entrepreneurs
DESCRIPTION
Entrepreneurs. People that start and run their own business. Why are they important to the economy? New Businesses. Choices – Fundamental to the market economy Jobs 80% of new jobs created by firms less than 5 years old. Why are they important to the economy? New Businesses. - PowerPoint PPT PresentationTRANSCRIPT
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EntrepreneursPeople that start and run their own business.
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Why are they important to the economy?
New Businesses• Choices –
• Fundamental to the market economy
• Jobs• 80% of new jobs created by firms less than 5 years old
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Why are they important to the economy?
New Businesses• Inventions and Innovations
– A high percentage of the most significant inventions and innovations originate in small firms.
• Disney
• Apple
• Cray / SSI
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Who are they?• Family
• Parent or close relative runs their own business
• Cultural• Prejudice, & Needs of the group
• Hmong grocery stores
• Polish deli in NE Mpls.
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Who are they?
• Psychological
–Control own destiny
–Goal setters
–Risk Takers
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Sample Questions from the Farley test for risk takers
1. I like to improve on ideas.
2. I am high in energy.
3. If I were to gamble, I would never make small bets.
4. I can easily generate lots of money making ideas.
5. I would never bet more money than I had at the time.
6. I am a highly creative person.
7. I like to challenge authority
8. I believe that I control my own destiny.
9. I am highly adventurous.
10. Friends would call me a thrill seeker
11. Making my own decisions is very important to me.
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Entrepreneur Example
• Fred Smith– Federal Express– Told plan would
never work.
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Who are they?• Age
– Most are 25 – 40– Right combination of money and lack of
obligations – 21 & under 3% Anybody here?– 21 - 25 11% – 26 - 30 21%– 31 - 35 20%– 36 - 40 18%Total 73%
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Why do they start?
• Motivation
• Event– Birthday, Family, Move
• Push– Fired from job, Get out of rut
• Goal set– Be own boss, make million by …
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Why do they start?
• Preparation - got idea from• Prior Job 45%• Personal interest/hobby 16% • Chance happening 11%• Suggestion 7%• Family Business 6%• Education/ Courses 6%• Friends / Relatives 5%
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Here’s my report card and an impressive list I’ve compiled of entrepreneurs who never finished high school.
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Why do they start?• Business Climate / Suitability
– Large organizations are difficult to start.– What’s the newest car company?
– Business that can start small and grow.– Software, Services, Low inventory
– Industry must be growing.– Do we need more ________?
– New want or need
– Economy should be growing– Recessions are not good for businesses.
– More people start business during recession.
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2006 Firm Births & Deathsper week average and yearly total
Total Less than 20 Employees
Births 12,886 670,100
12,321 640,700
Deaths 11,525 599,300
11,025 573,300
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Why do they start?
• Financing Sources– Personal Savings & Assets– Friends & Relatives– Banks – Former Owners– Investors – Venture Capitalists– Suppliers – consignments
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Why do they start?
• Regional Climate – Most entrepreneurs start their business in their hometown.
Familiarity with regionNeeds of community
What does Eau Claire need?
Locations BankersCustomers
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What determines success or failure?
• Evaluate the proposed idea– Product – what’s produced?
– Market – who’s served?
– Competition – how is business going to differentiate itself?
– New service– More service– Price
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What determines success or failure?
• Purchase an established business• Get location
• Customers
• Goodwill
• Franchise• Established product
• Systems & Support• Network
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Top Ten Franchises of 2009 according to Entrepreneur Magazine
• Subway• McDonald’s• Liberty Tax Service• Sonic Drive In Restaurants• InterContinental Hotels Group• Ace Hardware• Pizza Hut• The UPS Store• Circle K• Papa Johns
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What determines success or failure?
• Experience & Education• Mix of both is seen as good
• Teamwork - partners• Division of labor• Specialization• Multiple viewpoints• Access to more financing
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What determines success or failure?
• Utilize outside advice.– Small Business Administration– National Federation of Independent Businesses– SCORE– Chamber of Commerce
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What determines success or failure?
• Capital• Need for adequate financing.
– Revenues low during early stages
– Opening costs usually higher than expected
– Family needs are still present.
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What determines success or failure?
• Hours worked per week by new business owners.– Fewer than 50 23%
– 50 - 59 23%
– 60 - 69 28%
– 70 - 79 13%
– 80 or more 12%
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Public Corporation
• firm whose shares are publicly traded (stock market) and are usually held by a large number (hundreds or thousands) of shareholders
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Private Corporation
• firm whose shares are not publicly traded, and are held by a small number of stockholders (shareholders).
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Limited Liability Company “LLC”• Fairly recent type of business entity
• combining the advantage of corporate limited liability with the one-level taxation and managerial and operational flexibility of a partnership.
