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Solution Manual For Entrepreneurship: Starting and Operating Small Business, 5th Edition

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    Entrepreneurship: Starting and Operating a Small Business Fifth Edition Steve Mariotti Caroline Glackin Entrepreneurship: Starting and Operating a Small Business, Resource Manual (Download Only), 5e By Caroline Glackin

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    00 - 1 T o t he I n s t ruc t o r Entr e pr e n e urship: Starting and Op e rating a Small Busin e ss, Fifth Edition, is the l a t e st in a series of e nt re p r e n e u r ship t e x t b ooks w r itt e n b y S t e ve M ar iotti, the f ound e r of t h e N e two r k f o r T eac hi n g Ent r e p re n e u r s h ip ( N F TE ) , a nd p r o f e ssor a nd e nt re p re n e u r C ar ol i ne Gl ac kin. This t e x tbook is a n e x t e nsion of the p r o g ra ms d e v e lop e d b y S t e ve M ar iotti und e r the a uspi ce s o f N F TE. S in c e 1987, N F T E h a s re a c h e d more than 500 , 000 stud e nts a nd p r o fe ss i on a ls a nd c e r ti f i ed thousands of inst r u c t o r s globally to implement its innov a t i ve e nt re p re n e u r ship programs . N F TE is wid e l y vi e w e d a s a wo r ld l ea d e r in p r omoti n g e nt r e p re n e u r i a l lit er a c y a nd h a s a p r ov e n t r ack rec o r d o f h e lpi n g stud e n t s st ar t a v ar i e t y of s u cce ss f ul busin e ss v e nt ur e s. B usin e ss stud e nts, a s w e l l a s those fr om oth e r dis c iplin e s, ca n b e n e f it fr om Entr e pr e n e urship . F or t h e f o r m er , it r e c a sts th e ir p r ior l ear ni n g f r om a t y pi ca l l y c o r po r a te c ont e x t a nd f o c us e s it on sm a ll a nd e nt re p r e n e u r i a l e nt er p r is e s. F or stud e nts in su c h f i e lds a s hospit a li t y , the ar ts, e n g i n eer i n g , a nd fa shion m e r c h a ndisin g , the t e x t int r o du ce s k e y busin e ss c on ce pts in the c ont e x t of a b r o a d ra n g e o f c ar e er s . C a s e s fr om hospit a li t y , t ec hnolo g y , re t a il, m a nu fac tu r i n g , dist r ibution, rea l e st a t e , f in a n c e , a nd not - f o r - p r o f it o r g a ni z a tions p re s e nt a w ea lth of insi g hts a nd l e a r ni n g o ppo r tuniti e s. Most impo r t a nt l y , Entr e pr e n e urship is a b a l a n ce d mix of the aca d e mic a nd a ppli e d c ompon e nts of e nt re p re n e u r ship e du c a tion. S tud e nts ar e int r odu ce d to the th e o r i e s, m e thods, a n d re quisite knowl e d g e a n d skills for e nt r e p re n e u r s and a r e imm e di a t e l y provided p r ac t i ca l e x a mpl e s a nd dis c us s ion oppo r tuniti e s. Using the Appli ca tion E x erc is e s a nd E x plo r ing Online fea tu r e s, th e y a r e e n c ou r a g e d to t a k e this n e w knowl e d g e a nd a pp l y it to th e ir own lives , so th a t the c ou r se m a t er i a ls a r e re in f o r c e d a nd int e r n a li z e d. This t e x tbook c ombin e s S t e ve M ar iotti ’ s e x p er i e n c e a s a n e nt re p re n e u r wi t h re l e v a nt aca d e mic th e o r y a nd p r a c ti ce , suppo r t e d b y a r i c h v ar i e t y of e x a mpl e s a nd sto r i e s th a t in c lude the e x p er i e n ce s of N F TE p r o g r a m g ra d u a t e s who h a v e st ar t e d th e ir own busi n e ss e s. C ar oline Gl ac kin b r i n g s y e a r s of e x p er i e n c e in the univ er si t y c l a ss r oom, a s a l e n d e r t o sm a ll a nd mi cr obusin e ss e s, a nd a s a n e nt re p re n e u r a nd sm a l l busin e ss own er . T o g e t h er , th e y h a v e p r odu ce d a t e x t th a t is p r ac ti ca l, us e f ul, a nd a c a d e mi ca l l y solid. This book e n c ou r a g e s c o ll e g e stud e nts to think th r ou g h e v e r y st e p o f c r ea t i ng th e ir o wn enterprise while l ea r ning e c onomi c , f in a n c i a l, a nd busin e ss c on c e pts. Upon c ompl e tion of this c ou r s e , stud e nts will be a ble to:  Create and test a Business Model using the Customer Discovery process .  W r ite and present a p r o fe ssion a l bus i n e ss pl a n.   C rea te in c om e , b a l a n c e s h ee t, a nd c a sh f low st a t e m e nts.   Use f in a n c i a l ra tios to e v a lu a te busin e ss p e r f o r m a n ce.   An a l y z e m a r k e ts a nd cr e a te e f fec tive m a r k e ti n g p l a ns.   Use sou r c e s of c a pit a l.   I n v e st ear ni n g s.   D e v e lop h ar v e sting a nd e x it st ra t e g i e s.

