service– Analyze your competitiveness– Assess your human & financial resource– Determine whether you have the expertise

Section 3: Planning For Success

• A Sound Business Plan

• After choosing location, purpose and form of business you need a plan of action– This includes:

• Info on the Product or Service• The potential market• Marketing Strategy• Organization of the Business• Financial requirements to start the operation

– The plan should paint a picture of the business** Lenders will use the plan to decide their involvement **

Section 3: Planning For Success

• A Sound Business Plan

• NEVER mix personal and business funds• OPEN a separate bank account for the

business• LET customers know their patronage is

wanted and appreciated• ALWAYS thank your customers• BE SURE your employees follow this policy

Section 3: Planning For Success

• Target Market

– The group of consumers who would most likely purchase YOUR goods/services.

• Questions to Ask• WHO are my potential customers? How old? Gender?• WHAT are their buying habits? How can I reach them?• WHERE are they located? • WHEN are customers available? When do they buy most?• WHY would my customers buy my product?

Section 3: Planning For Success

• Competition

The biggest key to success is knowing your competition. What do they offer?How long have they been in business?What are their strengths & weaknesses?

Your customers will want to know 2 things:Are your business prices higher or lower?What is the benefit of your product vs. their product?

What can you do to try and trump their business and gain customer loyalty?

Section 3: Planning For Success

• Determining Price

Fine line between competitive pricing, profit & covering costs.

There is rarely an exact price for goods/services.This is an acceptable price range.

THE KEY: Do NOT overprice a good/service!

Section 3: Planning For Success

• Location, Location, Location…

This could be the difference between success and failure

- Convenient for Customers- Offer greatest access to markets

- Zoning- Business signs- Property Improvement- Property maintenance

Section 3: Planning For Success

• Advice

Never turn it down!

Every person and every business will encounter a problem.

Small Business Administration- Assists with all aspects of starting a business and growing a

business

Section 3: Planning For Success

• TIME WASTERS – The Top 10

1. Telephone interruptions2. Visitors to the worksite3. Procrastination4. Excessive paperwork5. Unclear objectives6. Lack of self-discipline7. Poor scheduling8. Failure to delegate9. Lack of skill in a needed area10. Lack of standard procedures

Section 3: Planning For Success

• Moonlighting – working 2 jobs

• Many entrepreneurs will work 2 jobs to keep regular income flowing while business gets off the ground

– Some will remain at a job similar to the one they are starting in order to continue gaining skills and experience in handling potential issues in their own business.

Section Questions• Answer on a separate sheet of paper and submit before bell rings.

Be prepared to discuss your responses.

• 1. Location, location and location. A new business could be located– at the exit ramp of a large expressway – the main street of a small town – a small business area near a large residential community 2 blocks from

an amusement park• Where would you put each of the following and why?

– Small clothing store Apartment building– Electronics store Motel– Grocery store

• 2. Which time waster is the most problematic for you at work? In school? At home? In relationships? What action can you take to get these time wasters under control?