2 2 Chapter 1 SHOULD YOU BECOME AN ENTREPRENEUR? 1.1 Entrepreneurs: Present and Past 1.2 Is Entrepreneurship Right for You? 1.3 Identify Business Opportunities and Set Goals LESSONS CHAPTER OVERVIEW Preview Ask students to read the chapter title out loud and discuss what might be covered in the chapter. Then have a student read each lesson title out loud and describe what might be covered in the lesson. Lesson 1.1 Entrepreneurs: Present and Past This lesson describes entrepreneurs and the types of entrepreneurial businesses, the importance of entrepreneurship in our economy, and brief sketches of entrepreneurs in our history. Lesson 1.2 Is Entrepreneurship Right for You? This lesson lists and describes characteristics of successful entrepreneurs along with analyzing suitability for entrepreneurship and advantages and disadvantages of entrepreneurship. Lesson 1.3 Identify Business Opportunities and Set Goals This lesson describes ways to investigate opportunities and how to set financial and nonfinancial goals.
Transcript
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Chapter 1
SHOULD YOU BECOME AN ENTREPRENEUR?
1.1 Entrepreneurs: Presentand Past
1.2 Is EntrepreneurshipRight for You?
1.3 Identify BusinessOpportunities and SetGoals
LESSONS
CHAPTER OVERVIEWPreview Ask students to read the chapter title out loud and discusswhat might be covered in the chapter. Then have a student read eachlesson title out loud and describe what might be covered in the lesson.
Lesson 1.1 Entrepreneurs: Present and PastThis lesson describes entrepreneurs and the types of entrepreneurialbusinesses, the importance of entrepreneurship in our economy, andbrief sketches of entrepreneurs in our history.
Lesson 1.2Is Entrepreneurship Right for You?This lesson lists and describes characteristics of successfulentrepreneurs along with analyzing suitability for entrepreneurship andadvantages and disadvantages of entrepreneurship.
Lesson 1.3Identify Business Opportunities and Set GoalsThis lesson describes ways to investigate opportunities and how to setfinancial and nonfinancial goals.
“I’m so tired of someone tellingme what to do all the time,”
Delia said to her friend Gloria.“I know what you mean,”
Gloria answered. “I get thesame thing.”
“It seems like there shouldbe somewhere we could be incharge,” Delia said. “There’sgot to be a better way.”
“I’ve got an idea,” Gloriasaid, “let’s be entrepreneurs.”
“Entrepre . . . what?” ques-tioned Delia.
“Entrepreneurs,” Gloriaanswered. “Mr. Rivera talkedabout them in my businessclass last week. They are peo-ple who start and run theirown businesses. We could dothat!”
“What would we have todo? Would we make a lot ofmoney? Would it be fun?Would we get to do whateverwe wanted?” Delia’s mind wasoverflowing with questions.
Gloria was getting veryexcited as she replied, “Wecould be our own boss! If wewere the owners, we wouldbe in charge! We’d get tomake all the decisions!”
“This is starting to soundpretty good,” Delia replied asshe began to share Gloria’sexcitement. “We could decide
when we work, what we do,how we do it, and make lotsof money! I can’t wait. Whendo we start?”
Gloria thought for a secondbefore answering, “Well, Delia,it’s not really that easy. Whenwe talked about this in class,Mr. Rivera said that there are alot of things to consider beforestarting a business. First, weneed to decide what we liketo do and what we are goodat. Then we have to do a lotof research and planning if wewant to be successful.”
Thinking about what Mr.Rivera told her in class, Deliasighed, “This entrepreneurthing sounds like a lot ofwork. What do you think weshould do?”
Gloria could understandDelia’s dilemma. There aremany advantages of owningyour own business, but thereare also many responsibilitiesand challenges that a businessowner has to face. Gloriaknew that she and Delia hadtheir work cut out for them,but she knew they could do itif they put their minds to it.“Delia, I think we need to getto the library as soon as possi-ble. We’ve got a lot of work todo!”
Delia’s Dilemma
1. Who are some famous entrepreneurs in our country? Name some inyour local community.
2. What kinds of things do you think Delia and Gloria should considerbefore they decide to start a business?
3. What resources do you think Delia and Gloria will find in the library?4. Where else could they go to get help in making their decision about
starting their own business?
BUILD A BUSINESS
3
TEACHING RESOURCESInstructor’s Resource CD• Lesson Plans, Ch. 1• PowerPoint Slides, Ch. 1• Video Discussion Guide, Ch. 1Videocassette• Video segment, Ch. 1www.ideas-in-action.swep.com• Internet Activities, Ch. 1• Crossword Puzzle, Ch. 1ExamView® CD, Ch. 1Workbook, Ch. 1Activity Masters, Ch. 1Chapter 1 Tests A and B
BUILD A BUSINESS• As students begin their study
of entrepreneurship, somewill know what the termentrepreneur means. Yetothers will have no idea. Asyou open the chapter, askstudents to define the wordentrepreneur. Ask studentswhat they think about whenthey think of someone whoowns his or her ownbusiness. Do they think it iseasy? Do they think it ishard?
• Students are introduced to• The concept of
entrepreneurship• The importance of
assessing skills andabilities in determiningwhat business to start
• Resources for informationon starting a business
• At the end of Chapter 1,students will be asked toreexamine the questions forthis case in What Do YouKnow Now.
