2. Characteristics of Entrepreneurs
□ Entrepreneur – person who assumes
the risk of starting, owning, and
operating a business for the purpose of
making a profit
□ Half of all businesses end within the first
five or six years
□ Self-starters, enjoy working on their
own
□ Obtain work experience in the field
before starting businesses of their own
3. Preparing a Business Plan
□ Should be done before starting a business
□ Business plan
□ Written document that describes the nature of
the business, the company’s goals and
objectives, and how they will be achieved
□ Helps lay out the risks and responsibilities involved
in starting a business; helps decide if you should
really go into business
4. Reasons for Failure
□ Did not prepare a business plan
□ Unrealistic plan
□ Plan is just prepared because the bank
required it
*Plan needs to be realistic and well-
designed*
5. Elements of a Business Plan
□ Nature of the business
□ Description of products and/or services,
estimated risk, size/location of business,
background of entrepreneur(s)
□ Goals and objectives
□ Results expected in the short term and in terms of
sales volume/profits
□ Marketing plan
□ Customers and demand for the product/service,
prices, competitor comparison
6. Elements of a Business Plan
(cont’d)
□ Financial plan
□ Investment needed to start/maintain business,
projected income/expenses/profit, cash start-up
and cash flow needs
□ Organizational plan
□ Legal form of ownership, legal factors (licenses,
leases, contracts), organization chart, job
descriptions/skills needs by employees, physical
facilities (buildings, equipment, tools)
□ Click here to see a sample business plan
7. Sole Proprietorship
□ Business owned and managed by one person
□ Over 16 million in the U.S.
□ Proprietor – owner/manager
□ Responsible for providing expertise, money, and
management
□ Receives all profits earned by the business
□ Debts – creditors have first claim against the assets
□ Creditors – those to whom money is owed
□ Click here to read an article about the basics of the
sole proprietorship
□ Click here to read an article about the advantages
and disadvantages of sole proprietorships
8. Partnership
□ Business owned by two or more people
□ After it is formed, statement of financial
position (balance sheet) must be prepared
□ Includes total assets, liabilities, and capital of the
owners at the start of the business
□ Key factor to its success – partners clearly
agree upon each person’s responsibilities
9. Partnership (cont’d)
□ Partnership – learn more by clicking
here (often referred to as a general
partnership)
□ Click here to read an article about the
advantages and disadvantages of
partnerships
□ Limited partnership – learn more by
clicking here
10. Businesses Suited for Partnerships
□ Sell more than one product or service
□ Each partner handles a specialized phase
of the business
□Example – restaurant where one partner
focuses on food preparation while the other
one is in charge of customer service
□ Also common for businesses that form
as sole proprietorships
□ Example – accountants, financial
consultants, lawyers
11. Business Name
□ Can do business under the name or names
of the owner or owners
□ Many states prohibit using and Company or
& Co., unless it identifies additional partners
□ “Company” must be identified by registration at
a public recording office (ex. county clerk’s
office)
□ Can do business under a trade name, but
creditors must know all those responsible for the
business
12. Reference
□ Evarard, Kenneth E., Burrow, James L.
(2001). Business Principles and
Management. Mason, OH: South-
Western.