• It can be formed by one or more persons and, if a single owner LLC, it does not have to file a separate Federal tax return.
• All members of the LLC are shielded from personal liability beyond their committed investment.
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Limited Liability Company “LLC”
• the LLC has recently become the most used form for doing business in Wisconsin.
• Best suited for small group, licensing company, etc. Very flexible.
• Can be easily converted to a corporation
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2006 Data Proprietorship Partnerships Corporations
Number of Firms
22,075,000 2,947,000 5,841,000
Percent 71.5 % 9.5% 19 %
Business Receipts
$1,278 $4,131 $26,070
Percent 4.1% 13.1% 82.8%
Average ReceiptsPer firm
$57,893 $1,401,764 $4,463,276
Net Income $278 $667 $1933
Percent 9.6% 23.2% 67.2%
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Cooperatives
• Members are the owners– Limit to one share per member
• Patronage Refund– Profits are returned to members based on the
amount of business they did with the co-op
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Eau Claire Area Co-ops• Credit Unions (12,000)
– RCU, MET, WESTCONSIN
• Retail Stores (500)– MEGA (EC Consumers Co-op)
• Utility– Eau Claire Electrical Coop– Touchstone Energy– Chequamegon Telephone
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2005 Data Proprietorship Partnerships Corporations
Number of Firms 21,468,000 2,764,000 5,671,000
Percent 71.8 % 9.2 % 19 %
Business Receipts(billions $) $1,223 $3,719 $24,060
Percent 4.2 % 12.8 % 83 %
Average ReceiptsPer firm $56,968 $1,345,514 $4,242,638
Net Income(billions $) $270 $546 $1,949
Percent 9.8% 19.7 % 70.5 %
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2005 Data Proprietorship Partnerships Corporations
Number of Firms 21,468,000 2,764,000 5,671,000
Percent 71.8 % 9.2 % 19 %
Business Receipts(billions $) $1,223 $3,719 $24,060
Percent 4.2 % 12.8 % 83 %
Average ReceiptsPer firm $56,968 $1,345,514 $4,242,638
Net Income(billions $) $270 $546 $1,949
Percent 9.8% 19.7 % 70.5 %
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• The following are co-op brands you may recognize
• Ace HardwareACE Hardware, Cleaning and Paint Supplies
• Blue Diamond GrowersBlue Diamond, Smokehouse
• CarpetOneCarpet, vinyl, laminate, ceramic, hardwood
flooring
• Florida's NaturalOrange juice and grapefruit juice
• Land O' LakesLand O'Lakes, Indian Maiden, Lake to Lake,Land-O-Lakes, Bridgeman, Cocoa Classics, Flash
• Sun-DiamondSun-Maid
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2004 Data from
U.S. Statistical Abstract -online
Proprietorship Partnership Corporation
Number of 20,591,000 2,547,000 5,558,000Percentage 71.7% 8.9% 19.4%
Revenue/SalesBillions $ / %
$1,140
4.4%
$3,142
12.1%
$21,717
83.5%Net Income
ProfitBillions $ / %
$248
14.3%
$385
22.0%
$1,112
63.7%
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2004 Firm Births & Deathsper week average and yearly total
Total Less than 20 Employees
Births 12,094 628,900
11,575 601,900
Deaths 10,409 541,000
9,904 515,000
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Why is small business important? According to the NFIB
Small business in the United States serves many purposes.
it supplies goods and services that customers demand
it is a major innovator; a laboratory of economic experiment
it generates the lion’s share of net new jobs
it stabilizes economic cycles through relatively small employment swings
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Why is small business important? According to the NFIB
its owners provide neighborhood and community leadership it is an avenue of economic opportunity it enhances pluralism in economic decision-making, and
it offers personal utility, i.e., personal satisfaction and happiness to its owners.
(Source: compiled by William J. Dennis, Jr., NFIB Research Foundation.)
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S-Type Corporation• S-Type corporations are taxed as
partnerships while retaining the advantages of incorporation.
The S-type corporation has all of the advantages and disadvantages of the traditional corporation except in the area of taxes. For tax purposes, the S-corporation shareholders are treated similarly to partners in a partnership. There is no double taxation of an S-type corporation.
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2002 Firm Births & Deathsper week average and yearly total
Total Firms < 20 Employees
Births 10,957 569,800
10,413 541,500
Deaths 11,286 586,900
10,713 557,100
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2001 Firm Births & Deathsper week average and yearly total
Total Firms < 20 Employees
Births 11,252 585,100
10,731 558,000
Deaths 10,640 553,300
10,077 524,000
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EntrepreneursPeople that start and run their own business.
• Why are they important to the economy?
• Who are they?
• Why do they start?
• What determines success or failure?
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Patents – 2003Inventions
• Patent Applications – 367,000
• Patents Issued Individuals
19,600
Corporations 148,500