AD2-Obj.#4.01 Summarize project resources & concerns

for entrepreneurial project

Entrepreneurship and Small Business Management Chapter 8

Read this chapter and develop a list of characteristics of an

entrepreneur.

Entrepreneur

• A person who undertakes the organization and ownership of a business with the intent of making a profit

Types of businesses

• Sole Proprietor- -Only one person is responsible for the activities

of the business. This person receives all of the profits and is responsible for any loses

-This person decides on a company name and then applies for a Certificate of Doing Business Under an Assumed Name. This certificate will ensure that you are the only business in the area using the name that you have chosen.

-What are the pros and cons of being a sole proprietor??

Types of businesses

Partnership• 2 or more people own a business and share the assets,

liabilities and profits• No law required for partnership but it is good to have one

written by an attorney• General partners-all partners have unlimited personal

liability and take full responsibility for the management of the business. The law requires that every partnership must have at least one general partner

• Limited partners-investors whose liabilities are limited to their initial investment-they can’t be actively involved in the business

Types of businessesCorporation

• A business that is charted or registered by a state and legally operates apart from its owners the business can live on after the owners have sold their interests or died)

• An attorney will guide you through the incorporation process. The owners must file a Certificate of Incorporation with the state the business is in. The corp. must have a board of directors

• Corporations raise money using stocks. • Stocks are certificates that indicate the amount

of ownership each investor has in the business

• What type of business will the Apparel class have???

• Complete: Ownership Comparison

Pick a partner and answer on notebook paper- 1 letter per team

• Your father wants you to join the family business, Calvert Plastics Corporation. This is not your only opportunity, however. Your best friend has an idea for a new business and wants you to come in as a partner. Analyze the pros and cons of each method of becoming an owner. Incorporate this information in a letter explaining to your father or your friend why you have decided against the offer you ultimately reject.

Warm up

• 1. What type of business does the Apparel class have?

• 2. Define entrepreneur

Market Analysis Research of potential:

1. Customers

2.Proposed goods or services

3.Competition

4.Market trends

5.Available suppliers

Marketing Concepts

• If a business is to succeed & make a profit, it must focus all of its efforts on satisfying its customers. Every business starts with this basic marketing concept.

• One needs to know their target market who are they and what do they want• A market is a group of people or

companies who have a demand for some product & are willing & able to buy it

Customer Markets

• Geographics- region, state, country, city & area• Demographics- age, gender, family size, family

life cycle, income, occupation, education, religion, race, nationality & social class

• Psychographics- personality, opinions, & life style elements like activities & interest

• Buying characteristics-knowledge of actual goods or services, personal experience with them or responses to them

Target Market

• Specific market segment on which you are going to concentrate your efforts

• The market segment should be measurable- if you don’t know how many buyers are available, you can’t know if the business is worth pursuing

• Who are our target market at Hopewell for the small business???

Sales Potential of our small business product

• How well does the good or service we are offering match up with the target market?

• Where is our product in its life cycle?• How have products of this type been

affected by changes in the Hopewell economy?

• Clearly products that are well matched to their markets have a high potential for success

Market TrendsWould all teen males wear all of these shoes?? Why or why not??

Would teen girls wear all of these shoes??

Competition

• Sales are not guaranteed success

• Your company is not the only one selling a certain item

• Market share is a portion of the total sales generated by all of the competing companies in a given market

SONICBurger King

McDonalds

Competitor

• The best way to evaluate your potential competition is in person

Buy their product for comparison Make list when you are there

Survey

• Come up with 5 questions to survey our target market about a product we might sell

• Choose team members to survey 10

people with your questions

• Return with surveys & make a chart

Warm up

• After making several inquiries to obtain information for your market analysis, you receive a telephone call from a local business person active in your field. He has heard that you are planning to start up a new business and feels it is not a good idea. He tells you that the local market will not support another operation like the one you are planning and that everybody would be better off if you just dropped the idea. What are your options and opinions? What would be the best way to handle the situation?

Marketing Plan—The Four P’s

• Product

• Promotion

•PRICE

•PLACE

PURSES

Marketing Plan—The Four P’s

Product

•Product strategy deals with the goods and services your business will provide.•How will you identify your product and make it stand out from the competition?•Branding is the name, symbol or design used to identify a product•Packaging is the physical container or wrapper that holds the product•Label is the part of the package used to present information•Product Mix refers to all the products a company makes or sells

Marketing Plan—The Four P’s

• PRICE

•Economics affect the price•Demand for the product is high and supply low-Will the price be higher or lower?•How much profit does each item require?•If buyers are price conscious ,how will you price your product?•Your cost of item + add your expenses to make the product = the selling price•Competition is another affect-price conscious buyers look for the best price

Must make a profit to stay in business

PRICE

• Pricing Strategies-

1. Cost based pricing -cost to make your product

2. Demand based pricing- find out what customers are willing to pay

3.Competition based pricing- determine what your competitors are charging

PRICE

• Will you let your customer negotiate for the best deal they can get or will your prices be for all customers the same?

• Psychological pricing- set a price that will affect the customers’ perceptions of a product

• Prestige pricing- higher than average price to suggest exclusiveness, status and prestige

• Odd/ Even pricing- use odd prices as $19.99 to suggest a bargain and even price $20.00 to suggest higher quality

PRICE

• What type of pricing are the items below?

$1,000,000

$29,999

$100 per mile

Marketing Plan—The Four P’s

• PLACE

-involves how you will deliver your goods to your customers.

-movement of your product –both to your location and to your customers

-distribution strategy of your products

• Channels of Distributions-path a product takes from producer to final user

• Direct channel- moves a product from producer to customer with NO one in between

• Indirect channel- a group will move products between producers and final users—

Example-Clothing designers may use an agent to reach wholesalers and retailers, so the designers won’t need to maintain sales staff or stores

PLACE

PLACE

• LOCATION— Where would your item sell the best for your target market?

