- Understanding Economics and how its

affects business -
The Age of Entrepreneur


Definition
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Entrepreneurship – Accepting the risk of starting and running a business


The Job Creating Power of Entrepreneurs in the U.S
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One or a couple of entrepreneurs had a good idea, borrow some money from friends and family
and started a business

Why people take the risk of entrepreneurship, the attribute of successful entrepreneurship,
describe entrepreneurial team, intrapreneurs, and home and web based business


Why People Take the Entrepreneurial Challange
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Opportunity

People find starting their own businesses offer them more opportunities (to be rich, to grow,
achievement, ect) than working for others.
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Profit

Entrepreneurship gain more profit than working with others

-
Independence

They can make their own decision that lead to their success or failure [ free to create, work
and delegate ]
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Challenge

Entrepreneurs take moderate and calculated risk and some people feel excitement in taking a
risk.


What Does It Take To be an Entrepreneur
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Self-directed
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Self-nurturing
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Action-oriented
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Highly energetic
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Tolerant of uncertainty
+
Contoh


You May Have a Business Idea, That is a Good Opportunity If...
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It fills customers’ needs
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You have the skills and resources to start a business
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You can sell the product or services at a reasonable price and still profit
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You can get your product or service to customers before the window of opportunity closes
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You can keep the business going

Entrepreneurial Team
-
Entrepreneurial Team – A group of experienced people from different areas of business
who join to form a managerial team with the skills to develop, make and market a new
product
-
An entrepreneurial team (steve jobs, steve wozniak and mike Markkula) was key to apple’s
success


Micropreneurs
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Micropreneur – Entrepreneus willing to accept the risk of starting and managing a business
that remains small, let them do the work they want to do, and offers a balanced lifestyle
-
Many micropreneurs are home-based businesses owners [ ex : writers, consultants, video
producers, etc ]
-
Nearly 60% of home-baes micropreneurs are men


Home-based Business
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Computer technology has levelled the playing field
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Corporate downsizing has led many to venture on their own
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Social attitudes have changed
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New tax laws have loosened restrictions on deducting expenses for home offices


Web-based Business
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Web-based businesses have more unique products than most brick and mortar stores
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Online sales reached $262 billion in 2013, 8% of all retail sales
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Affiliate Marketing – An Internet-based marketing strategy in which a business rewards
individual or other businesses for each visitor or customer the affiliate sends to its website


Entrepreneurship Within Firms
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Intrapreneur – A creative person who works as an entrepreneur within a corporation
-
Intrapreneurs use a company’s existing resources to launch new products for the company
+
Art Fry of 3M developed post-its when he was trying to mark pages of his hymnal
without damage


Encouraging Entrepreneurship : What Government Can Do ?
-
Immigration Act passed In 1990 created a category of “investor visas” that encourage
entrepreneurs to come to the U.S.
-
Enterprise Zones – Specific geographic areas to which governments attract private
businesses investment by offering lower taxes and other government support
-
Incubators – Offer new businesses low-cost offices with basic services

The Importance of Small Business to The American Economy, and Major Causes of Small-
Business Failure


Small Business
-
Small Business – Independently owned and operated, not dominant in its field of operation
and meets certain standards of size
+
Businesses are “small” in relationship to other businesses in their industries
Way to Learn About How Small Businesses Operate


Learning About Small Business
-
Learning from others – Investigate your local collages from classes on small business and
entrepreneurship || talk to and work for successful local entrepreneurs
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Get some experience – Gain three year experience in the field || then start a part-time small
business
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Take over a successful firm – Serve as an apprentice and eventually take over once the
owner steps down


Managing a Small Business
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Planning
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Financing
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Knowing Customers
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Managing employees
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Keeping records


Business Plans
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Business Plan – A detailed written statement that describes the nature of the business, the
target market, the advantages the business will have over competition, and the resources and
owner qualifications
+
A business plan forces potential owners to be specific about what they will offer
+
A business plan is mandatory for talking with bankers or investors


Writing a Business Plan
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A good plan takes a long time to prepare
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A good executive summary catches interest and tempts potential investors to read on
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Getting the plan into the right hands is almost as important as getting the right information in
it


Sources of Capital
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Personal Savings
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relatives
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former employers
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bank & finance companies
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government agencies
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angel investors
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Venture Capitalists – Individuals or companies that invest in new businesses in exchange
for partial ownership


