WHAT IS ENTREPRENEURSHIP?

STUDENTS WILL BE ABLE TO:

  DESCRIBE THE DIFFERENCE BETWEEN EMPLOYEES AND ENTREPRENEURS.

  DISCUSS HOW ENTREPRENEURS CREATE VALUE FROM “SCARCE” RESOURCE.

  EXPLAIN WHY ENTREPRENEURS LIKE CHANGE.

  EVALUATE THE PROS AND CONS OF OWNING YOUR OWN BUSINESS.

THOUGHT OF THE DAY…

“The greatest ability in business is to get along with others and influence

their actions. A chip on the shoulder is too heavy a piece of baggage to carry

through life.” -John Hancock

QUESTION

WHAT IS THE ROLE OF THE ENTREPRENEUR WITHIN A

FREE-ENTERPRISE ECONOMY?

“EVERYONE LIVES BY SELLING SOMETHING.”

- ROBERT LOUIS STEVENSON, SCOTTISH AUTHOR

WHAT DOES IT MEAN TO BE AN ENTREPRENEUR?

ENTREPRENEUR

  “a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.”

EMPLOYEES vs ENTREPRENEURS

  EMPLOYEES

  Does not own the business

  Works for someone else

  Is responsible for doing his/her job

  Succeeds by doing his/her job

  ENTREPRENEURS

  Owns the business

  Does not have a “boss”

  Is responsible for the success/failure of the business

  Succeeds by satisfying a consumer need

A successful business sells products or services that

customers need, at prices they are willing to pay.

SOME FACTS ABOUT BUSINESS

  There are some 16 million businesses in the U.S.

  8,000 new businesses are started each week.

  In 1990, 4 million jobs were created by new ventures. Big businesses lost 1.7 million jobs.

  Almost half of all innovations/new products were created by small entrepreneurial companies.

  Almost half of the work force works for small businesses.

  Millions of businesses today are owned by African-Americans, Hispanics, and women.

BUSINESS

  THE BUYING AND SELLING OF PRODUCTS OR SERVICES IN ORDER TO MAKE A PROFIT

  EXAMPLES:   FORD MOTOR COMPANY

  BED BATH & BEYOND

  EDIBLE ARRANGEMENTS

  MASSAGE ENVY

Prices must be HIGH enough for the entrepreneur to be able

to cover all the costs for running the business, and

have money left over as PROFIT.

WHAT IS

PROFIT?

PROFIT

  MONEY A COMPANY HAS LEFT AFTER EXPENSES AND TAXES HAVE BEEN PAID.

CAN-DO PERSON

WHEN YOU WORK FOR OTHERS, YOU CAN STILL THINK LIKE AN ENTREPRENEUR:

1.  LOOK FOR OPPORTUNITIES 1.  LEARN NEW SKILLS

2.  TAKE ON NEW RESPONSIBILITIES

2.  SHOW YOUR EMPLOYER YOU UNDERSTAND THE BUSINESS AND WORKING TO IMPROVE THE COMPANY

ENTREPRENEURS DO 3 THINGS:

  1. LISTEN

  2. OBSERVE

  3. THINK

BIG vs SMALL BIG

  MORE THAN 100 EMPLOYEES

  SELL MORE THAN $1 MILLION WORTH OF PRODUCTS/SERVICES

  MICROSOFT, NIKE

SMALL

  BABY-SITTING SERVICE

  NEIGHBORHOOD RESTAURANT

  START AS ENTREPRENEURIAL VENTURES

PROFIT!! PROFIT!! PROFIT!!

RULE OF THUMB:

  WHEN STARTING A BUSINESS, IT’S REALISTIC TO EXPECT TO LOSS, FOR THE FIRST THREE MONTHS.

UNSUCCESSFUL

  NOT MAKING A PROFIT = CLOSING MIGHT BE A SMART DECISION

  ENTREPRENEUR MAY CHANGE BUSINESSES MANY TIMES OVER THE YEARS DUE TO COMPETITION AND CONSUMER NEEDS

PROFIT

  YOUR DOING SOMETHING RIGHT!

  SIGN OF ADDED VALUE TO THE “SCARCE” (LIMITED) RESOURCES BEING USED

RESOURCES

  SOMETHING OF VALUE THAT IS USED TO MAKE SOMETHING ELSE OR TO FILL A NEED

  OIL = FUEL

  WOOD = HOUSE/TABLE/PAPER

  ALL RESOURCES ARE LIMITED!

DEBBIE FIELDS FOUNDER MRS. FIELD ORIGINAL COOKIES

RESOURCES:

  EGGS

  BUTTER

  FLOUR

  SUGAR

  CHOCOLATE CHIPS

  LABOR

=

FINAL PRODUCT

CONSUMERS ENJOYED THE FINISHED GOODS, PAYING MORE THAN COST FOR RESOURCES,

EARNING A PROFIT

THE ECONOMIC QUESTIONS

1.  WHAT SHOULD BE PRODUCED?

2.  HOW WILL IT BE PRODUCED?

3.  WHO GETS TO HAVE WHAT IS PRODUCED?

ALL BUSINESSES AT ONE POINT HAVE ANSWERED THE ABOVE QUESTIONS

ECONOMY IS THE SYSTEM THAT A GROUP OF PEOPLE CREATE THROUGH MAKING THESE DECISIONS.