What Do You Know?Answers1. Answers will vary. Some
are Bill Gates, Ray Kroc,Mary Kay Ash, DebbieFields, and Ted Turner. Be sure to differentiatebetween the person whostarts a business andsomeone who manages a business.
2. What they like to do, whatthey are good at, skills theyhave, if they can workindependently, where theyare going to get start-upmoney.
3. Books and magazines onentrepreneurship, booksabout famous entrepre-neurs, information on trendsin the market.
4. They could get moreinformation from theirparents, teachers, busi-nesses in the community,local Chamber of Com-merce, Small BusinessAdministration.
The United States economy includes thousands of small busi-nesses. Many of these small businesses are owned and oper-ated by men and women who created their own companies.
But what makes someone an entrepreneur? What impact haveentrepreneurs had in history, and today?
WHAT IS AN ENTREPRENEUR?People who own, operate, and take the risk of a business venture
are called entrepreneurs. They are engaged in entrepreneurship,the process of running a business of one’s own. Entrepreneurs comefrom all types of backgrounds and create all kinds of businesses. Allages of people choose to become entrepreneurs. Some own tiny craftshops, while others own huge construc-tion companies. Entrepreneurs try toidentify the needs of the marketplaceand to meet those needs by supplying aservice or product. When they succeed,their businesses flourish and the profitsgo to them. When they fail, their com-panies decline and they may have to goout of business.
EMPLOYEES VS. ENTREPRENEURS Entrepreneurs assume risk. Thismakes them different from employees, who are people who workfor someone else. Both may make decisions, but only the entrepre-neur is directly affected by the consequences of those decisions.Sam Jones manages a record store owned by Felipe Santiago. Samdecides to keep the store open until midnight during the week. Ifthe additional hours bring in customers and increase profits, Sammay be praised by Felipe. He may even get a raise. However, Samwon’t directly receive any of the profits because he is an employee.The earnings will flow to Felipe, the owner.
WHY DO PEOPLE BECOME ENTREPRENEURS? People go into business forthemselves for many reasons. Some want to leave the fast-pacedcorporate environment. Others want to be at home but still earn an
4 Chapter 1 • Should You Become an Entrepreneur?
GOALSDEFINEentrepreneurship.
LEARN aboutentrepreneurship in history.
IDENTIFY the impact of entre-preneurs and smallbusiness today.
ENTREPRENEURS:PRESENT AND PAST
Lesson 1.1
SCHEDULEBlock 45 minutesRegular 1 class period
TEACHING RESOURCES• Workbook Lesson 1.1
FOCUSIntroduce Point out thegoals. Ask students whatthey think they will learn orwhy they think the goals areimportant. Ask a student toread the opening paragraphout loud.Motivate Ask students if theyknow anyone who operateshis or her own business. Askthem to describe what theyknow of the business. As analternative, ask students toname a business near theschool that is probablyowned and operated by oneperson.
TEACH• Emphasize the definition
of entrepreneur.• Explain the difference
between an employee and an entrepreneur.Entrepreneurs makedecisions, take risks, andare directly affected by theconsequences. Employeesmay also make decisionsbut risk little and are notdirectly affected by theconsequences.
• Discuss why peoplebecome entrepreneurs: to leave the corporateenvironment, work athome, pursue a personaldream, and many otherreasons.
income. Others want to pursue a personal dream. The reason youmight become an entrepreneur may be completely different fromthese.
TYPES OF ENTREPRENEURIAL BUSINESSES There are many opportunities for entrepreneurs in each
type of business. Manufacturing businesses actually produce the products they sell. Using resources and supplies, they create everything from automobiles to paper. Wholesaling businesses sell products to people other than the final customer. For example, a wholesaler supplies your local greeting card store with items such as cards and wrapping paper. Retailing businesses sell products directly to the people who use or consume them. Service businesses sell services rather than products. They include hotels, hairdressers, and repair shops.
5Entrepreneurs: Present and Past • Lesson 1.1
How are entrepreneurs different fromemployees?
In Class ActivityGather in small groups. List reasons you would like to be an employee. List reasons youwould like to be an entrepreneur.Compare and discuss the reasons.
Manufacturing
Apparel andother textileproducts
Chemicals andrelated products
Electronics andother electricalequipment
Fabricated metal products
Food products
Industrial machinery and equipment
Printing and publishing
Rubber and miscellaneous plastic products
Stone, clay, andglass products
Wholesaling
Apparel
Electrical goods
Groceries andrelated products
Hardware, plumbing, heating equipment
Lumber, construction materials
Machinery, equipment, supplies
Motor vehicles,automotive equipment
Paper, paper products
Petroleum, petroleum products
Retailing
Auto and homesupply stores
Building materials andsupply stores
Clothing stores
Florists
Furniture stores
Gift, novelty,and souvenirstores
Grocery stores
Hardware stores
Jewelry stores
Retail bakeries
Shoe stores
Sporting goodsand bicyclestores
Service
Appliance repair
Automotiverepair
Babysitting
Bookkeeping
Consulting
Dance instruction
Electrical services
Exterminators
Flower decorating
House cleaning
Lawn care
Painting
Plumbing
Translating
Travel agency
Tutoring
Source: Small Business Administration
ONGOING ASSESSMENTCheckpoint Entrepreneursassume risk and are theirown bosses.
• Refer students to the chartand discuss examples inthe community of several of the businesses listed.
