Chapter 5 notes.docx

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Department
Business Administration
Course
BUSN 1101
Professor
William Shimer
Semester
Spring

Description
Chapter 5: The Challenges of Starting a Business Entrepreneur – someone who identifies a business opportunity and assumes the risk of creating and running a business to take advantage of it. The Nature of Entrepreneurship 1. Innovation. Entrepreneurship generally means offering a new product, applying a new technique or technology, opening a new market, or developing a new form of organization for the purpose of producing or enhancing a product. 2. Running a business. A business, as we saw in Chapter 1 "The Foundations of Business", combines resources to produce goods or services. Entrepreneurship means setting up a business to make a profit. 3. Risk taking. The term risk means that the outcome of the entrepreneurial venture can’t be known. Entrepreneurs, therefore, are always working under a certain degree of uncertainty, and they can’t know the outcomes of many of the decisions that they have to make. Consequently, many of the steps they take are motivated mainly by their confidence in the innovation and in their understanding of the business environment in which they’re operating. Why Start Your Own Business? • To be your own boss • To accommodate a desired lifestyle • To achieve financial independence • To enjoy creative freedom • To use your skills and knowledge Small Business - a business that is independently operated, exerts little influence in its industry, and employs fewer than five hundred people. • they generate about 50 percent of our gross domestic product (GDP) • Create jobs • Spark innovation • Provide opportunities for many people, including women and minorities, to achieve financial success and independence The goods-producing sector includes all businesses that produce tangible goods. Generally speaking, companies in this sector are involved in manufacturing, construction, and agriculture. The service-producing sector includes all businesses that provide services but don’t make tangible goods. They may be involved in retail and wholesale trade, transportation, finance, insurance, real estate, arts, entertainment, recreation, accommodations, food service, education, and such professional activities as technical services, health care, advertising, accounting, and personal services. Advantages of Small business ownership • Independence. As a business owner, you’re your own boss. You can’t get fired. More importantly, you have the freedom to make the decisions that are crucial to your own business success. • Lifestyle. Owning a small business gives you certain lifestyle advantages. Because you’re in charge, you decide when and where you want to work. If you want to spend more time on nonwork activities or with your family, you don’t have to ask for the time off. If it’s important that you be with your family all day, you might decide to run your business from your home. Given today’s technology, it’s relatively easy to do. Moreover, it eliminates commuting time. • Financial rewards. In spite of high financial risk, running your own business gives you a chance to make more money than if you were employed by someone else. You benefit from your own hard work. • Learning opportunities. As a business owner, you’ll be involved in all aspects of your business. This situation creates numerous opportunities to gain a thorou
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