Download Career Development PP

Career Development Relating to
Entrepreneurship Opportunities
Instructional Materials Service
IMS #8000A1
Objectives

Examine the elements and advantages
of the free enterprise system.

Explain the role of a small business in
the free enterprise system.

Discuss factors that motivate
entrepreneurs and self-employment.

Identify characteristics of a successful
entrepreneur.
Objectives

Identify opportunities for business
ownership.

Explain the risk and profit motive factor.

Explain the importance of organizational
policies and procedures.

Identify ethical practices and
responsibilities.
Introduction

The United States is often referred to as
the “land of opportunity”.

Our country’s economic system is based
on the free enterprise system.


Free enterprise provides everyone with an
equal opportunity to make individual dreams
a reality.
The free enterprise system is the
foundation for entrepreneurship.
Key Terms

Entrepreneurship


Entrepreneur


The process of getting into and operating
one’s own business.
An individual undertaking the creation,
organization, and ownership of a business.
Small Business

An independently owned business that
usually has the owner as the manager.
Importance of Entrepreneurship
& Small Businesses

Over 25 million small businesses in the
U.S. make the following contributions to
our economy:

Employ more than half of the total
workforce.

Produce about half of the private sector
output.

Generate more than half of the nation’s
income.

Serve as the principal source of new jobs.
Free Enterprise

The economic system in the
United States.

Ensures people the right to
make their own economic
decisions.

Sometimes referred to as a
consumer economy, market
economy, profit system or
capitalism.
Factors Contributing to
Free Enterprise

Private Ownership and Control of
Productive Resources

Free Market

Profit Motive

Supply and Demand

Competition

Limited Government Involvement
Private Ownership and Control of
Productive Resources

Citizens have the
opportunity to own
resources and decide
how to use them.
 Productive resources
include:





land;
labor;
equipment;
capital; and
other services and materials.
Free Market System

Voluntary effort where free trade at all
levels can lead to prosperity.

Person has the right to sell skills and
abilities to an employer, or be selfemployed.

Provides the opportunity for a variety of
needs to be met.

Allows people to pursue their own
interests while putting themselves at risk
for profit or loss.
Profit Motive

Profit motive involves the
desire to earn a profit when
selling a productive
resource.


Profit is the amount of
money made over the cost
of producing the resource.
Profit motive is a vehicle for
innovative and expansive
thinking.
Profit Motive and Risk

Profit motive also involves risk.

Risk is making a decision when the
outcome of the event is unknown.

Amount of risk can be offset if the person
has an idea about the factors that affect the
marketability of a product.

Risks must be studied, measured, and
analyzed.
Supply and Demand

Supply and demand of
productive resources for
sale drives the free
enterprise system.

Supply is the available
amount of resources for
sale.

Demand is the amount of
resources consumers are
willing to buy.
Supply and Demand

Supply and demand help determine the
market price of services and materials.

A product is first made available at a predetermined price.

If public interest creates a demand for the
product, the value and price usually
increase.

If there is an increase in supply, or if
competitors enter the market, prices usually
drop.
Competition

Competition is the right of any individual
or business to enter the same business
as others and compete for a share of the
market.

Competition encourages all involved to
make a quality product and to market it
at a fair and reasonable price with
greater efficiency.
Competition

Consumers choose from whom to
purchase a product based on the quality
of the product, price, and attitudes and
policies of the supplier.

Competition leads to lower prices, higher
quality, and better service.
Limited Government Involvement

No market system is
entirely free of
government
involvement.

Government
involvement under free
enterprise may be
necessary to protect
both the producer and
consumer.
Limited Government Involvement

Government ensures
fairness in the free
enterprise system and
strives to protect
consumers from unfair
or unethical business
and marketing
practices.
Types of Business

Proprietorship

Partnership

Corporation
Proprietorship

Owned by only one
person.

Simplest form of
business organization.
Advantages of Proprietorships

Business is easy to start.

Business can operate according to
personal desires.

Freedom to make all of the
decisions.

Profits do not have to be shared
with others.
Disadvantages of Proprietorships

Full responsibility for
business management.

