Business Education: Basics of Entrepreneurship and Business Plan Development

Effects of Entrepreneurs on Business and the Economy
Entrepreneurs drive innovation. In a large company, it can be difficult to get a new idea across with so many layers, but an entrepreneur has no such limits. Entrepreneurs also create jobs, both for themselves and the employees they hire. People who have difficulty finding a job may start a company on their own. They also fill niches. Entrepreneurs might see places where there is an unfulfilled need through their own or others' experiences.
They can make a product or service to fill this need. At times, more established companies have to make changes to respond to entrepreneurs.
Entrepreneurs play a large part in the economy and can make a significant difference.

Entrepreneurial Opportunities Due to Changes and Development
Changes in social, technological and economic factors can provide entrepreneurial opportunities. Technology has made it easy for people to start a home-based business without a lot of capital. For instance, someone who makes products at home can sell them on the internet and not have to open an actual store. It is also much less expensive to advertise if entrepreneurs take advantage of resources such as social media websites like Facebook and Twitter, where they can reach a lot of people without spending a lot of money.
Home-based entrepreneurs can even sell internationally thanks to the internet.
With this lowered cost of entry, many entrepreneurs are forming startups. There is also more funding available to startups. In many societies, innovation and hard work are prized, and this can spur entrepreneurs. Many people are looking to fulfill their dreams of owning a business. Some may be having difficulty at regular jobs and want to be their own boss. Now that it's easier than ever, this is becoming a reality for many.

Established and Entrepreneurial Ventures
There are many differences between established and entrepreneurial ventures. An established firm might have a lot of money and a lot of customers. An entrepreneurial venture that is just starting out might be lacking in both. Oftentimes it can be difficult to bring new innovations in an established business. There might be many levels to go through, and the business may be set in its ways. An entrepreneurial venture can try new things more easily and be more flexible. They may be more willing to take a risk or to use new channels. With less money, they may need to be more creative in their business such as by using social media to position themselves. Of course, there is more risk in entrepreneurial ventures, but many do stick around to become established businesses.

Methods to Compete with Established Businesseses
It can be difficult for entrepreneurs to compete with established businesses, but a number of strategies can make a difference.
First, they can try to differentiate their products so consumers will choose them. They may offer excellent and personalized quality and service that people will appreciate. They also can use innovative and yet low-cost methods to promote their products. For instance, many small companies became very successful using social media websites like Facebook and Twitter. They can promote their products with very little cost output. They can also use innovative ideas to promote brand loyalty such as a loyalty discount or club.
Some companies will offer something for free such as a free premium service or bonus product. An entrepreneur might offer a range of products for a wider market. He should get to know his audience well to entice them. It is also important for entrepreneurs to make sure their companies are healthy internally.

Qualities of Successful Entrepreneurs
Successful entrepreneurs are typically good leaders. They are not afraid to lead others and can do so effectively. They have good interpersonal skills and are very motivated and enthusiastic. They are usually hard workers willing to put in the time and effort to make their business a success. Many new businesses fail, and this is often due to lack of a solid business plan. Successful entrepreneurs are generally organized and create good plans that account for contingencies, and can be flexible when things don't go according to plan. Successful entrepreneurs are thorough, meticulous, persistent, and do research into their market and competitors. They are also good at managing money and promoting themselves and their businesses. They are passionate and willing to take risks. They have a vision and believe in themselves and their business.

Benefits and Drawbacks of Entrepreneurship
There are both advantages and disadvantages to entrepreneurship. One advantage is that an entrepreneur can be his own boss. He will be able to control his working conditions such as location, time, and hours. Entrepreneurs often work from home, especially when starting a new business. He makes all of the business decisions and enjoys all the success of the business. If the business makes millions, he might become a millionaire as compared to someone who works for a company and just makes a salary no matter how well the firm does. The disadvantages to entrepreneurship are also significant. The entrepreneur assumes all the risk. If the company fails, the entrepreneur can lose a great deal of money. Many types of businesses cost a lot of capital up front and all the money invested by the entrepreneur is at risk if he fails. Also, entrepreneurship typically involves hard work and long hours. The entrepreneur will have to make risky decisions without help. On top of all this, a significant number of start-ups fail in the first year, which can be very stressful, especially for someone who needs a secure form of income for a home, family, or other responsibilities.

Benefits and Drawbacks of Starting a Business from Home
Starting a business from home is easier than ever before, yet it is still wrought with challenges. There are both benefits and drawbacks to home-based businesses. One obvious benefit of a home-based business is the ability to work from the comfort of home. Entrepreneurs can enjoy their own personal environment. Also, some people have other responsibilities that preclude them from a job outside the home such as children or an ailing loved one. Entrepreneurs can save a significant amount of time and money with a home-based business. There is no commute, no gas money, and no need to rent an office. Entrepreneurs can also save money on taxes with business deductions. Entrepreneurs must also consider the drawbacks of a home-based business. Many people find it difficult to work at home; distractions such as the computer or phone may keep them from realizing the efficiency they'd see in an office. Also, a home-based business can be difficult if the entrepreneur needs a professional place to meet with clients. They might not have room for an office or a place to store products. Also, some have restrictions on where a commercial venture can be located.