• Ask students to think ofother examples in thecommunity and correctlycategorize them.
COOPERATIVE LEARNINGAssign the In Class Activityto introduce students toworking in groups and seeeach others’ differingviewpoints on reasons forbeing an entrepreneur.
TEACHING STRATEGIESKinesthetic LearnersGive students a copy of the business pages of thetelephone directory. Ask them to thumb through the pages to find additionalkinds of businesses.
OTHER BUSINESS AREAS Two other categories of businesses are (1)agricultural and (2) mining and extracting businesses. Agriculturalbusinesses generate fresh produce and other farm products, such aswheat. Mining and extracting businesses take resources like coal outof the ground so they can be consumed.
ENTREPRENEURS IN UNITED STATES HISTORYDuring the colonial years, entrepreneurship flourished. Entre-
preneurs raised crops such as rice and tobacco. They also workedas bankers, merchants, silversmiths, and candlemakers, to name afew career choices. After the American Revolution, the United Statesbegan to industrialize. Entrepreneurs invented machines thatincreased productivity and helped the economy grow.
ENTREPRENEURS WHO CHANGED AMERICA Entrepreneurs change American business decade after decade.
They establish huge companies or fill unmet needs. They constantlychange how things are done and contribute to the overall good of the nation. In each chapter, you will learn something about
6 Chapter 1 • Should You Become an Entrepreneur?
Describe different kinds ofentrepreneurial businesses.
The First Woman Millionaire1880 1900 1920 1940
Many entrepreneurs start by offeringsomething they themselves need. That’sexactly what made Madam C. J. Walker amillionaire. Walker began making herown hair treatments in 1904. The treat-ments worked well, so Walker beganoffering them to other African-Americanwomen. She sold her products door-to-door and bought ad space in newspa-pers. Walker then opened Lelia College,
where she and her daughter trainedother women to use and sell the productline, which now included items such ascomplexion soap and dental cream. Atleast 20 women completed the programevery six weeks. Besides becoming a mil-lionaire from the sales of her products,Walker made a huge contribution to theAfrican-American community by empow-ering women to take pride in their work.
ONGOING ASSESSMENT Checkpoint Manufacturingbusinesses produce productsto sell; wholesalingbusinesses sell products topeople other than the finalcustomer; retailingbusinesses sell productsdirectly to people who usethem; service businesses sellparticular services;agricultural businesses generate fresh produce; and mining and extractingbusinesses take resourcesout of the ground to beconsumed.
TEACH• Explain that entrepreneur-
ship benefits a country bystrengthening theeconomy, changing howthings are done by fillingunmet needs, andincreasing productivity.
• Point out that in manycases the historicalentrepreneurs described started businesses that arelarge corporations today.
ENTREPRENEURIALTIMELINEDirect students to examinethe highlighted period in thetimeline as they read aboutMadam C. J. Walker’sbusiness success. Askstudents what kinds ofobstacles Walker would havehad to overcome to succeedin that era.
entrepreneurs in history, because they are an important part of whatthe United States and the world have become today.
NINETEENTH CENTURY ENTREPRENEURS A machine that put a majorboost in the United States economy was the reaper. In 1831, CyrusMcCormick took the reaper, which had already been invented, andused it to mechanize the job of harvesting crops. McCormick had$60 when he went to Chicago to set up a factory to manufacturereapers. In time, the company that marketed his reapers evolvedinto International Harvester, which produced farm equipment formany years. Today this company is called Navistar InternationalTransportation Company and manufactures International brandtrucks.
Lydia Moss Bradley, an entrepreneur from Peoria, Illinois, mademillions of dollars in investments and real estate. She transformedseemingly unusable marshland into productive farm land. She alsofounded Bradley University in 1896.
John D. Rockefeller began working at the age of 16 as a clerk ina small produce company. At 23, he had saved enough money toenter the oil refinery business. By 1872, his company, Standard Oil,owned all of the main oil refineries in Cleveland, New York,Pittsburgh, and Philadelphia. Before long, Rockefeller controlledalmost all oil distribution in the United States. Eventually, hebecame the richest man in the world.
EARLY 20TH CENTURY ENTREPRENEURS Entrepreneursremained very important in the twentieth century. Forexample, Henry Ford developed and mass-produced theModel-T automobile, which he sold at a price manyAmericans could afford. A machinist from Detroit, Fordcreated one of the largest companies in the world. Alsoduring the early part of the century, Olive Ann Beech co-founded the Beech Aircraft Company with her husband.She had always handled the financial aspects of the com-pany and took part in major company decisions. She ranthe business when her husband became ill in 1940. WithBeech at the helm, the company continued to be a leaderin the aviation industry until merging with the RaytheonCompany in 1980.
Clarence Birdseye pioneered the development of packaged frozenfoods in the 1920s. His developments had a major impact on eatinghabits throughout the world. Rose Knox became another leader in thefood industry when she took over the Knox Gelatine Company in 1908.Besides being an innovative business owner, she was the first to pro-vide employees paid sick and vacation leave and a five-day work week.
7Entrepreneurs: Present and Past • Lesson 1.1
Name one historical entrepreneur anddescribe what he or she did.
Henry Ford
ONGOING ASSESSMENTCheckpoint Answers willvary.