Full responsibility for all
business costs.

Unlimited liability.

Individual could lose
personal savings and
property if business fails.
Partnerships

Involve two or more
people entering a
business together.
Partnership Agreement

Written partnership agreement should be
developed that outlines the following:

How much money each partner will invest.

How profits will be shared.

How work will be shared.

Plan that allows for remaining partners to
buy any partner’s share of the business if
the partner wishes to end his/her
involvement in the business.
Advantages of Partnerships

Business is easy to start.

It is easier to obtain capital for a
partnership than for a proprietorship.

Partners bring different skills and
experiences to the business that can
increase its efficiency and likelihood of
success.
Disadvantages of Partnerships

Profits must be shared.

If a partner leaves the business, then the
business must be reorganized.
Disadvantages of Partnerships

Unlimited legal and
financial responsibility
is shared.

If one partner makes a
bad choice financially, all
share the loss or debts.

If one partner engages
the business in illegal
activity, all may suffer
legal ramifications.
Corporations

Business type that is
owned by many
people.

Ownership is
determined by selling
stocks or shares of
ownership.
Corporations

For each share of
stock owned, the
stockholder gets a
share of the profits
and a vote on how the
business operates.

Stockholders are not
usually involved in
day-to-day operations.
Advantages of Corporations

A corporation does not end or require
reorganization if a stockholder sells
his/her shares.

More capital can be easily earned
through sales of more shares.

Limited liability.
Limited Liability

Stockholders are only responsible for the
amount of money that they invested.


If the business loses money, the stockholder
loses no more than he/she invested.
If the business fails, a stockholder will
not lose any personal property or
savings.
Small Businesses

Small businesses are important to the
free enterprise system.

They allow for the introduction of new and
innovative ideas.

They provide for more competition.

They encourage other businesses to keep
stride with new business groups, improve or
expand product lines, and/or create new
products.
Entrepreneurs

An entrepreneur is an
individual who
undertakes the
creation, organization,
and ownership of a
business.

Entrepreneurs are
often self-employed.
Characteristics of Entrepreneurs

Entrepreneurs find opportunities and
know how to act upon them.

Entrepreneurs see a need or desire for a
product, weigh the risks of producing and
marketing the product, formulate a plan
of action, and proceed to develop and
maintain a business.
Motivation for Entrepreneurs

Profit Motive


Entrepreneur Challenge


Person has a desire to capitalize on an idea
and make money.
Experience is rewarding, exciting, and
challenging.
Desire to Work By or For Themselves

Persons who want to work to accomplish
their own tasks, experiment with ideas, and
take responsibility for their own decisions.
Disadvantages of Entrepreneurship

Time commitment often exceeds the 40hour work week.

Overtime does not involve extra pay.

Extra responsibility, stress, emotional
strain, and pressure.

Risk of financial instability and the
possibility of failure.
Skills of Successful Entrepreneurs

Self Starter

Self-Motivation

Flexibility

Competitiveness


Innovative Thinking
Decision-Making
Skills

Goal Setting and
Achieving

Anticipation

Risk Taking

Researching

Planning

Management Skills
Decisions Required by
Entrepreneurs

Choosing the type of business

Choosing a location

Pricing a product and/or service
Considerations in
Choosing a Business

Personal abilities, skills,
and interests.

Idea may develop
personal dreams or relate
to prior work experience.

Marketing personal skills
and abilities may be an
option.
Considerations in
Choosing a Business

Research of consumer market.

Is there a consumer market for this service?

If not, can a market be created?

Will consumer needs be met by this product
or service?

Will consumers be willing to purchase the
product or service?

If so, at what price?
Choosing a Business

Gathering information is vital and should
be done with an open mind and with as
much scope as possible.


Successful business owners in the same
field are an excellent source of information.
A large knowledge base concerning
product acceptance and consumer
acceptability will aid in making an
informed decision about the venture.
Considerations in
Choosing a Location

Community Setting

Accessibility

Facilities

Home Business
Community Setting Considerations

Economic Base

Demographics

Labor Supply

Economic Incentives

Competitors

Character
Economic Base

A community’s economic
base is its main source of
income.

