Entrepreneurship Starting a Business Virginia Tech

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Entrepreneurship Starting a,Learning Objectives, 1 Define entrepreneur and describe the three characteristics of. entrepreneurial activity, 2 Identify five potential advantages to starting your own business. 3 Define a small business and explain the importance of small businesses to. the U S economy, 4 Explain why small businesses tend to foster innovation more effectively. than large ones, 5 Describe the goods producing and service producing sectors of an. 6 Explain what it takes to start a business and evaluate the advantages and. disadvantages starting a business from scratch buying an existing. business or obtaining a franchise,7 Explain why some businesses fail.
8 Identify sources of small business assistance from the Small Business. Administration,132 Download this book for free at Chapter 6. http hdl handle net 10919 70961,Cover Story Build a Better Baby and. They Will Come, One balmy San Diego evening in 1993 Mary and Rick Jurmain were watching a TV. program about teenage pregnancy 1 To simulate the challenge of caring for an infant teens on. the program were assigned to tend baby size sacks of flour Rick a father of two young. children remarked that trundling around a sack of flour wasn t exactly a true to life. experience In particular he argued sacks of flour simulated only abnormally happy babies. babies who didn t cry especially in the middle of the night Half seriously Mary suggested that. her husband a between jobs aerospace engineer build a better baby and within a couple. of weeks a prototype was born Rick s brainchild was a bouncing 6 5 pound bundle of vinyl. covered joy with an internal computer to simulate infant crying at realistic random intervals He. also designed a drug affected model to simulate tremors from withdrawal and each model. monitored itself for neglect or ill treatment, The Jurmains patented Baby Think It Over and started production in 1994 as Baby. Think It Over Inc Their first factory was their garage and the office was the kitchen table. a little business in a house as Mary put it With a boost from articles in USA Today. Newsweek Forbes and People plus a Product of the Year nod from Fortune news of the. Jurmains infant simulator eventually spread to the new company s targeted education. market and by 1998 some forty thousand simulators had been babysat by more than a million. teenagers in nine countries By that time the company had moved to Wisconsin where it had. been rechristened BTIO Educational Products Inc to reflect an expanded product line that now. includes not only dolls and equipment like the Shaken Baby Syndrome Simulator but also. simulator based programs like START Addiction Education and Realityworks Pregnancy. Profile BTIO was retired and replaced by the new and improved RealCare Baby and. ultimately by RealCare Baby II Plus which requires the participant to determine what the. baby needs when it cries and downloads data to record misconduct In 2003 the name of the. Jurmains company was changed once again this time to Realityworks Inc. Chapter 6 Download this book for free at 133,http hdl handle net 10919 70961.
In developing BTIO and Realityworks Inc the Jurmains were doing what entrepreneurs. do and doing it very well In fact Mary was nominated three times for the Ernst Young. Entrepreneur of the Year Award and named 2001 Wisconsin Entrepreneurial Woman of the. Year by the National Association of Women Business Owners So what exactly is an. entrepreneur and what does one do According to one definition an entrepreneur is an. individual who starts a new business and that s true Another definition identifies an. entrepreneur as someone who uses resources to implement innovative ideas for new. thoughtfully planned ventures 2 But an important component of a satisfactory definition is still. missing To appreciate fully what it is let s go back to the story of the Jurmains In 1993 the. Jurmains were both unemployed Rick had been laid off by General Dynamics Corp and. Mary by the San Diego Gas and Electric Company While they were watching the show about. teenagers and flour sacks they were living off a loan from her father and the returns from a. timely investment in coffee futures Rick recalls that the idea for a method of creating BTIO. came to him while I was awake in bed worrying about being unemployed He was struggling. to find a way to feed his family He had to make the first forty simulators himself and at the. end of the first summer BTIO had received about four hundred orders a promising start. perhaps but at 250 per baby less expenses not exactly a windfall We were always about. one month away from bankruptcy recalls Mary, At the same time it s not as if the Jurmains started up BTIO simply because they had. no conventional options for improving their financial prospects Rick as we ve seen was an. aerospace engineer and his r sum includes work on space shuttle missions at NASA Mary. who has not only a head for business but also a degree in industrial engineering has worked. at the Johnson Space Center Therefore the idea of replacing a sack of flour with a computer. controlled simulator wasn t necessarily rocket science for the couple But taking advantage of. that idea choosing to start a new business and to commit themselves to running it was a. risk Risk taking is the missing component that we re looking for in a definition of. entrepreneurship and so we ll define an entrepreneur as someone who identifies a business. opportunity and assumes the risk of creating and running a business to take advantage of it. To be successful entrepreneurs must be comfortable with risk positive and confident well. organized and very hard working people,134 Download this book for free at Chapter 6. http hdl handle net 10919 70961,The Nature of Entrepreneurship. If we look a little more closely at the definition of entrepreneurship we can identify. three characteristics of entrepreneurial activity 3. 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, It is easy to recognize these characteristics in the entrepreneurial experience of the.