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    00 - 2 T he Ma ri o tt i / G l a c k i n L e a rning S y s t e m 1. B e gi nn i n g o f c h a p ter :   Learning Obj e c tiv es   Quot a tion   Ent re p re n e u r i a l V i g n e tte 2. I n c l ud e d i n t h e c h a p ter :   S t e p into the S ho e s of the E x p er ts   B i z Fac ts   Ent re p re n e u r i a l W isdom   Glob a l I m p act 3. En d o f c h a p ter :   C h a pt e r S umm a r y   K e y T er ms   Ent re p re n e u r ship P o r t f olio — C r iti ca l Thinking E x erc is e s — K e y C on ce pt Q u e stions — Appli ca tion E x erc is es — E x plo r ing Your C ommuni t y a nd E x plo r ing O nline __Canvas Connections — B iz B uild e r B usin e ss P l a n Qu e stions — S ho r t C a se S tu d y / C a s e S tu d y An a l y sis — L o n g C a s e S tu d y / C a se S tu d y An a l y sis 4. U n it c as es C o n t en t s o f t h e Ma nu al This I nst r u c to r’ s M a n u a l p r ovid e s the inst r u c tor w ith a summ a r y of e a c h c h a pt er , a s w e ll a s a nsw er s to a ll c h a pt e r e x erc is e s, c a se stu d y a n a l y s e s, a nd lists of a ddition a l p r int a nd Internet re sou r c e s. C h a p te r Ov er vi e w : A b r i e f s y nopsis of the c h a pt e r C h a p te r O b ject i v e s: M a t c hing t h e t e x t L ect u r e O u t li n e s: Outlin e s a nd t e a c hing no t e s , including class discussion and activity ideas, f o r eac h c h a pt e r topic a r e p r ovid e d. O u t si d e t h e Class r oo m : C h a pt er s in c lude listin g s f or a ddition a l web sit e s, m e dia ( m a g a z in e s, e t c . ) , a nd or g a ni z a tions (e . g ., S m a ll B usi n e ss A d minist ra tion) th a t ar e re l e v a nt to the c h a pt e r m a t er i a l a nd h e lp to e x p a nd the l ear ni n g e x p er i e n c e b e y ond the c l a ss r oom.

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    1 - 1 | P a g e UN I T 1 : E N T R E P R E N E U R I AL P A T H W AYS C h a pter 1 Entrep r eneurs and Entrepreneurship C h a p ter 1 Co n te n ts Understanding Entrepreneurs and Ent re p re n e u r ship 3* W h a t I s a n Ent r e p re n e u r ? 3The Free - Enterprise System 5 Volunt a r y E x c h a nge 5 B e n e f its a nd C h a ll e n g e s of F r e e Ent e r p r ise 5 W h a t I s a S m a ll B usin e s s ? 6 Definitions of Success – Monetary and Other 6 Taking the Long View 7 B e n e f its a nd C osts of B e c oming a n En t re p r e n e ur 8 Potential Benefits of Entrepreneurship 8 Potential Costs of Entrepreneurship 10 Cost/Benefit Analysis 11 Oppo r tuni t y C ost 11 Seeking Advice and Information to Succeed 12 Ent re p re n e u r i a l Options 14 The Many Faces of Entrepreneurship 16 How Do Ent re p re n e u r s F ind Oppo r tuniti e s to S t ar t N e w B usin e ss e s? 17 Ent re p re n e u r s C r e a tiv e l y E x plo i t C h a n g e s in Our W o r ld 18 W h er e Oth er s S e e P r obl e ms, Ent re p re n e u r s R ec o gni z e Oppo r tuniti e s 18 T ra in Your Mind to R ec o g ni z e B usin e ss Opp o r tu n iti e s 19 Ent re p re n e u r s Use Th e ir I m a g i n a tions 19 An I d e a I s Not N e ce ss ar il y a n Opp o r tuni t y 19 Oppo r tuni t y I s S itu a tion a l 20 The F ive R oots of Opp or tuni t y in the M ar k e tpl a c e 21 P a ths to Enterprise Own er ship 22 S ec u r e F r a n c hise R i g h t s 22 B u y an E x isting B us i n e ss 22 L i c e nse T ec hnol og y 2 3 M a king the B usin e ss W o r k P er son a l l y a nd P r o f e ssion a l l y 23 A B usin e ss Must M a ke a P r o f it to S t a y in B usin e s s 23 P r o f it I s the S i g n Th a t t h e Ent re p r e n e ur I s Addi n g V a lue 24 P r o f it R e sults fr om the Ent re p re n e u r’ s C hoi ce s 24 The T ea m Ap p r o ac h 24 Developing Skills for Your Career 25 *Not e : p a g e numb er s re f ere n c e the t e x tbook