Economic bases are often
“primarily industrial” or
“primarily serviceoriented”.

The community chosen
should have an economic
base that matches the
business.
Economic Base

The community should
have a growing economic
base.

This means that more
money is coming into the
area than leaving it, and
that there is enough money
in the area to support both
established and new
businesses.
Demographics

Demographics describe
characteristics of the
human population.

It includes information
such as:

Age

Gender

Race

Household Income

Education Level
Demographics

By understanding a community’s
demographics, a business owner can
determine if the location matches the
target market for the products and/or
services to be offered by the business.

The Census Bureau, local economic
development office, or local chamber of
commerce may be able to provide
information regarding demographics.
Labor Supply

Determine if the
community can provide
an adequate and
appropriate labor pool to
meet the business’ needs.
Financial Incentives

Financial incentives may be
offered by the community to
attract new enterprises.

Some incentives may be:

Lower taxes.

Cheaper land.

Employee training
programs.
Competitors

Selecting a site near
competitors assures
a business owner
that customers are
already doing
business in the area
and allows for
comparison
shopping.
Character

Consumers prefer
to patronize
businesses in
areas that are
attractive, safe,
and flourishing.
Accessibility

It is important for
consumers to be
able to find the
business and get to
it easily.

Suppliers must have
easy access to the
business to ensure a
continuous supply of
goods and materials.
Facilities

Facility considerations
include:

Building Facility vs.
Existing Facility

Growth and
Expansion

Operational Costs
Building Facility v. Existing Facility

Building Facility

May be more
expensive, require
more financing, and
take more time.

Allows the business
owner to build it to
own specifications.

Existing Facility

Facility must meet
business needs or
be renovated to
meet business
needs.
Growth and Expansion

Regardless of deciding to build a new
facility or to utilize an existing one,
facility should allow for growth and
expansion.

Building or renovating for growth initially
may be too expensive.

Not planning ahead may result in a costly
move or restricted business performance.
Operational Costs

When selecting a location,
also consider operational
costs such as:

utilities;

gas;

taxes; and

insurance.
Home Business

Another possibility may
be starting a home
business.

Many types of businesses
are able to function well
from the home of the
owner or manager.
Home Business

Businesses with the following
characteristics may be good candidates
for a home business:

Little contact with customers.

Work is picked up or dropped off when
completed.

Creates little traffic, noise or pollution.
Considerations in
Starting a Home Business

Type of business.

Space and equipment available at home.

Effect on others living in the home.

Advantages of a home business.

No rent.

Money saved on taxes.
Pricing a Product and/or Service

Price should be based on what people
are willing to pay, and not so much on
what the item is worth.

Industry looks for products that can be
made for only a small amount of money
and sold for a lot of money.

These philosophies encourage maximum
markup.
Factors to Consider When
Pricing a Product and/or Service

What is the price in relation to the
competition’s price?

Does the price cover the overhead or
production costs and still allow for a fair
markup?

How much profit will be made per
product at that price?
Factors to Consider When
Pricing a Product and/or Service

How many units can be sold at that
price?

Can production costs be cut without
sacrificing quality to give the product
more consumer appeal?

How much profit does the business want
to make?

Can the price be increased and still keep
the same market interest?
Pricing a Product and/or Service

Most important
consideration is the
ability to cover costs
while making the
product available
and affordable to
consumers.
Zoning

Zoning involves the designation a city
has set on an area regarding its use or
purpose.

Common zoning designations include:

residential;

commercial;

industrial; and

public.
Zoning

Once an entrepreneur has selected a location,
he/she must determine if the business plans fit
the zoning specification of the area.
Licenses

Licenses are required for certain types of
professions or businesses.

Licenses protect consumers from
unskilled or unqualified business
operators.

Businesses or professions commonly
requiring a license include doctors,
accountants, barbers, and counselors.
Licenses

Proof of necessary education or training
may be required to obtain a license.

