Transcript Chapter 1 What is Entrepreneurship?

Chapter 1
Every0ne lives by selling something.
-Robert Luis Stevenson, Scottish author
Key Objectives
Describe the difference between employees
and entrepreneurs.
Discuss how entrepreneurs create value from
“scarce” resources.
Explain why entrepreneurs like change.
Evaluate the pros and cons of owning your own
business.
Vocabulary
Business
 Entrepreneur
Capital
 Free enterprise system
Capitalism
 Profit
Economy
 Res0urce
Employee
 Voluntary exchange
Differences between Employees
and Entrepreneurs
 Most Americans make money working in a
business.
 A business is buying and selling of products
and services in order to make a profit.
 An employee who works in another
person’s business.
 Entrepreneurs are people who work in their
own business.
 The success of the business belongs to the
entrepreneur.
Think Like an Entrepreneur
Entrepreneur is a risk taker, a can-do person.
Always looking for opportunity to learn new
skills and take on new responsibilities.
Show your employer that you understand
business and working to improve the
profitability of the company.
“Entrepreneurship is a way of thinking,
reasoning, and acting that is opportunityobsessed, holistic in approach, and leadership
balanced.”—Jeffery Timmons
Entrepreneurs do three important
things:
1. They listen.
2.They observe.
3. They think
a) Problem solvers, for profit!
Skills Means Success #1 pg. 4
Seeing yourself as an entrepreneur.
 “The best way to get good ideas is to have
lots of them.” –Linus Pauling, Nobel Peace
Prize winning scientist.
 Develop an Idea Journal
 Carry a small pocket-size notebook all the time.
 Listen, observing, and thinking skill to see
opportunities to meet consumer needs.
 Describe briefly every you have with a business.
Big and Small Business
Big Business is defined as follows:
A company with over 100 employees.
Selling more than million dollars of good or services
annually.
Small business are business that are smaller.
“America’s small business owners and their employees
represent more than half of the private workforce. These
entrepreneurs who create more than 75% of new jobs
nationwide and generate more than 50% of the nation’s GDP,
and employees who work in small businesses, deserve our
thanks. We salute them.” –George W. Bush, President
A Business Must Make a Profit To Stay in
Business
Rule of thumb: It is realistic to expect to lose
money for at least three months.
Intial start-up costs and loans.
Change in customers behavior.
New customers come from other business.
20% Repeat customers. Important people.
60% of all new business close operations before 5
years.
Lack of capitalization
Lack of sales, lack of repeat customers.
Can’ beat the competition!
Profit Is the Sign that the Entrepreneur is
Adding Value
 When business is making a profit, something is
going right.
 Profit is adding value to scarce resources.
 Scarce resources are something with value that
is limited, such as oil, and wood.
 What are other examples of Scarce Resources?
 Mrs. Fields Original Cookies takes scarce
resources flour, sugar, chocolate, and etc. and
make cookies. Saless are greater than the total
amount of the scarce resources.
The Economic Question
 What should be produced?
 How will it be produced?
 Who gets to have what is produced?
 Economy- The study of how different groups
answer the above questions.
 Free enterprise system- A system that
distributes wealth. Anyone can start a
business (within the laws). To sell goods
and/or services to the public for profit.
 Capital-Is the money to start a business.
Voluntary Exchange
 “Free-trade system”
 Transactions between two parties who
agree to trade money for goods or
services.
 No one is forced to trade.
 Both parties benefits in the transactions.
 Business receives profit.
 Consumer receives utility of the product
or services (benefits).
Benefits of Free Enterprise
 Entrepreneurs are discourage to waste
scarce resources.
 Control costs.
 Entrepreneurs must effectively provide
goods and services to satisfy consumers.
 Encourages competition
 Entrepreneurs view changes as
opportunity.
Skills Means Business #2 pg. 8
Reading for Information and Understanding
Gathering and Interpreting Information.
Look for articles about the following people on the
Internet. Read the articles and tell me what business or
opportunity by taking advantage of a change, trend, or
consumer need. Use MS Word to write the document.
 Russell Simmons
 Lane Bryant
 Julie Algner-Clark
 John H. Johnson
 Sarah Breedlove Walker
Why be an Entrepreneur?
Advantages
 Control over time
Disadvantages
 Creative, full filling life
Business failure
 Opportunity to create great
wealth
Obstacles
 Control over compensation
 Salary, wage, dividend,
commission
Loneliness
 Control over working conditions.
 Self-Evaluation
 Participation in an International
community.
 Opportunity to help one’s
community.
Financial Insecurity
Long hours/hard work
Skills Mean Success #3 pg.10
Reading for Information and Understanding
Interpreting, and analyzing information
See page 10 of the textbook to see why
people start businesses.
Owner is the Key to Wealth
 Entrepreneurs make great wealth
through their business’s profits.
 Entrepreneurs take that profits and do
the following.
 Take the profits for themselves as a
reward for taking the risks.
 Reinvest the profits back to the company
to make it larger and more profitable.
 Start another business.
Living a Life You Will Love
1. Wealth
2.Influence
3. Control
Profit is the reward for satisfying a customer
need.