ENTREPRENEURS TODAYMore than 5.8 million small businesses contribute billions of dollars
every year to the United States economy. These small companiesemploy more workers than all of the country’s large corporations com-bined. Small businesses are found in virtually every sector of the econ-omy. Companies such as Microsoft, Intel, and Apple all started as smallbusinesses. These companies have changed the workplace by makingcomputers accessible to the world. Other entrepreneurial companiesinclude Southwest Airlines, Mrs. Fields Cookies, and Estée LauderCosmetics. These companies make life more pleasant for consumersand provide employment to hundreds of thousands of workers.
Small companies can be more creative and take more risks thanlarge companies. Their experimentation and innovation leads totechnological change and increased productivity. This makes smallbusiness a significant part of the American economy. For this rea-son, many experts believe that small companies will play anincreasingly important role in the future.
8 Chapter 1 • Should You Become an Entrepreneur?
Why are small businesses so important to our economy?
1. What are your reasons for wanting to become an entre-preneur? Do you think they are common to all entrepre-neurs, or are some of your reasons unique?
2. What other entrepreneurs in the 19th or 20th centuryhave changed the American economy? How?
3. MATH Suppose there are exactly 5,812,000 small busi-nesses in the economy today. Approximately 27 percentof those businesses are service businesses. What is thenumber of service businesses in the economy?
4. COMMUNICATION Clarence Birdseye developed the first packaged frozen foods. He greatly influenced eatinghabits in the United States and throughout the world.What do you think a typical family’s daily eating habitswere like at the end of the nineteenth century? Write ashort scenario describing them.
Answersmay include independence, flexibility, and enjoying work.
5,812,000 � 0.27 � 1,569,240
Student answers will vary,but should mention that the diet consisted of meat and starch (such aspotatoes and bread) due to the lack of fresh vegetables.
Answers will vary.
ONGOING ASSESSMENT Checkpoint Smallbusinesses employ the mostworkers and contributebillions of dollars to the U.S.economy.
RETEACHReview answers to theCheckpoints in the lesson.
a calculator for the MathConnection and to explorethe function of the % key.
• Encourage students to useword processing softwareto write the scenario in theCommunicationConnection.
• Encourage students to doan Internet search forinformation on ClarenceBirdseye and daily eatinghabits in the 19th century.
CLOSEReview the topics stated inthe Goals at the beginning ofthe lesson.
9Is Entrepreneurship Right for You? • Lesson 1.2
Many people dream of running their own businesses. They would like to become entrepreneurs. Entrepreneurship can be exciting. But running your own business is diffi-
cult. In fact, many companies started by entrepreneurs go out ofbusiness. This is often caused by poor planning, lack of businessknowledge or entrepreneurial characteristics, or choosing the wrongbusiness.
CHARACTERISTICS OF SUCCESSFUL ENTREPRENEURSResearchers have identified several characteristics that distinguish
successful entrepreneurs from those that fail.
1. Successful entrepreneurs are independent. They want tomake their own decisions and do something they enjoy.
2. Successful entrepreneurs are self-confident. Entrepreneursmake all the decisions. They must have the confidence to makechoices alone and bounce back from a poorly made decision.
3. Successful entrepreneurs have determination and perse-verance. Entrepreneurs persist through hard times until goals are met.
4. Successful entrepreneurs are goal-oriented. They know whatthey want, and they are able to focuson achieving it.
5. Successful entrepreneurs have aneed to achieve and to set high standards for themselves. They are constantly setting challenging new goals.
6. Successful entrepreneurs are creative. They think of new ways to market their businesses, and are alwayslooking for new solutions to problems.
7. Successful entrepreneurs are able to act quickly. They are not afraid to make quick decisions when nec-essary, which helps them beat their competitors.
FOCUSIntroduce Point out thegoals at the top of the page.Ask students what they thinkthey will learn or why theythink the goals are important.Ask a student to read theopening paragraph out loud.Motivate Ask students toname a business in thecommunity and anothersimilar business that hasgone out of business.Discuss what the differencesbetween the two businessesmight be.
TEACH• Discuss each characteristic
of successfulentrepreneurs.
• Ask students to think of anexample to illustrate eachcharacteristic.
• Ask students why eachcharacteristic is importantto entrepreneurship.
• Discuss why peoplebecome entre-preneurs: to leavethe corporateenvironment, work athome, pursue apersonal dream, andmany other reasons.
There are 8.5million women-owned businesses in the United States.These businessesaccount for morethan one-third of allbusinesses andgenerate $3.1trillion in revenue.
10 Chapter 1 • Should You Become an Entrepreneur?
Ryan Nelson has many entrepreneurial characteristics. Since hewas 14, Ryan played for his high school basketball team. Otherboys his height—just 5’8”—would not have enjoyed competing withmuch taller boys. Ryan accepted that he would have to work harderto win. He needed to be creative in handling the ball. Most of all,he had to believe in himself. He did, and became one of the topplayers on his team. If Ryan opened his own business, the charac-teristics he displayed as a ball player might help him succeed.
ASSESS YOUR SUITABILITY FOR ENTREPRENEURSHIPEntrepreneurship is not for everyone. Some people lack the qual-
ities needed to become successful entrepreneurs. Others lack the aptitude needed to run a business. For others, the benefits of entre-preneurship do not outweigh the disadvantages.