• LAYOUT---How does your fashion customer enter the store, try on items, or pay for items while in the store? When is the store open for business?

• AVAILABILITY---Can the customer see and purchase the item from your location?

Can you get the product in a timely manner ?

PLACE

• On white paper –

1. Draw a floor plan for the Sweet Tooth Candy Shop

-Where will the customers enter

-Where will the customer pay

--How will the candy be displayed

-What type of candy will be sold

Marketing Plan—The Four P’s

PROMOTION• Tell the customers about your product

Advertising- paid nonpersonal presentation of ideas, goods or services for a mass audience by a sponsor

1. Advertise by PRINT —newspapers, magazines, direct mail, billboards, directory and transit

2. Advertise by BROADCAST —radio, television, and computers

Types of Promotions ?

PROMOTION

• PUBLICITY

-- Placement of newsworthy items about a business, new product, or employees in the media

--Not paid for by the business

--Good public relations with the community, the press and customers

PROMOTION

• SALES PROMOTION---Use of incentives to increase sales 1. Displays 2. Coupons 3. Sweepstakes 4. Contest 5. Rebates 6. Free Samples

PROMOTION

• Personal Selling:

--Oral presentations to one or more potential buyers with the intent of making a sale

---Designed to bring the sale to a close after the customer has been attracted by advertising, publicity, or sales promotion

• Bring a calculator to class for the rest of the week

• Be prepared to do Math!!!!

Warm up

• Tom Apple decided to open his own bakery. In the beginning, he had a lot of business but now it is slowing down.

The store is extremely hot due to the ovens, customers can see the dirty pans, and boxes are cluttered everywhere.

As a business layout consultant for Mr. Apple what would you suggest he do to improve the business?

Balance SheetDefinition: An accounting

statement that lists the assets, liability and capital accounts (such

as retained earnings) for a business for a specific point in

time

Cash Flow statement

• An accounting statement that forecasts cash receipts and disbursements for a specified period.

• The statement is used for planning purposes to determine if a business will need to borrow money in order to maintain its operations during times of heavy expenses or low sales.

• Often accompanied by a graph or chart to represent the data at a glance.

Entrepreneurship bookCh. 5 page 56

• General expenses

• Practice 1 page 57

• Take revenue total and subtract each expense to find earnings before taxes

• Write answer on a sheet of paper

Entrepreneurship bookCh. 5 page 57

• Break Even Point

• Cost before profit

• Practice 2

• Total production cost divided by selling price equal break even point

• Write answer and calculations on paper

Break even point

• Volume of sales required so that the expenses of the business are equal to the income received.

Fabric + labor + building cost = items sold

• There is neither a profit nor a loss.

++ =

Interest on a loan

• Business owners borrow money for different reasons---buy more inventory, remodel a building, or buy new equipment

• Principal—amount of money borrowed• Interest—money paid for the use of the principal• Interest==principal($) x rate(%) X time (years)• i=prt• Practice 3 page 58• Put answer and calculations on paper

Stock Turnover

• Stock turnover —how often the inventory has been sold and replaced over a certain amount of time

• ST rate is found by dividing total net sales for a period by the average inventory on hand

• Total net sales______Average inventory on handPractice 4 page 58 Write Down Answer

Income statement

• An accounting statement that shows the profit or loss for a business, by subtracting costs from its earnings, over a specific period of time, typically for a quarter or year.

Earnings- Cost = Income

Fixed expenses

• Costs that stay the same or very nearly the same regardless of the level of output or sales.

• For example: if you don't use water in making widgets, your water bill should stay the same whether you make 20 widgets or 500 widgets

• Example: Building mortgage payment is the same each month

Variable Expenses

• Those costs that fluctuate depending on the level of output or sales.

• For example: if your business sells home-baked cookies, your costs for flour and sugar will depend entirely on how many cookies you bake for resale, How?

• Example: Gasoline is a variable cost for a landscaping business, How?

Math for Entrepreneurs

• Entrepreneurs Chapter 5- page 55-67

Define the terms to know page 54

Copy the formulas to answer the practices

and keep on the same sheet to have for test information.

Complete Practices 1,2,3, and 4

Use Bulletin board paper and put formulas on the wall for review practice

Math for Entrepreneurs

• Entrepreneurs Chapter 5- page 55-67

• Complete Practices 5, 6, 7,8

Entrepreneurs Ch. 5- page 55-67

• Markdowns- lower retail price by a certain percentage

Retail price X markdown% = $ markdown

Practice 10

Practice 10

• Practice 10

• Percentage mark down:

Selling price X markdown%= $ markdown

New Sale price

Original sale price- $ of markdown= new sale price

Math for Entrepreneurs

• Entrepreneurs Chapter 5- page 55-67

• Discounts- reduction in the retail of a particular product

Retail price X discount % = $ discount

Math for Entrepreneurs

• Entrepreneurs Chapter 5- page 55-67

• Counting change back

• Practice 13-

The purchase total for your customer is $31.18. She hands you two $20.00 bills. How would you count back her change.

Math for Entrepreneurs• Entrepreneurs Chapter 5- page 55-67 Balancing the Cash Drawer- Do dailyCash $ 574.13Checks 613.77Credit sales + 433.18Total receipts ?Cash refunds - 75.00Adjusted receipts ?Opening cash fund - 150.00Actual receipts ?

Math for Entrepreneurs

• Entrepreneurs Chapter 5- page 55-67

• Practice 14-

The actual receipts total is $1,396.08

Suppose the tape register total was $1,397.33. What would that mean?