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    1 - 2 | P a g e C h a p ter 1 Ov er vi ew This c h a pt e r is a n int r od u c tion to the c on ce pt of e n t re p re n e u r ship. Ent re p r e n e u r ship is d ef in e d a nd the v ar ious a d v a nt a g e s a nd dis a dv a nt a g e s of c ondu c ting busin e ss a s a n e nt re p r e n e ur ar e int r odu ce d. S ome of the d ec isions th a t a n e nt re p r e n e ur f a ce s a r e p r e s e nt e d. C h a p ter 1 O b ject i v es Learning Obj e c tive 1.1 : Summarize wh a t entrepreneurship is and what e nt re p r e n e u r s do. Learning Obj e c tive 1.2 : Examine how fr e e - e nt er p r ise e c onomi e s wo r k a nd how e nt re p r e n e u r s f it into th e m. Learning Objective 1.3: Describe small business. Learning Objective 1.4: Understand the costs and benefits of entrepreneurship. Learning Objective 1.5: Recognize the various entrepreneurial options. Learning Objective 1.6: Identify a nd e v a l u a te op p o r tuniti e s to st ar t y our o wn busin e ss. Learning Objective 1.7: Distinguish between ideas and opportunities. Learning Objective 1.8: Explore the multiple paths to entrepreneurship. Learning Obj e c tive 1.9 : E x pl a in success s i g n a l s for e n t re p re n e u r s . Learning Objective 1.10: Develop skills for a future career – employment or entrepreneurship. C h a p te r 1 O u t li ne 1. Summarize what entrepreneurship is and what entrepreneurs do. a. Entrepreneurs start their own businesses and work for themselves. b. Entrepreneurs recognize and create opportunities to start businesses that other people may not have noticed. c. Ent repreneurs shift economic resources from an area of lower productivity into an area of higher productivity and greater yield. By doing this, they add value to scarce resources. 2. Examine how free - enterprise economies work and how entrepreneurs fit into them. a. The free - enterprise system is based on voluntary exchange. Voluntary exchange is a trade between two parties who agree to trade money for a product or service. Both parties agree to the trade because each benefit from the exchange. b. The free - enterprise sys tem encourages entrepreneurs who use resources efficiently to satisfy consumer needs by rewarding them with profit. 3. Describe small business a. A small business is generally defined by the U.S. Small Business Administration’s Office of Advocacy as having fewer than 500 employees and selling less than $5 million worth of products or services annually 4. Understand the costs and benefits of entrepreneurship a. Benefits i. Control over time

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    1 - 3 | P a g e ii. Fulfillment iii. Independence/autonomy iv. Creation/ownership v. Financial reward/control over compensation vi. Control over working conditions vii. Self esteem viii. Contribution to society b. Costs i. Business failure ii. Obstacles iii. Loneliness/isolation iv. Financial insecurity v. Long hours/hard work vi. Strain on personal relationships 5. Recognize the various entrepreneurial options a. Social entrepreneurship b. Green entrepreneurship c. Microenterprise d. Mainstream small firms e. Unicorns f. Corporate entrepreneurship 6. Identify and evaluate opportunities to start your own business. a. The five roots of opportunity are i. problems that your business can solve; ii. changes in laws, situations, or trends; iii. inventions of totally new products or services; iv. competition (if you can find a way to beat the competition on price, location, quality, reputation, reliability, or speed, you can create a successful business w ith an existing product or service); and v. technological advances (scientists may invent new technology, but entrepreneurs figure out how to sell it). 7. Distinguish between ideas and opportunities a. Ideas are not necessarily opportunities b. Opportunity is situational

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    1 - 4 | P a g e c. Five roots of opportunity i. Problems your business can solve ii. Changes in laws, situations, or trends iii. Inventions of new products or services iv. Competitive advantages of importance to customers v. Technological advances that entrepreneurs take from the laboratory to the marketplace 8. Explore t he multiple paths to entrepreneurship. a. Start your own business b. Buy an existing business c. Secure a franchise or license d. License technology 9. Explain success signals for entrepreneurs. a. Profit is the sign that an entrepreneur has added value to the scarce resources he or she is using. b. Not making a profit is a sign that the entrepreneur is not using resources well and is not adding value to them. 10. Develop skills for a future career - employment or entrepreneurship. a. Written and oral communications b. Critical thinking and problem solving c. Teamwork and collaboration d. Leadership e. Creativity and discovery f. Ethics g. Information technology skills h. Information literacy C h a p ter 1 T e a c h i n g No tes Class Dis c u ssion I d e as: 1. W r ite on the bo ar d or p o se a loud the f ollowi n g : W h a t ar e th r e e thin g s y o u think oth er s would s a y t h a t y ou ca n “ do” p ar ti c ul a r l y w e ll? 2. Ask the stud e nts to visu a li z e : W h a t k ind of li f e do I w a nt? How ca n I m a ke m y c ommuni t y a b e tt e r pl a ce ?

