Entrepreneurship: A business of your own Marcellous Curtis
Vocabulary
Entrepreneurship: the organization and management of a business
■
Franchise: the right to market another company’s product or service
■
Small Business Administration (SBA): the prime source of information for would-be entrepreneurs
■
Entrepreneur: a person who organizes and manages a business
■
Vocabulary Commission: a percentage of sales paid to a salesperson
■
Zoning laws: regulate what types of business activities can be performed in certain areas
■
License: a certificate showing that you have permission to practice your occupation
■
Fraud: the act of deceiving or tricking
■
Vocabulary
Flexible expenses: vary from month to month
■
Assets: items you own
■
Liabilities: debts you owe
■
Fixed expenses: Bills that must be paid regularly in set amounts
■
Accounting: Analysis of the data you’ve recorded
■
Receipts: record of all money collected
■
Profit ratio: percentage of receipts that are profit
■
Break-even point: when income equals expenses
■
Bookkeeping: Recording of income and expenses
■
Vocabulary
Entrepreneurship
■
■
■
Advantages You are your own boss Freedom to make your own decisions You get to keep all profits your company earns
■
■
■
Disadvantages As a business owner, you take on all responsibilities Many extra hours of work (at least 60 hrs per week) Emotional strain
Franchise
■
Purchasing a franchise has several advantages. It allows the entrepreneur to buy a business with a proven track record of success. As a franchise owner, you would also receive support from the franchiser
■
Franchise
■
■
Buying a franchise also has some disadvantages. You need a lot of money for the initial investment. You also may have to pay ongoing fees to retain the right to use the company’s name You may be required to follow company guidelines instead of your own.
■
Franchise
Some popular franchises are: ■ Subway ■ McDonalds ■ Taco Bell ■ KFC ■ Jackson-Hewitt Tax Service ■ TCBY treats ■ Wendy’s
Buying an existing business
■
Another opportunity open to some entrepreneurs is buying a business that is already existing Buying an established business can eliminate much of the work and expense of starting a business.
■
Planning your own business What does it take to succeed?
■
Optimism – you must believe in yourself & your business. Self-starter – you must have initiative
■
Planning your business
■
■
Choosing a business – what is the best business for you? Choosing a location – the importance fo location depends on the kind of business you have Pricing your product or service – are you charging enough for your products or services?
■
Legal and Financial Issues
■
■
A number of legal and financial issues will affect you if you become an entrepreneur. Zoning and licensing requirements must be met Choose your business structure
■
Business Structure
Proprietorships Partnerships Corporations
2. 3.
1.
The three basic business structures-
■
Proprietorship
■
■
■
Simplest type & most costly ($$$$) You will be the sole owner Gives you total freedom Gives you total responsibility
■
Partnership
■
■
■
Share the business responsibility You can borrow more money with two people It can be difficult if you don’t get along with partner The business could be jeopardized
■
Corporation
■
■
■
Easier time raising money Have less risk to your personal assets Costs more to set up Higher taxes
■
Obtaining Financing
■
■
Use saved money (seed $) to finance your business Apply for a loan Use outside investors
■
Applying for a loan ■ ■
■
Business plan Record of fixed and flexible expenses Record of assets and liabilities
Comparing Annual Profits Year 1 Income - $100,000 Expense - $80,000 Profit $20,000 ■
Year 2 Income - $120,000 Expense - $98,000 Profit $22,000 ■
Profit ratio = Profit ratio = 20,000/100,000 = 20% 22,000/120,000 = 22%
Professional Assistance
■
■
A lawyer can be one of your most valuable resources when starting a business An accountant can help analyze his books and give advice about increasing profits An insurance agent is another professional whose advice you should seek, protect your business against theft, fire, etc.
■
Working from home Advantages
■
■
Don’t have to pay rent Can handle home responsibilities during the day Certain tax advantages
■
Disadvantages ■ Family concerns may disrupt your business ■ Neighbors may object about a business next to their home ■ Clients may feel its unprofessional ■ Loneliness & isolation can be a possible hazard
Thank You