The Small Business Administration
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Small Business Administration (SBA) – A U.S. government agency that advises and assist
small businesses by providing management training and financial advice
+
SBA started a microloan program in 1991 that provides very small loans to small
business owners
+
Program judges worthiness on belief of the borrower’s integrity and soundness of their
business ideas

The Small Business Investment Company
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Small Business Investment Company (SBIC) – A program through which private
investment companies licensed by the SBA lend money to small businesses
+
A SBIC must have a minimum of $5 million in capital and can borrow up to $2 from the
SBA for each $1 of capital it has
+
SBICs are able to identify a business’s trouble spots early, giving entrepreneur advice,
and in some cases rescheduling loan payment


Knowing Your Customers
-
Market – Consumers with unsatisfied wants and needs who have both resources and
willingness to buy
+
Set out to fill the market’s needs by offering top quality and great services at a fair price
+
One of the great advantages of small businesses in the ability to know the market and
quickly adapt to market needs


Managing Employees
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Hiring, training and motivating employees is critical
-
Employees of small companies are often more satisfied with their job [ they feel challenged
and respected ]
-
Entrepreneurs best serve themselves and the business if they requit and groom employees for
management position


Keeping Record
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Computers simplify the process by helping with inventory control, customer records and
payroll
-
Good accountant can help in :
+
Deciding whether to buy or lease equipment
+
Deciding whether to own or rent a building
+
Tax planning
+
Financial forecasting
+
Choosing sources of financing
+
Writing requests for funds


Looking for Help
-
Owners need outside consulting advice early in the process
-
Small and medium size firm cannot afford to hire experts as employees
-
A competent lawyer can help with
+
Leases
+
Contracts
+
Partnership agreement
+
Protection against liabilities

The advantages and disadvantages small business have in entering global markets


Going Global : Small Business prospects
-
Small and medium sized businesses accounted for 99% of recent export growth
-
Advantages of global trade for small businesses :
+
Overseas buyer enjoy dealing with individuals
+
Small companies can usually begin shipping much faster
+
They provide a wide variety of suppliers
+
They can give more personal services and attention
 Definition :

Business Any activity that seeks to provide goods and services to others while
operating at a profit
Goods Tangible products such as computer, food, clothing, cars and appliances
Services Intangible products that can’t be held in your hand like education,
healthcare, insurance, recreation and travel
Entrepreneur a person who risks time and money to start and manage a business
Revenue The total amount of money a business takes in during a given period by
selling goods and services
Profit The amount of money a business earns above and beyond what it spends
for salaries and other expenses needed to run the operation
Loss Occurs when a business’ expenses are more than its revenues
Risk The chance an entrepreneur takes of losing time and money on business
that may not prove profitable
Standard of living The amount of goods and services people can buy with the money they
have (high average wages does not equal to high standard of living)
Quality of life The general well-being of a society in terms of its political freedom,
natural environment, education, healthcare, safety, amount of leisure
and rewards that add to personal satisfaction and joy that other goods
and services provide
Stakeholders All the people who stand to gain or lose by the policies and activities of
a business and whose concerns the businesses needs to address
Outsourcing Contracting with other companies (often in other countries) to do some
or all of the firm’s functions like production or accounting task
Insourcing Foreign companies opening offices and factories in the United states
Non-profits An organization whose goals do not include making a personal profit
for its owners or organizers.
Factor of Production The resources used to create wealth
Business Environment The surrounding factors that either help or hinder the development of
business
Technology everything from phones and copiers to computer, personal digital
assistants and the various software programs that make businesses more
effective, efficient and productive
Effectiveness producing the desired result
Efficiency producing goods and services using the least amount of resources
Productivity The amount of output you generate given the amount of input ( ex :
hours worked. The more you produce in any given period, the more
money you are worth to companies.
E-Commerce The buying and selling of goods over the internet (online)
Databases An electronic storage file for information that store all customers
purchase information (to help business know what customers wants and
needs and take action accordingly)
identity theft The obtaining of individuals’ personal information
Empowerment Giving frontline workers ( salespeople or front desk people ) the
responsibility, authority, freedom, training, and equipment they need to
respond quickly to customer request
Demography The statistical study of the human population with regard to its size,
density, and other characteristic such as age, race, gender, and income
Climate change The movement of the temperature of the planet up or down over time
Greening The trend toward saving energy and producing products that cause less
harm to the environment