Entrepreneurship
| Author | Robert Berns, Jewel Hairston |
| Pages | 248-252 |
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A subject taught in many high schools and colleges, entrepreneurship is actually defined as "the state of being an entrepreneur." An entrepreneur is an individual who owns, organizes, and manages a business and, in so doing, assumes the risk of either making a profit or losing the investment. According to the Small Business Administration (1999), the total number of businesses in the United States in 1995 was somewhere between 16 million and 24 million, of which approximately 15,000 were large. In 1997, there were an estimated 8.5 million businesses owned by women.
For any business to be successful, an adequate level of funding must be furnished. The amount needed varies according to the scope and nature of the business. Another key factor in the success of an entrepreneurial organization is planning, including planning for the marketing, management, and financial aspects of the business.
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From a personal perspective, becoming an entrepreneur is not a simple task. It certainly has its drawbacks. However, it can also be quite rewarding.
Choosing to create a new business, or even to purchase an existing one, is a decision that has a far-reaching impact. Long hours, poor pay, and an unclear future are only three of the challenges a budding entrepreneur must face. And, of course, losing everything one invests in a business is a very real risk. In fact, while 885,416 new employer firms were created in 1997, as reported by the U.S. Department of Labor, 857,073 businesses were terminated during the same year, with 53,826 of these being bankruptcies and 83,384 being failures. Failures and bankruptcies are business closures that occur while the business owes debts.
However, the potential rewards are unlimited. Business owners can profit greatly. Many of the wealthiest people on earth are entrepreneurs, including William Henry Gates III (1955– ), the world's richest person and cofounder, chairman, and CEO of Microsoft Corporation. Another reward entrepreneurs tend to appreciate is independence. However, entrepreneurs' time is not necessarily their own. The work of the business must be completed, and often the entrepreneur is the one who must perform the most complex tasks of the business. Although others may work for the owner and manager of the business, it is ultimately the responsibility of the entrepreneur to make sure that the work gets done. Other rewards cited by entrepreneurs include personal satisfaction gained while performing the duties of the business and the resulting prestige.
Planning is a key ingredient in the success of an entrepreneur. A business plan helps to guide the decision making needed to operate a business. The first decision is to choose what sort of business to own. The business may be:
A retail business that markets a tangible product (such as clothing, houses, food)
A wholesale business that acquires goods from a producer and distributes requested quantities to retailers
A service business that offers an intangible product (such as insurance, haircuts, consultant services, construction, financial services)
A manufacturing business that produces a product
Of course, a business may perform more than one of these functions. The scope of the business will also be
William Henry Gates, III (1955– ). Entrepreneur Bill Gates speaks in Dearborn, Michigan, April 29, 2005.
dependent on the breadth and depth of the products or services offered as well as the geographic region served.
One option available to someone interested in purchasing a business is a franchise. A franchise is a license to organize a business that markets products manufactured or owned by a parent company, such as a Kwik Copy, Sleep Inn, McDonald's, Play It Again Sports, or other businesses.
Another early decision involves choosing the legal form of ownership. Three options are sole proprietorship, partnership, and corporation. In a sole proprietorship, a single person owns and operates the business. The owner assumes all risks and responsibilities for the business, including debts. Two or more individuals may form a partnership and serve as co-owners of the business. If the partnership is a general partnership, all partners assume unlimited liability. However, if the partnership is a limited partnership, one or more of the partners assumes unlimited liability while the remaining partner(s) do(es) not. Instead, they may lose up to the amount of their investment, while having limited involvement in the business.
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The third form of ownership is the corporation. A corporation is a group of individuals who obtain a charter giving the organization formed by the group legal rights and privileges. This organization can perform such functions as buying and...
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