Sole Proprietorships
A sole proprietorship is a simple and common form of business ownership in which an individual starts an unincorporated business.
Everything with the business is connected to the individual, therefore she is responsible for all debts and liabilities. If there is a problem, she could be personally liable. She also enjoys all the profits from the business. It is not nearly as difficult or complex to start a sole proprietorship as many other types of businesses; although one must get the necessary licenses and follow regulations, it is not as complex as incorporating a business. Also, taxes are simpler because the taxes for the business are combined on the individual's personal income taxes, as opposed to having taxes just for the business. With a sole proprietorship, the individual has total control of the business and makes all of the decisions.
One advantage of a sole proprietorship is that the person has complete control over the company. He can make changes as he wishes and sell the company if he desires. There aren't any corporate taxes, and the legal costs and requirements are fewer and less complicated than when forming a corporation. Also, the sole proprietor will enjoy all of the profits and benefits of the company. A disadvantage is that a single person may find it more difficult to find investors. He can also be legally liable for all the debts and any issues that occur because of the company or its employees. It can be challenging and a lot of work to be the sole proprietor and have to make all the decisions. If the company loses, so will the entrepreneur. Entrepreneurs should look at the pros and cons to decide whether a sole proprietorship is right

Partnerships
A partnership is formed when two or more individuals band together to form a business in which they share in the work, profits, liabilities, and other features of the business. It may be a general partnership, in which all partners share everything equally; a joint venture, which is similar to a general partnership but temporary and encompassing a single project; or a limited partnership, in which a partner can have both limited liability and limited input into the business. Partnerships are registered with the state and must obtain required licenses and follow regulations. They are a generally easy type of business to form. Taxes must be filed specifically for the business, including annual return of income, excise taxes, and employment taxes. The partners are personally liable for the actions of the business as well as responsible for the debts. They share the profits, and partners can benefit from the expertise of each other. They all contribute to the business as well as the decision making. Partnerships are a common form of business.
There are both benefits and drawbacks to being in a partnership. One advantage is that the partners can bring different skills and qualities to the business. For instance, one partner might be great at creating a product but terrible at selling it, while the other might be a great salesperson. They can each complement one another. It takes the burden off of one person as far as the workload and decision making. In addition, it might be easier for the partners to share the cost and liabilities of the business. One person might not be able to afford to do it on her own. It is generally an easy type of business to form and relatively inexpensive. A business that lets employees become partners might find the employees are much more motivated. A disadvantage is that the partners might not agree on something and this can lead to adversity within the business. Also, the partners still have the liability of the business tied to them personally, including the decisions made by others in the business. Additionally, unlike sole proprietors, partners have to share their profits.

Corporation
A corporation is a type of business that is its own legal entity, although it is owned by shareholders. The liabilities and debts are incurred by the corporation, not by the shareholders. They can raise money by selling stock so that investors can own a small part of the company. It is a complex form of business structure and requires administrative fees and complicated taxes. Usually, corporations are bigger companies with numerous employees. They are formed when a party chooses a name and files forms to incorporate the business through the Secretary of State's office. There are various taxes that must be paid, including income taxes. This is a common form of business for larger businesses in the United States.
One benefit of operating a corporation is that the shareholders are shielded from the debts and liabilities of the corporation. In other types of business, such as a sole proprietorship, an owner could be legally liable based on the actions of the company. A corporation provides protection against this. Corporations also have the ability to gain funds by selling shares, or small portions of ownership in the company. Some of the profits may be taxed at a corporate rate, which is typically lower than the tax rate for individuals. Corporations also can often get better employees because of their size, benefits, and stock options. One disadvantage of a corporation is that it generally costs a lot more to start than other types of business. It can also take a lot more time and effort as it is more complicated and there is more paperwork. In some cases, profits can be double taxed when they are taxed both as income for the business and as personal income when shareholders receive dividends.

Franchise
When someone owns a franchise, they pay a company for the right to recreate their business. They typically use the same name, products, style, and look. They also enjoy benefits from the advertising. They usually have very limited control; the company will dictate what the franchise owner can and cannot change. Customers expect a certain experience when they go to the store or restaurant, so it should be as uniform as possible. The person who owns the franchise can get the benefits of using an already proven brand with proven products that have a built-in customer base. McDonald's is an example of a popular franchise.
There are both benefits and drawbacks to owning a franchise.
One advantage is that much of the hard work is already done. The company that owns the brand has already created a successful brand, product, look, etc. It can be very difficult to come up with all of these details. Another advantage is that there is a built-in audience of customers. For instance, people will seek out McDonald's because they know what to expect. This is different from starting a new business in which an owner has to convince consumers to give him a chance. One disadvantage of a franchise is that it costs money. Some of the profits will go to the brand owner. Another disadvantage is the lack of control.
Even if someone owns a franchise, he can't just make whatever changes he wants.
He might not be able to change much of anything, which might be frustrating to some owners. Entrepreneurs should balance the pros and cons to decide whether a franchise is right for them.