To determine if entrepreneurship is right for you, you first need to perform a self-assessment, an evaluation of your strengths andweaknesses. You can do this in a number of ways. You can listyour strengths and weaknesses on a sheet of paper. You can askothers what they believe your strengths are and where your weak-nesses lie. There are also tests you can take to assess your abilities.
ASSESS YOUR INTERESTSSuccess as an entrepreneur requires a strong commitment to a
business and a lot of energy. To be able to commit yourself fully to abusiness, you should choose a field that interests you and that willprovide you with an experience you will enjoy.
Name three important characteristicsof entrepreneurs.
The vast majority ofbusinesses in the UnitedStates are small busi-nesses that employ fewer than 20 people.
Number of employees20 or fewer 21–500 More than 501
1010
20
30
40
50
60
70
80
90
100
Perc
enta
ge
of
all U
.S. b
usi
nes
ses
Small Businesses Dominate the U.S. Economy
90%
9%
1%
DID YOU KNOW?Direct students to read theDid You Know? feature. Askstudents if they know anybusinesses owned bywomen.
ONGOING ASSESSMENT Checkpoint Answers willvary, but may includeindependence, creativity, and self-confidence.
TEACH• Demonstrate how to read
the graph at the top of the page.
• Emphasize that the graphdemonstrates that mostbusinesses in the U.S. are entrepreneurships.
• Ask students to point outwhich characteristics ofentrepreneurship apply to Ryan Nelson describedin the paragraph under the graph.
• Point out that not everyoneis suitable forentrepreneurship.
• Explain how self-assessment can evaluatepersonal strengths andweaknesses forentrepreneurship.
Name key factors that aid an entre-preneur’s commitment to a business.
JOB ATTRIBUTES CHECKLIST1. I enjoy working with numbers.2. I enjoy working outdoors.3. I enjoy working with my hands.4. I enjoy selling.5. I like working with people.6. I prefer to work alone.7. I like supervising other people.8. I like knowing exactly what it is I am supposed to do.
In Class ActivityAs a class, suggest ten possible jobs for each item on the job attributes checklist. Choose two people to write down all the suggestions on the chalkboard or on paper.
11Is Entrepreneurship Right for You? • Lesson 1.2
HOBBIES AND INTERESTS Many entrepreneurs center a business on an interest or hobby. TriciaJohnson loved reading mysteries and was interested in book collecting. Tricia created Royal Books, a com-pany that buys and sells new, used, and rare books,especially mystery books. Making a list of hobbies andinterests can help you decide what business is right foryou.
PAST EXPERIENCES Analyzing past ex-periences and jobs can help you decide on a business you would enjoy owning.Samantha Rodriguez worked as a cus-tomer service representative for a largecompany. Recognizing that she wanted a job where she could spend time out-doors, Sam formed her own bicycle messenger service. She now earns lessmoney than she did as a customer ser-vice representative, but she enjoys thework that she is doing.
ASSESS YOUR APTITUDEDifferent jobs require different job aptitudes. Aptitude is the abil-
ity to learn a particular kind of job. Auto mechanics must possessan aptitude for solving mechanical problems. They also must begood with their hands. People who sell insurance must have goodinterpersonal skills. Answering questions like those in the JobAttributes Checklist can help you identify the kinds of entrepreneur-ial opportunities that might match your aptitudes and interests.
ONGOINGASSESSMENT
Checkpoint Interest andenjoyment.
TEACH• Explain how hobbies,
interests, and pastexperiences may
suggest thetype ofbusiness toenter.• Point out
that interestandenjoymentare keyfactors forbusinesssuccess.
• Defineaptitude asthe ability tolearn aparticularkind of job.
Explain that different jobs and businesses require differentkinds of aptitudes.• Point out the difference be-
tween interest and aptitude.
COOPERATIVE LEARNINGAssign the In Class Activityto encourage groupinteraction. Ask students towrite the suggested possiblejobs that match their ownpersonal interests in theirnotes.
WWWNET WORTH
Point your browser to
Complete the activityfor Chapter 1.
www.ideas-in-action.swep.com
12 Chapter 1 • Should You Become an Entrepreneur?
ASSESS THE ADVANTAGES OF ENTREPRENEURSHIPMany people see significant advantages in owning their own
businesses.
1. Entrepreneurs are their own bosses. Nobody tells an entre-preneur what to do. Entrepreneurs control their own destinies.
2. Entrepreneurs can choose a business that interests them.Entrepreneurs work in fields that interest them. Many combinehobbies and interests with business.
3. Entrepreneurs can be creative. Entrepreneurs are alwaysimplementing creative ideas they come up with themselves.
4. Entrepreneurs can make lots of money. Entrepreneurshipinvolves risk. This means that entrepreneurs can make a lot ofmoney if their business succeeds.
ASSESS THE DISADVANTAGES OF ENTREPRENEURSHIPThere are also disadvantages to being an entrepreneur. They
include the following:
1. Entrepreneurship is risky. All small businesses face the possi-bility of going out of business or of losing money.
2. Entrepreneurs face uncertain and irregular incomes.Entrepreneurs may make money one month and lose money the next.
What does it mean to have anaptitude for something?
ONGOING ASSESSMENT Checkpoint The ability tolearn a particular kind of job.
TEACH• Describe each of the
advantages ofentrepreneurship.
• Ask students if being theirown boss appeals to them.
• Ask students if working in a field that interests them is better than working in a field that does not.
• Ask students to think of an occasion in which theydid something creative andto describe the feeling ofsatisfaction that came from it.