Local government and state department
of licensing and regulation should be
consulted to determine if the business
will require a license.
Permits

A business permit is required to gain
permission to operate and run a
business.

Permits are obtained from local
government.

Permits must generally be renewed
annually.

Fees associated with permits are generally
based on how much the business earns.
Permits

The State Department of Commerce
(DOC) can provide information about
what documentation is required to obtain
a permit and to operate one’s own
business.
Financing

Financing is a major
issue when starting a
business.

One must decide
where and how start
up money will be
obtained.
Sources of Financing

Personal Savings

Family and Friends

Financial Lending
Institutions

Outside Investors
Considerations Regarding Financing

Amount of financial
assistance needed.

Type of payment
schedule the
business can follow.

Interest or payback
the business can
afford.
Financing Agreements

Agreements need to be
recorded in writing and
should include the
following:

Amount of money
being borrowed.

Interest rate.

Method of repayment.
Advisors for Entrepreneurs

Lawyer

May help structure
business and
gather necessary
documentation.

Assists in the
development of
employee contracts.
Advisors for Entrepreneurs

Accountant

Can help plan
business’ finances and
give direction on how
to borrow and repay
money.

Advises in the
development of
employee contracts.
Advisors for Entrepreneurs

Insurance Agent

Helps determine
insurance coverage
needs.


Fire, theft, product liability,
employee injury, and
disability, etc.
Helps develop employee
benefits package and
policies to make benefits
available.
Advisors for Entrepreneurs

Business Owners


May provide valuable
opinions and
information based on
their experiences.
Family and Friends

May provide valuable
opinions and
information based on
their experiences.
Business Management

Businesses must be managed with care
for both economics and people.

Manager may be owner of the business
or a hired manager.

Larger businesses or companies frequently
hire individuals to manage specific areas or
divisions of the organization.
Business Management

Common duties of managers are:

Establishing Direction and Goals

Employee Relations

Customer Relations

Financial Management
Direction and Goals

Direction and goals
provide a map or plan
to reach a desired
destination and a tool
for evaluation.
Direction and Goals

They should be
implemented and
continually emphasized
in daily operations.

This emphasis reminds
employees of business
goals and why they are
involved in specific
tasks.
Employee Relations

Managers must be able to perform the
following tasks related to employee
relations:

Recruit and hire effective candidates.

Supervise and manage existing employees.

Terminate unproductive employees.
Considerations Regarding
Recruiting & Hiring Employees

Recruiting From Within or From Outside

Recruiting from within encourages
employees to work hard for promotions. It
also reduces costs associated with
recruiting and training.


However, this may lead to feelings of resentment
by those not promoted, and limit opportunities to
bring in new thoughts and ideas.
Recruiting from the outside may include
advertising in newspapers or at job fairs.
Recruiting and Hiring New
Employees

Manager is involved in
reviewing applications,
interviewing applicants,
checking references, and
offering the position.

Management also designs
the training and
development programs for
new employees.
Importance of Positive
Relationships with Employees

A strong business manager with poor
people skills will often destroy employee
self-esteem and suffer a drop in
productivity.

A good people manager will develop
respectability and credibility with
employees, which nurtures a pleasant
working environment that results in
higher productivity.
Recognizing Employees as an Asset

Management should recognize that
employees have important information
about their job and input on how to make
it better.

Employees may even see a need for
changes at a lower level that management
may not be able to recognize.
Recognizing Employees as an Asset

Employees should be encouraged to
make suggestions and be involved in
decision-making.

Advantages of this approach include:

Increased productivity.

Increased profits.

Employees becoming less likely disgruntled
if they are involved in the decision-making
process.
Recognizing Employees as an Asset

Employee recognition shows
employees that management
feels they are important and
valued.

Recognition may be given
informally on a regular basis
by praising a job well done or
giving an employee credit for
an idea.

Formal recognition, such as
plaques or awards, is another
option.
Performance Evaluations

Performance evaluations are a formal
review of how well an employee does his
or her job.