Jurmains They certainly had an innovative idea But was it a good business idea In a. practical sense a good business idea has to become something more than just an idea If. like the Jurmains you re interested in generating income from your idea you ll probably need. to turn it into a product something that you can market because it satisfies a need If you. want to develop a product you ll need some kind of organization to coordinate the resources. necessary to make it a reality in other words a business Risk enters the equation when you. make the decision to start up a business and when you commit yourself to managing it. A Few Things to Know about Going into Business for Yourself. Mark Zuckerberg founded Facebook while a student at Harvard By age 27 he built up a. personal wealth of 13 5 billion By age 31 his net worth was 37 5 billion. Chapter 6 Download this book for free at 135,http hdl handle net 10919 70961. So what about you Do you ever wonder what it would be like to start your own. business You might even turn into a serial entrepreneur like Marcia Kilgore 4 After high. school she moved from Canada to New York City to attend Columbia University But when her. financial aid was delayed Marcia abandoned her plans to. Figure 6 1 Facebook founder, attend college and took a job as a personal trainer a natural Mark Zuckerberg. occupation for a former bodybuilder and middleweight title. holder But things got boring in the summer when her wealthy. clients left the city for the Hamptons To keep busy she took a. skin care course at a Manhattan cosmetology institute As a. teenager she was self conscious about her complexion and. wanted to know how to treat it herself She learned how to. give facials and work with natural remedies She started giving. facials to her fitness clients who were thrilled with the results. As demand for her services exploded she started her first. business Bliss Spa and picked up celebrity clients. including Madonna Oprah Winfrey and Jennifer Lopez The business went international and. she sold it for more than 30 million 5, But the story doesn t end here she launched two more companies Soap and Glory a. supplier of affordable beauty products sold at Target and FitFlops which sells sandals that. tone and tighten your leg muscles as you walk Oprah loves Kilgore s sandals and plugged. them on her show 6 You can t get a better endorsement than that Kilgore never did finish. college but when asked if she would follow the same path again she said If I had to decide. what to do all over again I would make the same choices I found by accident what I m good. at and I m glad I did, So a few questions to consider if you want to go into business for yourself. How do I come up with a business idea, Should I build a business from scratch buy an existing business or invest in a.
What steps are involved in developing a business plan. Where could I find help in getting my business started. 136 Download this book for free at Chapter 6,http hdl handle net 10919 70961. How can I increase the likelihood that I ll succeed. In this chapter we ll provide some answers to questions like these. Why Start Your Own Business, What sort of characteristics distinguishes those who start businesses from those who. don t Or more to the point why do some people actually follow through on the desire to start. up their own businesses The most common reasons for starting a business are the following. To be your own boss,To accommodate a desired lifestyle. To achieve financial independence,To enjoy creative freedom. To use your skills and knowledge, The Small Business Administration SBA points out though that these are likely to.
be advantages only for the right person How do you know if you re one of the right people. The SBA suggests that you assess your strengths and weaknesses by asking yourself a few. relevant questions 7, Am I a self starter You ll need to develop and follow through on your ideas. How well do I get along with different personalities Strong working relationships. with a variety of people are crucial, How good am I at making decisions Especially under pressure. Do I have the physical and emotional stamina Expect six or seven work days of. about twelve hours every week, How well do I plan and organize Poor planning is the culprit in most business. How will my business affect my family Family members need to know what to. expect long hours and at least initially a more modest standard of living. Before we discuss why businesses fail we should consider why a huge number of. business ideas never even make it to the grand opening One business analyst cites four. reservations or fears that prevent people from starting businesses 8. Chapter 6 Download this book for free at 137,http hdl handle net 10919 70961. Money Without cash you can t get very far What to do line up initial financing. early or at least have done enough research to have a plan to raise money. Security A lot of people don t want to sacrifice the steady income that comes with. the nine to five job What to do don t give up your day job Run the business part. time or connect with someone to help run your business a co founder. Competition A lot of people don t know how to distinguish their business ideas from. similar ideas What to do figure out how to do something cheaper faster or better. Lack of ideas Some people simply don t know what sort of business they want to. get into What to do find out what trends are successful Turn a hobby into a. business Think about a franchise Find a solution to something that annoys you. entrepreneurs call this a pain point and try to turn it into a business. If you re still interested in going into business for yourself try to regard such drawbacks. as mere obstacles to be overcome by a combination of planning and creative thinking. Sources of Early Stage Financing, As noted above many businesses fail or never get started due to a lack of funds But.
where can an entrepreneur raise money to start a business Many first time entrepreneurs are. financed by friends and family at least in the very early stages Others may borrow through. their personal credit cards though quite often high interest rates make this approach. unattractive or too expensive for the new business to afford. An entrepreneur with a great idea may win funding through a pitch competition. localities and state agencies understand that economic growth depends on successful new. businesses and so they will often conduct such competitions in the hopes of attracting them. Entrepreneurship Starting a Business Learning Objectives 1 Define entrepreneur and describe the three characteristics of entrepreneurial activity 2 Identify five potential advantages to starting your own business 3 Define a small business and explain the importance of small businesses to the U S economy 4 Explain why small businesses tend to foster innovation more effectively than

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