• Point out that althoughthere are risks of entre-preneurship, the other side is the possibility ofearning a lot of money.
• Emphasize the disadvan-tages of entrepreneurship.Students will tend toglamorize the advantagesand underestimate thedisadvantages.
• Point out that small busi-nesses often fail andowners lose theirinvestments.
• Explain how income fromsmall businesses can beuncertain or irregular.
1. Entrepreneurs can fail even if they are committed andhave the characteristics needed to be successful. Why doyou think this can happen?
2. Why is it important for entrepreneurs to choose a fieldthat they will enjoy?
3. Do you think the advantages of entrepreneurship out-weigh the disadvantages? Why or why not?
4. MATH One in four small companies begun this year willbe out of business within the next two years. What per-centage is this? Six years from now, nearly two-thirds ofall businesses started this year will no longer be open.What percentage is this?
5. COMMUNICATION Rank the advantages of entrepre-neurship in order of importance to you. The item ranked“1” is most important to you and the item ranked “4” isthe least important. Write a paragraph explaining yourrankings.
3. Entrepreneurs work long hours. Entrepreneurs never reallyare finished with their jobs. They can work long, irregular hours.They receive no paid days off, and they may have to workevenings and weekends.
4. Entrepreneurs must make all decisions by themselves.Unless they have partners, entrepreneurs must make all the decisions alone.
What are advantages and dis-advantages of entrepreneurship?
13Is Entrepreneurship Right for You? • Lesson 1.2
“ ”You can say that again!
“The thing you have to remember is that you can’t blame anyone
else for your mistakes.”
—Vinita Gupta, creator of Digital Link
Answers will vary.
One in four = 1 � 4 � 25%; two-thirds = 2 � 3 � 67% (rounded).
Some studentswill say yes, others will say no. Personal opinion will determine howstudents answer.
If they do not enjoy the business, they will loseinterest and the business will fail.
Answers may include: because therewas not a market for the product or service or ineffective management.
TEACH• Explain the time commitment
required in entrepreneurship.Students often think thatbeing their own boss meansnot having to work veryhard.
• Draw the connectionbetween the quotation inYou Can Say That Again! and the fourth disadvantageof entrepreneurship.
ONGOING ASSESSMENT Checkpoint Advantages:Entrepreneurs are their ownbosses, can choose abusiness that interests them,can be creative, and canmake lots of money.Disadvantages: Entrepreneurstake risks, face uncertainincomes, work long hours,and make all decisionsalone.
RETEACHReview the answers to theCheckpoints in the lesson.
• Encourage students to useword processing softwareto complete theCommunicationConnection. Students mayuse the cut and paste ormove functions to put theadvantages in order.
CLOSEReview the topics stated inthe Goals at the beginning ofthe lesson.
Millions of entrepreneurs in the United States start their ownbusinesses. How did they decide what businesses to oper-ate? How can you learn about the business opportunities
available to you? What kinds of goals should you set for yourself?
INVESTIGATE OPPORTUNITIESThe library has resources that
can help you examine differentopportunities. These include bookson entrepreneurship, magazines for entrepreneurs, trade magazinesfor certain businesses, and govern-ment publications. County BusinessPatterns is an annual series of publi-cations providing economic profilesof counties, states, and the UnitedStates as a whole. Data include
employment, payroll, and number of establishments by industry. The library is not the only place to investigate opportunities. The
Small Business Administration (SBA) is an organization that exists to help small businesses and their owners. It publishes informationthat may be helpful. Talking to entrepreneurs and attending tradeshows, which are special meetings where companies display theirproducts, can also be beneficial.
Luanda Williams wanted to use her love of sports and dancing tocreate her own company. She found books and magazine articles atthe library that gave her information on various kinds of businesses.She also talked to owners of gymnastic centers, health clubs, anddance studios. Her research helped her come up with the idea ofopening a gymnastics and fitness center for children.
14 Chapter 1 • Should You Become an Entrepreneur?
How can you find out about variousbusiness opportunities?
GOALSRECOGNIZE differentbusinesses you couldstart.
FOCUSIntroduce Point out thegoals at the top of the page.Ask students what they thinkthey will learn or why theythink the goals are important.Ask a student to read theopening paragraph out loud.Motivate Ask students tothink of a kind of businessthat is not located in theircommunity and that nowrequires a great deal of travelto get to the nearest one. Askif there is enough demand inthe community to open thatkind of business nearby.
TEACH• Point out that deciding
what kind of business tooperate is a businessdecision that requiresidentifying what theopportunities are.
• Describe sources ofinvestigating opportunities:books and magazines,business trade magazines,and governmentpublications.
• Emphasize that the SmallBusiness Administrationexists to help smallbusinesses and theirowners, and it publishes a lot of information.
• Emphasize that talking to entrepreneurs andattending trade shows areother ways of investigatingopportunities.
ONGOING ASSESSMENT Checkpoint From the library,the SBA, attending tradeshows, and talking to otherentrepreneurs
COMPARE DIFFERENT OPPORTUNITIES Once you find some appealing businesses, you need
to identify which have the best chance for success. Nowis the time to assess each business idea by askingyourself the following questions:1. Is there a market in my community for this kind of
business? Will people buy my product or service? 2. How much money would it take to start this
business? Will I be able to borrow that muchmoney?