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    1 - 5 | P a g e 3. W r ite on the bo ar d or p r o j ec t the f ollowing quot e a nd a sk the stud e nts to re w r ite or e x pl a in it in t h e ir own wo r ds a nd/or g ive a n e x a mple of it: “ The p e ople who g e t on in this wo r ld a r e t hose who g e t out a nd lo o k f or the c i r c umst a n ce s t h e y w a nt a nd, if th e y ca n ’ t f ind th e m, m a ke th e m.” 4. I n f o r m the stud e nts th a t “ e nt re p r e n e u r ” is not a so c i a l or f in a n c i a l c a t e g o r y but a st a te of mind th a t f o c us e s on s e e king out oppo r tuniti e s, t a king a c tion, a nd f inding w a y s to solve oth e r p e opl e’ s p r obl e ms in a p r o f it a ble w a y . Ask s tud e nts to think a bout a nd n a me e nt re p r e n e u r s th e y kn o w, su c h a s sm a ll busin e ssp e ople in the n e i g hb o r hoo d . C a n th e y think of w a y s t h e se lo ca l e nt re p r e n e u r s s a w p r obl e ms a s oppo r tuniti e s a nd solv e d those p r obl e ms in a p r o f it a ble w a y ? C a n stud e nts think of a time wh e n th e y w e r e e nt re p r e n e u r i a l in this w a y ? 5. Eli c it fr om stud e nts several m ea nin g s of the w o r d fr ee . S t re ss th a t, in the ca s e of t h e t er m “ f ree e nt er p r is e , ” it m ea ns th a t a n y o n e m a y st ar t, own, or s e ll a busin e ss ( “ e nt e r p r is e”) ; m a y s e ll g oods a nd s er vi ce s f or wh a t e v e r p r i c e th e y ca n g e t f o r th e m; a nd m a y s p e nd th e ir mon e y a nd inv e st th e ir a s s e ts a s th e y c hoos e . I nvite stud e nts to sh ar e opini o ns a bout a fre e - e nt e r p r ise e c ono m y , both the a dv a nt a g e s ( su c h a s fr e e dom to su cc e e d, re w a r d f or initi a tiv e , no int erfere n c e fr om oth er s) a nd dis a dv a nt a g e s ( su c h a s f in a n c i a l r isk a nd p er son a l re sponsibili t y ) . 6. Ask stud e nts f or th e ir d e f initions of opportunit y . H ow is a n oppo r tuni t y di f f ere nt fr om a p r obl e m? ( An oppo r tuni t y is vi e w e d mo r e positiv e l y th a n a p r obl e m a nd c onsid ere d a situ a tion a n individu a l ca n do som e thing a bout. O ppo r tuni t y is mo r e a m a t t e r of a ttitude tow ar d pot e nti a l p r obl e m s th a n the s ce n a r io its e l f .) 7. Ask wh a t oppo r tuniti e s a n e mpl o y e e g e n era l l y h a s . ( E x a mpl e s: t ra inin g , p r omotions, ra is e s — but a ll d ec id e d b y som e o n e e ls e .) Ask w h a t oppo r tuniti e s a n e nt re p re n e ur h a s. ( E x a mpl e s: g r owi n g the busin e ss, l ear ni n g skills, m ee ting n e w p e opl e , cr ea ting w e a lth b a s e d on his/h e r own a n d /or the m ar k e t ’ s g o a ls a n d n ee ds.) Ask w h a t a n e mpl o y e e o wns in his/h e r job. Ask wh a t a n e nt re p re n e u r owns. 8. S umm ar i z e the di ffere n c e s b e tw ee n o wn er ship, a s it impli e s th a t som e thing b e lon g s to y o u, a nd t e nan cy , whi c h impli e s y ou ca n u s e som e thing b e lo n g i n g to oth e r s with th e ir p er mission. Use e x a mpl e s to m a ke this di ffere n c e mo r e c on c re t e . C r ea te a t wo - c olumn c h ar t on the bo a r d c omp a r ing di f f e r e nt a sp ec ts of home own er ship vs. re nt i n g , a nd busin e ss own er ship vs. e mpl o y m e nt. Emph a si z e the point th a t own er ship o f t e n m ea ns th a t y ou d e l a y re w ar ds u ntil some point in the f u t u r e (e . g ., y ou do n ’ t g e t p a id f or y our eff o r ts r i g ht a w a y , the w a y y ou do with e mpl o y m e nt) but th a t the re w ar ds ar e o f t e n big g e r (e . g ., y ou g e t the c omp a n y ’ s p r o f its, not a s a l a r y or w a g e s, a n d ca n p er h a ps s e ll the c omp a n y f or a lot mo r e mon e y th a n y ou c oul d have e a r n e d in w a g e s a s a n e mpl o y e e) . C h a p ter 1 L ect ur e Enh a n cers P P T L e c t u r e S li d e s f or C h a p te r 1 O u t si d e t h e Class r oo m : www.sb a . g ov : The S m a ll B usin e ss Ad m inist ra tion ( S B A) is a g o v er nm e nt a g e n c y th at suppo r ts a nd p r omot e s e nt re p re n e u r s. The S B A o ffer s fr e e or in e x p e nsive p a mphl e ts on a v ar i e t y of

