Starting a Business: Entrepreneurship

Why Start a Business?

• New businesses are essential to any economy.
• The United States Small Business Administration (SBA) provides statistics to prove the importance of entrepreneurial businesses.
• 99.9% of all businesses in the United States are considered small.
• 48% of private sector employees work for small businesses.

Fortune 500

• Every business on the Fortune 500 list started as a new venture.
• Fortune magazine publishes the list annually.
• The list documents the 500 largest corporations in the United States, ranked by sales.

Frank Perdue

• Frank Perdue provides an excellent example of a small business owner with a vision that exceeded expectations.
• He transformed a commodity (chicken) into a unique, sought-after product.

Kuwaiti Entrepreneurship

• Ahmad Al Mutawa, a Kuwaiti entrepreneur, business coach, and public speaker (2015), has supported 850 clients and projects.
• He has helped over 80 businesses establish themselves in the GCC (Gulf Cooperation Council).
• Lulwa Al-Terkait, the founder of Je La La, launched her entire jewelry business on Instagram.
• Successful entrepreneurs often succeed because they know their target market very well.
• They conduct prior research, create a customer persona, and understand the demographics of their customers.

Defining Success for Entrepreneurs

• Success for entrepreneurs can encompass various aspects, including making money, building a loyal customer base, and having more free time.
• It can include being sound in mind, body, and spirit, accumulating wealth, having an expansive network, and possessing the knowledge to build up others.

Economies of Scale

• Economies of Scale are typically obtained by large firms or companies.
• It refers to a condition where the long-run average cost decreases as production increases.
• Advertising can be cheaper per unit for large companies like Walmart because it is purchased in large volume.
• The cost per unit in manufacturing decreases as production volumes increase.
• Entrepreneurs can respond quickly and effectively to specific customer needs.

Critical Elements for Entrepreneurial Success

• Critical elements an entrepreneur must solve for success include
  • Effective sales generation model.
  • Sustainable operating profit margins.
  • Being properly financed.

Effective Sales Generation Model

• A sales model provides a general framework that defines an organization's high-level approach to selling.
• An entrepreneur or sales team uses sales techniques or selling methods to generate revenue and sell more effectively.
• The technique is often refined through trial and error based on past experiences and is not typically a one-size-fits-all approach.

Sustainable Operating Profit Margins

• Operating margin measures how much profit a company makes on a dollar of sales after paying for variable production costs, such as wages and raw materials, but before paying interest or tax.
• It is calculated by dividing a company's operating income by its net sales.

Being Properly Financed

• Financing involves identifying the needs of individuals, organizations, and companies for monetary resources.
• Determining the means of collecting and using those resources while considering the risks associated with their projects is also part of financing.
• The term "financing" covers:
  • Studying money and other assets
  • Managing and controlling these assets
  • Identifying and managing project risks.
  • Applying the science of money management.

Societal Benefits of Entrepreneurship

• New business development drives the economic success of a community, a region, and a state.
• Civic leaders use entrepreneurs to promote economic strength.
• Entrepreneurs generate new employment, provide a growing tax revenue base, and improve an area's economic vitality.
• Entrepreneurial businesses can garner profits in markets that large corporations have ignored.
• Flexibility of business ownership allows workers to meet their own needs.

Entrepreneurship Around the World

• The World Bank estimates that the presence of small- and medium-sized enterprises (SMEs) is a strong factor in the growth of a nation's GNP (Growth National Product).
• Most nations encourage SME development.
• Efforts to encourage SMEs range from small microloans to comprehensive programs that assist new venture start-ups.
• The pace of start-ups is increasing globally.

Facebook Success

• Mark Zuckerberg is an example of massive entrepreneurial success.
• His story is more the exception than the rule.

Business Planning Process

• The text provides a practical and logical guide for planning a business.
• There are no cookie-cutter business plan programs.
• Plan to develop the elements of your plan as you finish each chapter.
• Do not be intimidated by the effort needed to bring forth a business.
• Craft a one-page pitch for your business.