3. How many hours a week is it likely to take to run this business? Am I willing to commit that much time?
4. What are the particular risks associated with this business? What is the rate of business failure?
5. Does my background prepare me to run this kind of business? Do most people who own this kind of business have more experience than I do?
6. How much money could I make running this business?
SETTING GOALS For everything you do in life, you set goals. As an entrepreneur,
you will need to set financial and nonfinancial goals.
FINANCIAL GOALS Financial goals can include how much money youwill earn and how quickly you will pay off debts. Make sure yourgoals are realistic. They should be easily attainable. If one of yourfirst goals is to make lots of money early on, you almost certainlywill be disappointed. It usually takes time for businesses to befinancially viable. Most businesses begin operations by borrowingmoney. These debts usually are paid within one to five years. Thismeans that at first, an entrepreneur may earn less than he or shewould have earned working as an employee.
Setting specific financial goals before starting a business canensure a business is able to earn the profits you want. Mo Yangwants to start a mail-order business for model trains, planes, andcars. He estimates that after expenses he would earn $9for each item he sold. At this rate of profit, he wouldhave to sell 3,000 models to meet an income goal of$27,000 a year. This showed Mo that he would have tolower his income goal or find another business idea,because he would probably not be able to sell that many models.
15Identify Business Opportunities and Set Goals • Lesson 1.3
What are some questions you need toask to help determine if the businessopportunities you listed are realistic?
In Class ActivityIn small groups, brainstorm a list of resources for findinginformation about a company that sells automobile accessories.
COOPERATIVE LEARNINGAssign the In Class Activityto encourage groupinteraction. Point out thatgroup brainstorming usuallyproduces more ideas than asingle individual couldproduce.
ONGOING ASSESSMENTCheckpoint Answers mayinclude: Is there a market forthis business? How manyhours will I have to work?How much money could Imake?
TEACH• Explain that it is not
enough to identify andselect appealingbusinesses, but they mustalso be evaluated toidentify which have thebest chance for success.
• Select a small businessthat would interest yourstudents and discuss thesix questions for thisbusiness.
• Explain that entrepreneursmust set two kinds ofgoals: financial andnonfinancial.
• Explain why financial goalsmust be realistic to avoidcertain disappointment.
• Point out that mostbusinesses beginoperations by borrowingmoney that may take anumber of years to repay.
NONFINANCIAL GOALS Mostpeople who own their ownbusinesses do so for morethan just monetary gain.They are looking for per-sonal satisfaction. They mayserve a community need,do something they like, orenjoy the personal inde-pendence of being anentrepreneur. You willwant to specify what nonfi-nancial goals you want toget out of being an entre-preneur.
Mark and Cindy Bairdown Outdoor Exploration, a company specializing in
Is Entrepreneurship Right for You?
Be Sharp or Fall FlatBusiness: Print Here!, San Francisco, CA * Open for business 5 months
Louise was an opera singer, but it wasn’ta financially viable career. She earned addi-tional money working at a copy shop inSan Francisco. The elderly couple whoowned the shop gave flexible hours toemployees with aspiring music careers.Sadly, the husband died and the wifedecided to sell the business and go toCincinnati. Louise grabbed the opportunity.
The former owner helped Louise gatherfinancial information and put together abusiness plan. Louise’s uncle co-signed ona bank loan, and she was in business. Shemodernized the décor of the shop. Louisecontacted all the existing customers toassure equal or better service. Salesincreased the first two months. Butthen. . .
The former owner left town earlier thanplanned. Then Louise’s chief printer quit. With the schedules of her part-timeemployees, Louise was frantically trying toget large orders out on time. With no for-mal business training and no managementexperience, Louise couldn’t begin to dealwith all these problems, problems even aveteran would find difficult. She ended upselling the business at a $50,000 loss.
Think Critically1. What characteristics did Louise possess
that led her to become an entrepre-neur?
2. What circumstances out of Louise’s con-trol led to the failure of this business?
16 Chapter 1 • Should You Become an Entrepreneur?
TEACH• Explain nonfinancial goals. • Ask students what kinds of
nonfinancial goals would beimportant to them.
WHAT WENT WRONG?The What Went Wrong?feature is a case that showsa business failure. Studentsanalyze the case to see thekinds of mistakes businessowners may make so that they can avoid thosemistakes in their ownentrepreneurial careers.
Think Critically Answers1. Ability to act quickly, creati-
2. The loss of the formerowner as a mentor andlosing the chief printerhindered her ability tokeep the business goingsmoothly.
backpacking, white-water rafting, and mountaineering trips. TheBairds had a dream to help disabled children experience the out-doors. Last year, they began offering inexpensive outdoor programsto children with Down’s syndrome and cerebral palsy. Mark andCindy experienced an enormous sense of satisfaction in seeing these children enjoy themselves outdoors.
17Identify Business Opportunities and Set Goals • Lesson 1.3
Why are financial goals important?Name some nonfinancial goals anentrepreneur may have.
1. Choose a business idea that appeals to you. For this busi-ness, answer the six assessment questions listed in thislesson on a sheet of paper. Is this a realistic choice foryou? Why or why not?
2. In terms of annual income, what financial goals have youset for yourself for five years after you graduate? Whatnonfinancial goals have you set that becoming an entre-preneur can help you achieve? Are financial or nonfinan-cial goals more important to you? Why?