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    1 - 6 | P a g e busin e ss subj ec ts. S ome lo ca l o ff i c e s o f f e r c o uns e ling to sm a ll busin e ss own er s th r o u g h SC O R E or the S B DC s y s t e m. ww w . e on e two r k. o r g : Ent re p re n e u r s O r g a ni z a tion p r ovid e s l ear ni n g a nd n e t wo r king opp o r tuniti e s wo r ldwide f or y ou n g e n t re p re n e u r s. www. z er omillion. c om : This sit e , r un b y Z e ro to O ne M illion a uthor R y a n Allis, p r ovid e s re sou r c e s f or y ou n g e nt r e p re n e u r s, a n e two r ki n g l i st of c ont ac ts ca ll e d The Ent re p re n e u r ship Di rec to r y , dis c ussion f or ums, a nd links to ar ti c l e s a nd c ou r s e s. Entr e pr e n e ur m a g a z ine S ubs cr iptions: www. e nt r e p re n e u r . c om M I T Ent r e p r e n e u r ship C e nt e r http:// e nt re p re n e u r ship. m it. e du T he C on c ise En cyc lo p e dia of E c onomi c s http://www. ec onlib.o r g /l i b ra r y /En c /Ent r e p re n e u r s hip.html C h a p ter 1 K ey T e r m s A c quisition 22 C a pit a l 5 C a pit a lism 5 C ommission 9 Corporate entrepreneurship 17 C ost/b e n ef it a n a l y sis 11 Divid e nd 9 Due dili g e n c e 22 Ent re p re n e ur 4 Family enterprise 17 Fra n c hise 22 Fr e e - e n t er p r ise s y st e m 5 G ree n e nt re p r e n e u r ship 15 L i f e s t y le busi n e ss 16 Mentor 12 Mi cr o e nt er p r ise 22 Necessity - based entrepreneurship 4 Oppo r tuni t y c ost 11 Opportunity - based entrepreneurship 4 P r odu c t 3 P r o f it 23 S a l a r y 9 S er vi c e 3 Social business 15 S o c i a l ent re p re n e u r ship 14 T ra d e - o f f 24 Unicorn s 17