ECONOMICS IS THE STUDY OF HOW SOCIETIES USE SCARCE RESOURCES TO PRODUCE VALUABLE COMMODITIES AND DISTRIBUTE THEM AMONG DIFFERENT PEOPLE.

  AN ECONOMY IS A COUNTRY’S FINANCIAL STRUCTURE.

FREE ENTERPRISE SYSTEM

  ANYONE IS FREE TO START A BUSINESS.

  FREE TO DO WHAT THEY WANT WITH THEIR MONEY.

  THE ECONOMIC SYSTEM IS CALLED CAPITALISM

  MONEY USED TO START A BUSINESS IS CALLED CAPITAL

VOLUNTARY EXCHANGE

  FREE ENTERPRISE SYSTEM aka “FREE-TRADE SYSTEM” BECAUSE IT IS BASED ON VOLUNTARY EXCHANGE

A TRANSACTION BETWEEN TWO PARTIES WHO AGREE TO TRADE MONEY FOR A PRODUCT OR SERVICE

BOTH PARTIES BELIEVE THEY WILL BENEFIT!

ROBBERY = INVOLUNTARY TRADE

BENEFITS OF FREE ENTERPRISE

  DISCOURAGES ENTREPRENEURS WHO WASTE RESOURCES (DRIVING THEM OUT OF BUSINESS)

  ENCOURAGES TO USE RESOURCES EFFICIENTLY TO SATISFY CUSTOMERS NEEDS (WITH PROFIT)

  ENCOURAGES COMPETITION WITHIN ENTREPRENEURS ATTRACTING NEW CUSTOMERS

  CONSUMERS BENEFIT FROM LOWER PRICES

CHANGE = OPPORTUNITY

  In the 1970’s, oil prices were high. American automobile manufacturers had to begin making smaller cars because consumers didn’t want to buy big ones, which consumed more gasoline.

  Debbi Fields, created chocolate chip cookies that tasted homemade because in the 70’s, more women started to work instead of staying home.

WHY BE AN ENTREPRENEUR?

PROS : OF AN ENTREPRENEUR

1.  CONTROL OVER TIME •  FLEXIBLE HOURS, HIRE PEOPLE TO

PERFORM TASKS

2.  A CREATIVE, FULFILLING LIFE •  PASSIONATE AND ENJOY THE

FREEDOM AND RESPONSIBILITY OF BEING “THE BOSS”

PROS :

3. THE OPPORTUNITY TO CREATE GREAT WEALTH •  OWNERSHIP IS THE KEY TO WEALTH;

OWNERS BENEFIT FROM PROFIT EARNED AND INCREASING VALUE OF BUSINESS

PROS :

4.  CONTROL OVER COMPENSATION •  PAY YOURSELF SALARY – FIXED

PAYMENT WEEKLY OR MONTHLY •  PAY YOURSELF A WAGE – PAYMENT

PER HOUR

•  TAKE A DIVIDEND – PAY YOURSELF A SHARE OF THE BUSINESS’S PROFITS

•  TAKE COMMISSION – PERCENTAGE OF SALE

PROS :

5. CONTROL OVER WORKING CONDITIONS

  CREATE YOUR WORKING ENVIRONMENT

6. SELF-EVALUATION   EVALUATE OWN PERFORMANCE; NO

ONE CAN HIRE OR FIRE YOU

PROS :

7.  PARTICIPATION IN AN INTERNATIONAL COMMUNITY •  COMPETE AROUND WORLD OVER

INTERNET

8.  THE OPPORTUNITY TO HELP ONE’S COMMUNITY •  CREATE JOBS FOR PEOPLE IN THE

COMMUNITY

CONS :

1.  BUSINESS FAILURE •  MANY SMALL BUSINESSES FAIL; RISK

YOU OWN MONEY AND INVESTORS

2.  OBSTACLES •  UNEXPECTED PROBLEMS

3.  LONELINESS •  ON YOUR OWN TO SUCCEED OR

NOT

CONS :

3.  FINANCIAL INSECURITY •  MAY NOT HAVE ENOUGH MONEY TO

PAY YOURSELF FROM EARNINGS

4.  LONG HOURS/HARD WORK •  LONG HOURS, EVERY DAY

OWNERSHIP IS THE KEY TO WEALTH

  ENTREPRENEURS MAKE MONEY FROM PROFITS

  IF BUSINESS SUCCEEDS AND GROWS, THEN SOMEONE BUYS IT

  TOP EXECUTIVES MAKE MILLIONS THROUGH SALARY AND STOCK ( PART OWNERS)

LIVING A LIFE YOU WILL LOVE

  HAVING A CAREER YOU ENJOY

  WHAT DO YOU LOVE?

  WHAT INTERESTS YOU MOST?

RUSSELL SIMMONS

  LOVED HIP-HOP, TURNED IT TO DEF JAM RECORDS

PHAT FARM CLOTHING

  RUSH MANAGEMENT

BECOMING AN ENTREPRENEUR HAS PROVIDED SIMMONS WITH:

1.  WEALTH : ENTERPRISE WORTH OVER $60 MILLION

2.  INFLUENCE : POLITICS, PROMOTING VOTER REGISTRATION

3.  CONTROL : IN CHARGE OF HIS MONEY AND TIME

QUESTION

  WHAT IS THE ROLE OF THE ENTREPRENEUR WITHIN A FREE-ENTERPRISE ECONOMY?