They provide an opportunity to recognize
employee strengths and weakness, as well
as the chance to offer suggestions for
improving performance and productivity.
Terminating Employees

When an employee does
not meet performance
expectations, terminating,
the employee from the
position may become
necessary.
Handling Employee Resignations

A good manager will allow an employee
to explore other employment possibilities
and consider resignation.

It is better to have an employee resign
than to remain in a position where the
person will be unhappy and
unproductive.
Customer Relations

Customer satisfaction
is a must for any
business.

Satisfied customers
result in repeat
business and
customer referral.
Customer Relations

Customers should know they are valued.


Asking questions about their needs and
suggestions for organizational
improvements is also a valuable source of
information.
Customer needs, suggestions, concerns,
and questions should be responded to
immediately.
Customer Relations

Businesses should stand by their
products and services, but guarantee
only what the business can support.

Customers may be able to understand
and accept problems like delays or minor
mistakes if they are conveyed to them,
there is a history of good service, and
the business and management is
respected.
Financial Management

Financial management
involves tasks such as:

distributing money for
payroll and maintenance;

purchasing production
supplies and
advertisement;

procuring new equipment;
and

seeing that taxes are paid
to the proper collection
agencies.
Keys to Management Excellence

They take action, rather than analyze
plans to death.

They listen to their customers and put
themselves in their customers’ shoes.

They encourage their employees to act
independently, be innovative, and treat
the business as if it were their own.

They stress respect for the individual.
Keys to Management Excellence

They instill commitment to values and
objectives by keeping in touch with all
employees.

They keep the business focused on what
it does best.

They keep their organization simple,
flexible, and efficient.

They keep their operations under control
and keep an eye on detail.
Characteristics of Good Managers

Trustworthy

Dependable

Integrity

Social Skills

Communication Skills
Characteristics of Good Managers

These characteristics are vital in
developing good relationships with
employees and clients.

Characteristics are recognized by others
when the manager treats people with
respect, leads by example, follows a fair
set of rules, stands by his/her word, and
does everything well and with the best
outcome in mind.
Managerial Failures

An unsuccessful manager
loses the confidence of
employees, resulting in
decreased production for
the business.
Possible Causes for
Loss of Employee Respect

Indecisive decision making.

Unclear focus or goal.

Short term planning instead of
envisioning the big picture.

Focusing more on the managerial
position than on managing.
Possible Results of
Loss of Employee Respect

Lack of employee
support.

Treating employees
as a handicap to the
company instead of as
an asset.

Erosion of trust and
the image of integrity
as perceived by those
who work with and for
the manager.
Possible Results of
Loss of Employee Respect

Employees
questioning
manager’s authority.

Inefficient,
unproductive
workplace.
Developing Business Ethics

Development and implementation of an
ethical guide for the company should be
a part of the direction, goals,
expectations, and mission of the
business.
Aspects of Business Ethics
to be Recorded

Ethical beliefs of
organization.

Treatment of
employees.

Employee business
ethics.

Employee treatment
of supervisors, other
employees, and
customers.

Contributions of
business to
community and
society.

Measurement of
unethical behavior in
the organization.

Ethical practice
rewards.
Benefits of Outlined Business Ethics

Reduced questions concerning ethics.

Possible prevention of unethical activity.

Clear set of guidelines for both employer
and employees.

Reduction of repercussions when an
employer or employee violates company
policy.
Summary

Thanks to the free
enterprise system,
Americans are
assured the
opportunity to pursue
establishment of their
own business.
Summary

Careful research into
the following are
important in ensuring
business success:

Type of business.

Product or service
offered.

Price of the product
or service.
Summary

Formalities of
establishing a
business include:

Permits

Licenses

Financing
Summary

Tasks associated with managing a
business include:

Establishment of Directions and Goals

Employee Relations

Customer Relations

Financial Management
Summary

With a great deal of hard work and
perseverance, an individual can achieve
the dream of starting his/her own
business.

An entrepreneur has the satisfaction of
bringing an idea to fruition and the
contentment of knowing that his/her
efforts can have a positive impact on the
economy, clients served, and people
employed.