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    1 - 7 | P a g e V e ntu r e P hil a nth r o p y 15 Volunt a r y E x c h a n g e 5 W a g e 9 C h a p ter 1 Class A ct ivi t y I d e as a n d G r o u p E x erc is es 1. Di rec t stud e nts individu a l l y or in sm a ll g r oups to b ra insto r m p r obl e ms th e y s e e in so c i e t y , th e i r n e i g hbo r h o ods, the s c hool, or th e ir o wn liv e s. A f t e r a fe w mi n ut e s, a sk e a ch stud e nt or g r oup to c hoo s e one p r obl e m. H o w c ou l d it be tu r n e d into a n oppo r tuni t y — a p r odu c t or s er v i c e — th a t m i g ht h e lp solve the p r ob l e m ? H a ve stud e nts/ g r oups p re s e nt th e ir id ea s to the c l a ss. 2. Ask eac h stud e nt to identify one p r o f e ssion or o cc up a tion he o r she i s c onsid er i n g a s a c a r e er . G r oup stu d e n ts b a s e d on jobs/busin e ss e s th a t ar e in simil a r int e r e st g r oupi n g s or in c omp a r a ble indust r i e s: f or e x a mpl e , wo r ki n g with numb er s (a c c ountin g , insu ra n ce) , o r in e nt er t a inm e nt (ac to r , musi c i a n ) , or s c i e nti f ic c ar e er s. Gi v e e a c h g r oup a fe w minut e s to b ra insto r m w a y s to tu r n the ca r e e r into a busin e ss oppo r tuni t y so th a t stud e nts c ould wo r k f or t h e ms e lv e s. How m i g ht th e y think a bout th e ir int e r e sts in t er ms of e nt re p r e n e u r ship? H a v e e a c h g r oup b r i e f l y s h a r e its id ea s. 3. Gu e st Sp e a ke r Pan e l . I n v ite s e v era l lo c a l e nt re p r e n e u r s to s er ve a s p a n e l m e mb er s f or a dis c ussion of the b e n ef its a nd c h a ll e n g e s of e nt r e p re n e u r ship. C onsid e r inv i ting a n e nt re p r e n e ur fr om e a c h m a jor t y pe o f busin e ss ( m a nu fac tu r i n g , who l e s a l e , re t a il, s er v i ce) . T r y to m a t c h the d e m o g r a phic c h a rac t er isti c s of t he p a n e l to y our c l a ss (e . g ., wom e n, A fr i ca n Am er i c a ns, His p a ni c s, Asi a ns) a nd to in c l ude e nt re p re n e u r s fr om d i ffere nt a g e g r oups. P r e p the p a n e l m e mb er s to be a b l e to g i v e a b r i e f o v er vi e w o f th e ir re sp ec tive busin e ss e s ( p r odu c t/s er v i c e d e s c r iption, t y pe o f b u sin e ss, wh e n st ar t e d, a n n u a l s a l e s, e t c .) a nd dis c uss w h y th e y b ec a me e nt re p re n e u r s, wh a t th e y s e e a s the m a in b e n e f its of e nt re p r e n e u r ship, w h a t th e ir g r e a t e st c h a ll e n g e s h a ve b ee n, w h a t th e ir g o a ls are , e t c . H a v e stud e nts c ome up with lists of a ddition a l qu e stions b ef o r e t h e sp ea k er s a rr i v e . 4. I nvite stud e nts visit http://www . y a hoo . c om a nd http://www. g o o g l e . c om a nd c ondu c t a c omp ara tive SW OT a n a l y s is of the two s e a r c h e n g ine c omp e tito r s. W hi c h should the c l a ss inv e st i n ? W h y ? 5. H a ve stud e nts s e arc h the I nt er n e t f or “ ca s e studi e s on e nt re p r e n e u r s .” H a v e th e m f ind not e wo r t h y e nt re p re n e ur s a nd w r ite up wh a t th e s e p e ople h a ve a c c omplish e d. C h a p ter 1 C r i t i c al Th i nk i n g E x erc is es 1 - 1. W h a t would be the b e st thing a bout owni n g y our own busin e ss? W h a t would be the wo r st for you ? Why? L.O. 1 .1 Summarize what entrepreneurship is and what entrepreneurs do. AACSB Reflective thinking A n s w er s w i ll va r y w i t h s t ud e n t s. Typically, they will draw upon the items on pages 8 through 11. Best: control over time; fulfillment; independence/autonomy; creation/ownership ; financial reward/control over compensation; control over working conditions; self - esteem, and

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    1 - 8 | P a g e contribution to society. Worst: business failure; obstacles; loneliness/isolation; financial insecurity; long hours/hard work, strain on personal relationships. En c o u r age s t ud e n t s t o w r i t e c o m p l et e s e n te n ces a n d u se p a r ag r a ph s t o c l e a r ly c o n v e y a n d o r ga n i z e t h e ir t h o u g h t s. 1 - 2. Choose th r e e non - f in a n c i a l b e n ef its of e n t re p r e n e u r ship th a t mi g ht be impo r t a nt to y ou. W r ite a p ar a g r a ph a bout eac h and why it would be important . L.O. 1. 2 Examine how free - enterprise economies work and how entrepreneurs fit into them. AACSB Application of knowledge A n s w er s w i ll va r y w i t h s t ud e n t s. No n - f i n a n c ial b e n e f i t s m ig h t i n c l ud e s e l f - e s te e m , sa t is f a ct io n , e x c i t e m e n t , and the like . Much like previous question, but explicitly excludes financial rewards. 1 - 3. I f y ou w e r e to st ar t a bus i n e ss five years from n ow , wh a t would you expect oppo r tuni t y c ost to be ? I n ot h e r wo r ds, wh a t would be the n e x t - b e st use of y o u r tim e ? How mu c h mon e y c ould y ou m a ke wo r king as an employee , inst ea d ? The a nsw e r to this qu e stion will g ive y o u a r o u g h id e a o f how to v a lue y o u r time wh e n y ou st a r t a b u sin e ss a nd f i g u r e out how mu c h to p a y y o u r s e l f . L.O. 1.6 Identify and evaluate opportunities to start your own business . AACSB Analytical thinking M y o pp o rt un i t y c ost w o u ld b e t h e c ost of o t h e r a ct ivi t i e s t h at I c o u ld pu r s u e du r i ng t h at t i m e . M y t i m e is w o rt h a pp r oxi m a t e ly $ p e r h o u r . 1 - 4. Select and d e s cr ibe a n id e a th a t y ou h a v e for a business . Summarize how it c ould s a tis f y a c onsum e r n ee d. What problem is it solving? For whom? L.O. 1.6 Identify and evaluate opportunities to start your own business . AACSB Analytical thinking E xa m p l e : I p lan t o s t a r t a bu si n e ss c all e d “ O l d i e s bu t G oo d i e s DJ S er v i ce .” C u s t o mer s w ill h i r e m e t o DJ at s p ec ial e v e n t s i n c l ud i n g f a m ily re un i o n s, ret i r e me n t p a rt i e s, b i rt hd ays, a n d a nn iv er sa r y ce l e b r a t io n s. Ol d i e s b u t G oo d i e s will s p ec iali ze in p lay i n g M o t o w n - er a m u sic f r o m t h e 1960 a n d 70s. M y bu si n e ss w i l l c a te r t o ol d er c u s t o m er s w h o e n j oy t h is p er iod a n d s t yl e . I w i l l d e liv e r m y DJ s er v i ce s d i rect ly t o m y c li e n t s. W h e n I am h i re d t o p lay at a p a rt y, I w ill tr a n s p o r t all of m y e qu i p m e n t a n d m u sic t o t h e e v e n t. M a n y DJs f o c u s on p la y i n g t h e la te s t , m ost c u t t i n g - e d ge tr a c k s, bu t ol d e r c u s t o m e rs d o n ot val u e t h is f e a t u re . I w ill b e sa t i s f yi n g m y c u s t o m er s ’ n ee d t o he ar t h e m u sic t h e y e n j oy m os t . Ol d i e s bu t G oo d i e s w ill o f f e r i t s c u s t o mer s a f un - f ill e d , n os t algic m u si c al e x pe r i e n c e t h at t h e y c an s h a r e w i t h t h e ir f r i e nd s