Variation of Taxation Between Business Ownership Types
The taxation of a business will vary greatly depending on the type of business ownership. In a sole proprietorship, there is no separate tax filing for the business. Instead, the taxes related to the business are absorbed into the owner's individual tax filing. Business earnings would just be reported as income. A partnership is taxed in much the same way as a sole proprietorship, except it is divided between the individual partners who will then include it in their returns. A corporation is considered a separate taxable entity, however, and will be taxed as such. A tax filing must be done for the company, and it will be subject to a corporate income tax rate. Any owners that receive dividends will also pay personal taxes on those.

Launching Small Businesses
The first step in launching a small business is to come up with a solid business plan. This should include every part of the business such as a description of the offerings, who is going to be involved, the target market, pricing, promotions, the financial plan, and more. If possible, the person should consider getting business counseling or training from a source such as the Small Business Administration. Next, the entrepreneur should consider if his business needs a physical location. If the answer yes, it should be somewhere where it will get noticed and attract customers. Next, the person has to get financing for the business. This can be in different forms such as a loan or capital investment. The entrepreneur then needs to follow all the procedures for a business of his type such as registering the name, setting up taxes, and attaining required licenses and permits. The more attention he pays to each step, the more likely he will be successful.

Financing
One type of financing is through a loan. Some very beneficial loans are available through the Small Business Administration (SBA).
They offer a loan called the 7(a) small business loan and another that is the 504 fixed-asset small business finance program. Various banks also offer similar loans. A small business may also try to attract a venture capitalist who invests in promising businesses. They typically want their money back relatively swiftly but can give management experience. A capital investment may be done by banks, angel investors, equity investors, or financial institutions. Usually, common or preferred equity is issued, but there could also be straight or convertible debt. Small businesses can also finance their company through other means such as through loans from family and friends.

Obstacles
It can be very difficult to get capital to start the business, especially if it is being started as a sole proprietorship. Lenders may not be willing to risk the money and thus the entrepreneur will have to work hard to finance the project. They must also be able to manage the money so it lasts until the business becomes profitable, which can take time even for a well-thought-out business that will eventually succeed. Entrepreneurs must come up with a solid business plan and all the different aspects of their business, which means a lot of hard work, long hours, and perseverance. They must accept the risk; even good products and businesses may fail through no fault of the entrepreneur. They must find a way to make themselves stand out so people will choose them. There is a lot of competition in today's market, especially with how the Internet and technology has eased the ability to start a business, and entrepreneurs must contend with that.

SBA
The Small Business Administration (SBA) was started by Congress in 1953 with the goal of aiding small businesses and the entrepreneurs starting them. They provide a wide variety of functions, including giving loans, grants, and loan guarantees. They also offer counseling and information to small businesses. The counseling is both across the Internet and in person at one of their many offices. On their website, entrepreneurs can learn about how to start a business, including important information such as securing financing. They also help people with government contracting and advocate for small businesses with the legislature, as well as conducting research.

Factors That Influence Success of Small Businesses
There are various factors that influence whether a small business succeeds. First, the company has to be competitive and attract consumers. This might be through differentiation or providing better quality, value, or services. The company has to be able to secure stable financing.
Depending on the business, it can cost a lot of money to start, and the company needs to make sure it has enough to see it through the beginning stages. Some companies that will eventually turn a profit fail to do so at the beginning.
The location makes a big difference in whether a business succeeds. A restaurant in a busy shopping plaza will have a lot more exposure than one in a small and quiet strip mall. It's important for entrepreneurs to carefully choose the location of the business. Marketing decisions also make a large difference in whether the business succeeds. Companies that are very successful at marketing their business will attract more customers. They need to do a good job of retaining their customers, as well.

Business Plan
A business plan should be thorough and contain the necessary components to give the business the best chance of success. First, the business plan should provide a vision. This might be in the executive summary and show what the entrepreneur envisions his business will become. The plan should have a detailed description of the business, including the product, pricing, distribution, what makes it unique, and how it will gain a competitive advantage. It should discuss the background of the company, as well as the complete management team and key players. It needs to discuss the financial details of the company and should include a cash flow statement and projections of revenue. It should discuss the capital the company needs to start up, as well as give a detailed financial plan for the company that shows how profit will be made. A marketing plan also needs to be included. The target market should be clearly identified, as should a plan for marketing and advertising to them. A
SWOT (strengths, weaknesses, opportunities, and threats) analysis should be conducted. A summary should wrap everything up at the end.

Strategies
A solid business plan can make a large difference in whether a business succeeds. Different strategies can help an entrepreneur create such a plan. First, the person might want to seek help. For instance, the Small
Business Administration gives counseling and provides information on making a business plan. The plan should be as thorough as possible, planning for as many contingencies and details as possible, but also flexible. It should give detailed numbers. The entrepreneur should perform as much research as possible.
For instance, to attract investors, she may need to show exactly how she found her target market and how she is going to earn profits. She can show the investors that she 'did her homework' and expects a certain return based not on wishful thinking, but on solid research and numbers. Entrepreneurs can also look at other successful business plans to help create their own.