Vocab

• Entrepreneurship

• Sole proprietorship

• Unlimited liability

• Partnership

• Corporation

• Stock

• Limited liability

• Franchise

• Nonprofit organization

• Cooperative

Vocab cont.

• Producer

• Processors

• Manufacturers

• Intermediary

• Wholesaler

• retailer

Dictionary: Entreprenedre - “To undertake”

Perception: A person of very high aptitude who pioneers change; Anyone who wants to work for himself or herself

What is an Entrepreneur?

Source: www.QuickMBA.com

Characteristics of an entrepreneur:

• Independent, Self-confident, self-motivated, disciplined and risk takers, persistent, creative, responsible, enthusiastic,

• Of all the characteristics being independent or wanting to work for themselves seems to be the most dominant.

Textbook Traits •Desire for responsibility •Preference for moderate risk•Confidence in ability to

succeed•Desire for immediate

feedback •High level of energy •Future orientation •Skill at organizing •Value of achievement over

money •High degree of commitment •Tolerance for ambiguity•Flexibility

Source: Zimmerer, Thomas W. and Scarborough, Norman S., Essentials of Entrepreneurship and Small Business Management, Prentice Hall, 2005.

Entrepreneurial Traits… What Entrepreneurs Say:

•Tenacity and drive •Opportunity “vision”•Passion •Relationships•Judgment

Source: Frey, Katherine Korman, Vision Forward, LLC case studies: The Hot MommasTM Project, Cool Daddies Project, Extreme Entrepreneurs, & Innovative

Intrapreneurs, 2004-2007.

Skills you should develop

• Communication

• Human Relation

• Math

• Problem-solving/ decision making

• Technical

• Basic business

Common traits• 47% are under age 35 when they start (16% are

under 25)

• 40% have only a high school diploma. 27% - some college -33% complete college

• 62% had a parent or relative who own a business

• Frequently had work experience at a young age .

• Influenced early in life by a role model.

Exercise 1-4The Role of Small Business in AmericaWhich of the below is/are FALSE?

1. Employ more than half of all private sector employees.

2. Create more than 50 percent of nonfarm private gross domestic product (GDP).

3. Produce 13 to 14 times more patents per employee than large patenting firms.

4. Are employers of 39 percent of high tech workers (such as scientists, engineers, and computer workers).

5. Made up 97 percent of all identified exporters and produced 29 percent of the known export value in FY 2001.

6. Provide 83% of the world’s steel.

What is the most rewarding part of being a

business owner?

Advantages

    Profit

    Satisfaction

      Use of all your skills

Disadvantages

    Long Hours

    Total Responsibility

    Financial Risks

Entrepreneurs reduce failure by using calculated risks. They do extensive research before starting a business.

Researching about potential customers, products already on the market, competition, and supply/demand is called Demographics.

An essential part of starting a business is a business plan. The plan is a written guide to help you develop your goals (future plans). A business plan is required by most banks to obtain a loan.

Parts of a Business Plan

Types of business ownership:• Sole proprietorship – individually

owned business

– Unlimited liability, unlimited profit, taxed once

• Partnership – 2 or more people who may have equal share in the running of the business.

– Shared liability, shared profit, taxed once

The Role of Small Business in America

Types of Sole Proprietorships by Industry and Receipts (Revenues) 2003.

Figure 1:

Source: www.bizstats.com

IndustryNumber of sole-proprietorships %

Receipts (in thousands) %

Professional, scientific & technical services 4,226,056 24% $ 148,359,796 15%

Other services 3,047,639 17% $ 85,381,003 9%

Retail trade 2,309,270 13% $ 185,175,310 19%

Construction 2,283,929 13% $ 154,225,367 16%

Health care and social assistance 1,520,435 9% $ 82,760,451 9%

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Franchise– Advantages:

Prepackaging of a system of operation.

Parent company helps owners start business

Name of company draws customers

 

– Disadvantages:

Large amount of money needed to purchase.

A share of the sales or yearly fee must be paid

May have limited choices as to how the company is run.

Corporation

• – Owned by many people who all have a vote, but is treated like a separate person, which can pay taxes and own property.

– Limited liability, profit based on stock portfolio, taxed twice

Cooperative

• – owned by a group of people to save money (pool resources)– Pay less taxes than corporations,

can sell stock,

– Examples: Ocean Spray, Welch’s REI

Non-Profit

• organized so as to give out as much as it takes in. (Churches, shelters, government, public schools, etc.)

– doesn’t pay taxes, donors deduct from their taxes.

Types of Businesses• Producing raw goods

– (mining or fishing)

• Processing raw goods – (packing fish, fish oil, making iron ore bricks)

• Manufacturing – (automobiles, canned tuna)

• Intermediaries – buys, moves, stores and resells

• Wholesaler

• Retail

• Service – fastest growing type of business

Vocab Chapters 7 & 8

• Organizational chart

• Centralized organization

• Decentralized organization

• Departmentalization

• Top, middle, operational managers

Part of the business plan is a good management plan.

Managerial Functions

• Planning

• Organizing

• Leading

• Controlling

Managerial Skills

• Perform a varied of tasks

• Work under pressure

• Effective communication

• Interpersonal skills

• Gather and use information“Management is doing things right; leadership is doing the

right things”

Peter Drucker

Depending on the amount of people a business could run formally or informally.

Formally

• Centralized (one manager in charge), also called line authority

• Departmentalized (different areas of the business working with different managers)

• Decentralized (projects which people come together for a short time and then move on.)

Informal

• A loose structure which most small businesses use. Top manager may do all; or give responsibility to others.

Draw a diagram of the organizational structure of this school.

Leadership qualities

• Motivation

• Confidence

• Communication

• Integrity

Styles of Leadership

• Autocratic – you run the show – you make all the decisions

• Democratic – everyone meets and makes the decision

• Free-Rein – leader sets goals for managers and they decide how best to get the job done. (hands-off)

Self-managed teams

• Manager becomes a team leader– Goal orientated rather than task orientated

– Faster more efficient

– Team members learn more skills

– Simplifies decision making

– Members learn to cooperate

– Teams learn to solve own problems.