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    1 - 9 | P a g e a n d re la t iv e s. 1 - 5 . Provide a n e x a mple of a c h a n g e t h a t h a s o cc u rre d o r i s a bout to o cc ur in y our area / n e i g hb o r hood. Dis c uss at least three busin e ss opp o r tuniti e s this c h a n g e m i g ht c rea t e . L.O. 1.6 Identify and evaluate opportunities to start your own business . AACSB Analytical thinking S t ud e n t ’ s e x a m p l e s s h o u ld s te m f r o m a c h a n ge in l a w s, si t u a t io n s, or t r e nd s. E xa m p l e : I live in a h ip a n d t r e nd y n e ig hb o r h o od of yo u n g p e o p l e . L a t e l y , I ’ ve n o t i ce d t h at m a n y p e o p le in m y n e ig hb o r h ood a r e s t a rt i n g f a m ili e s. Bu si n e ss o pp o rt un i t i e s c r e a te d b y t h is c h a n ge m ig h t i n c l ud e d ay - c a r e a n d b a b y s i tt i n g s er vi ce s, d ia p e r - d e liv e r y s er vi ce s, a n d m o t h e r ’ s h e l p e r s er vi c e s. 1 - 6 . Identify and l ist f ive busin e ss oppo r t uniti e s in y o u r environment a nd the n e e d ( s) eac h would s a tis f y . Indicate w h e t h e r e a c h oppo r tuni t y y ou d e s cr ibe is likely to be a lifestyle business, microenterprise, small business, unicorn or some other type of business . L.O. 1.6 Identify and evaluate opportunities to start your own business . AACSB Analytical thinking and application of knowledge B usin e ss Oppo r tuni t y a n d T y p e : N ee d ( s ) S a tis f i e d : 1. ( E xa m p l e ) a c a f e / b oo k s t o r e 1. a p la c e w h er e tee n a g er s c an h a n g o u t ( lifestyle business ) b ec a u se it d o e s n ’ t s er v e al c o h ol 2. 2. 3. 3. 4. 4.

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    1 - 10 | P a g e 5. 5. __________________________ 1 - 7. How have you worked to develop the critical skills discussed in the chapter? Which skills are your strongest? How might you build those that need improvement? L.O. 1.10 Develop skills for a future career – employment or entrepreneurship. AACSB Reflective thinking and application of knowledge. Students will provide a range of areas. For example: I have done many things to develop the critical skills discus sed in this chapter. I have taken courses that involve developing and using the skills. I have read books, watch ed videos, and listened to podcasts on several the skills. I practice the skills as much as I can. My strongest skills include : critical thinkin g, teamwork, and leadership. I may be able to improve upon my information technology skills by taking additional courses or using tutorials to learn skills and projects to practice them. C h a p ter 1 K ey Co n ce p t Q u e s t io n s 1 - 8 . D ef ine sm a ll busin e ss according to the U.S. Small Business Administration terms . How, if at all, does this differ from what you expected the definition to be? L.O. 1.3 Describe small business. AACSB Application of knowledge and reflective thinking A s m all bu si n e ss h as f e w e r t h an 5 00 e m p loy e e s a n d h as l e ss t h a n $5 m illion i n a nnu al s a l e s. Students often envision small business as being 25 or fewer employees and lower than $1 million in annual sales. They are surprised to learn how many businesses are considered small. 1 - 9 . E x pl a in how p r o f it wo r ks a s a si g n a l to the e nt re p re n e u r . L.O. 1.9 Explain success signal s for entrepreneur s . AACSB Analytical thinking W h e n a bu s i n e ss e a r n s a p r o f i t , it te lls t h e e n t r e p r e n e u r t h at h e o r s h e h as m a d e good d ec isio n s a b o u t h o w t o u se s c a r c e r e so u r c e s t o m e e t c o n s u me r need s. 1 - 10 . I t will p r ob a b l y t a ke a bout th r e e to 18 months f or y our busi n e ss to st ar t ear ni n g a p r o f it . Do you agree or disagree? W h y? I f you disagree , how lo n g do y ou e x p ec t it to t a k e ? What are the three most important factors in determining the time frame?

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    1 - 11 | P a g e L.O. 1.9 Explain success signals for entrepreneurs. AACSB Analytical thinking This will generally have “disagree” as the answer, as most businesses take more than three months to generate profits. The length of time they provide will likely be between 12 and 24 months. They should be able to explain the answer. Most important facto rs include: revenues, startup costs, cost of goods sold, and f ixed costs. 1 - 11 . Summarize th r e e facts a bout ca p i t a lism. L.O. 1. 2 E xamine how free - enterprise economies work and how entrepreneurs fit into them . AACSB Application of knowledge   Ca p i t alism is an ec o n o m ic sy s t e m in w h i c h a n yo n e is f r e e t o s t a r t a bu si n e ss.   In a c a p i t alis t ic so c i et y , t h e gov er n m e n t d o e s n o t s e t p r i ce s f or m ost go o d s a n d s er vi ce s.   Ca p i t alism is b as e d on vol un t a r y e x c h a n g e . 1 - 1 2 . Compare and contrast the meaning of a business opportunity and a business idea. L.O. 1.6 Identify and evaluate opportunities to start your own business . AACSB Analytical thinking Business Opportunity Business Idea Customer segment tested and real Customer segment untested Product or service defined sufficiently to test Product or service can be wholly “imaginary” Sufficient customers who will pay sufficient prices frequently enough to generate profitability in the foreseeable future Because the segment is untested, it is not clear that the business can become profitable It is attractive to customers because it creates or adds value for its customers Unknown It will work in the business environment Unknown It can be executed in a defined window of opportunity Unknown It can be implemented with the right team to make it durable Unknown 1 - 1 3 . V isit the U.S. S m a ll B usin e ss Administ ra tion Web site ( http: / / ww w .sb a . g ov). Read an article on starting a business and write a summary of the key information (200 words or fewer). Remember to create a proper citation for the article. L.O. 1. 1 and 1.6 Summarize what entrepreneurship is and entrepreneurs do , and i dentify

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    1 - 12 | P a g e and evaluate opportunities to start your own business . AACSB Written and oral communication & information technology Student answers will vary widely. They all should be well written and contain at least one citation in the requisite format. C h a p ter 1 A p p li c a t ion E x erc is es 1 - 14 . H a ve a c onv er s a tion with a fr i e nd or re l a tiv e . Discuss things he or she f inds fr ust r a ting in his or her ar e a /n e i g hbo r hood. a . W rite down th e se comments . b. G e n era t e a t l ea st th re e busin e ss oppo r tuniti e s fr om this c onv er s a ti o n. c. Use the c h e c klist b e low to e v a lu a te y o u r th re e busin e ss id ea s a s o ppo r tuniti e s. d. C hoose the b e st of the busin e ss oppo r tuniti e s a nd develop a SW OT a n a l y sis f or it. e. C rea te a c ost/b e n ef it a n a l y sis f or st ar ti n g t his busin e ss. Use the a n a l y sis to e x pl a in w h y y o u would or would not ac tu a l l y st ar t it. L.O. 1.6 Identify and evaluate opportunities to start your own business . AACSB Analytical thinking S t ud e n t s s h o u l d f ill o u t c h ec k lis t s f or t h r e e bu si n e ss o pp o rt un i t i e s t h e y g e n er a t e b y t al k i ng w i t h a f r i e n d or r e la t ive a n d t h e n s u pp ly a c os t / b e n e f it a n alys i s f or e a c h . The SWOT analysis can be in paragraph form or as a table and should include internal strengths and weaknesses and external opportunities and threats . Bu si n e ss I d e a C r i t i c al E val u a t ion W ould it be a tt rac tive to pot e nti a l c ustom er s? Y e s W ould it wo r k in y our b u sin e ss e nvi r onm e nt? Y e s I s th e r e a window of op p o r tuni t y ? Y e s Do y ou h a ve the skills a n d re sou r c e s to cr e a te this busin e s s ? Y e s I f y ou do not h a ve the sk i lls a nd re sou r c e s to cr e a t e this busin e ss, do y ou know s om e one who do e s a nd mi g ht w a nt to crea te this busin e ss w i th y ou? Y e s ___ No No No No No ___

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