3. MATH You live near the beach and have a passion forsnorkeling. Your dream is to give snorkeling lessons. Youestimate that after expenses, you can earn $10 per lesson.Your income goal is $15,000 per year. How many lessonsdo you need to give to achieve this goal? Is this goal realistic?
4. COMMUNICATION Write a letter to the Small BusinessAdministration. In your letter, indicate your interest instarting a small business. Be specific about the type ofbusiness you wish to start. Ask what specific services theSBA provides to people who wish to start this type ofbusiness. Give your letter to your teacher.
5. COMMUNICATION Make a list of personal nonfinancialgoals you would like to achieve through entrepreneur-ship. Choose one of these goals. Write an outline for adetailed plan you can follow to achieve this goal.
ONGOING ASSESSMENT Checkpoint Financial goalsare set to make sure thebusiness will earn a profit.Nonfinancial goals includeserving the community andpersonal satisfaction.
RETEACHReview the answers to theCheckpoints in the lesson.
• Encourage students to use word processingsoftware to complete the CommunicationConnections.
CLOSEReview the topics stated inthe Goals at the beginning of the lesson.
ANSWERSThink Critically1. Answers will vary.2. Financial goals may be
owning property or morethan one business.Nonfinancial goals may beindependence andflexibility.
Make Connections3. $15,000 � $10 � 1,500
lessons. The goal isrealistic if the lessons arekept to one hour. You cangive 6 lessons a day for 5days a week (regular workweek). Assuming youwork 50 weeks a year (2weeks vacation), youwould give 30 lessons aweek for 50 weeks (1,500lessons in a year).
4. Answers will vary, butshould include all of thetopics listed in the activity.
5. Answers will vary.
18 Chapter 1 • Should You Become an Entrepreneur?
ENTREPRENEURS:PRESENT
AND PAST
18 Chapter 1 • Should You Become an Entrepreneur?
Chapter Summary1. An entrepreneur is a person who owns, operates, and takes the
risks of a business venture. Entrepreneurs try to identify andmeet a need for a product or service.
2. Entrepreneurs come from all types of backgrounds, and theyown all kinds of businesses including manufacturing, retailing,and service businesses.
3. Throughout U.S. history, there have been many entrepreneurswho have contributed to the economy.
4. Today, more than 5.8 million small companies still contributegreatly to the U.S. economy.
5. Small businesses generally are more creative and willing to takerisks than large corporations.
6. There are a number of characteristics successful entrepreneurspossess, such as independence and determination.
7. To determine whether entrepreneurship is for you, you will needto assess your strengths, weaknesses, interests, and aptitudes.
8. Advantages of owning your own business include being yourown boss and working in a field that interests you.Disadvantages include uncertainty, risk, and the need to workvery long hours.
9. There are many resources at your public library that can helpyou develop a list of business ideas. Trade shows can also giveyou valuable information.
10. Once you have identified several opportunities, ask yourself keyquestions to analyze each option and identify the kind of busi-ness that makes the most sense for you.
11. Financial goals should include how much money you want toearn from your business. Setting specific financial goals will help you determine if your business idea will make the profitsyou want.
12. Nonfinancial goals can include serving a community need,working at something you enjoy, or maintaining the indepen-dence that comes with entrepreneurship.
ISENTREPRENEURSHIP
RIGHT FOR YOU?
IDENTIFY BUSINESS
OPPORTUNITIESAND SET GOALS
Read Build a Business again. Then answer the questions a second time.How have your responses changed?
PRACTICEAssign What Do You KnowNow? to provide practice inapplying new knowledgefrom the chapter.
REVIEWReview each point in theChapter Summary.
VOCABULARY BUILDERChoose the term that best fits the definition.
Write your answers on a separate sheet of paper.
1. People who work for someoneelse b
2. Evaluation of your strengths andweaknesses e
3. Special meetings at which com-panies display their products f
4. People who own, operate, andtake the risk of a business ven-ture c
5. The ability to learn a particular kind of job a
6. The process of running a business of one’s own d
REVIEW YOUR KNOWLEDGE7. How are entrepreneurs different from employees?
8. Why do some people go into business for themselves?
9. Name all the different kinds of entrepreneurial businesses anddescribe what each produces.
10. Name two early American entrepreneurs and what they did.
11. Why are entrepreneurial companies important to our economy?
12. What are the seven characteristics of successful entrepreneurs?
13. Why is it important for a beginning entrepreneur to perform a personal assessment?
14. Why should entrepreneurs take past experiences into account whendeciding to start their own business?
15. Why is it important to have an aptitude for the business you decideto own?
16. List the four advantages and four disadvantages of entrepreneurship.
17. What resources can you use to research business opportunities?
18. Why should you set both financial and nonfinancial goals for yourselfas an entrepreneur?
VOCABULARY BUILDERChoose the term that best fits the definition.
Write your answers on a separate sheet of paper.
1. People who work for someoneelse
2. Evaluation of your strengths andweaknesses
3. Special meetings at which com-panies display their products
4. People who own, operate, andtake the risk of a business ven-ture
5. The ability to learn a particular kind of job6. The process of running a business of one’s own
REVIEW YOUR KNOWLEDGE7. How are entrepreneurs different from employees?
8. Why do some people go into business for themselves?
9. Name all the different kinds of entrepreneurial businesses anddescribe what each produces.
10. Name two early American entrepreneurs and what they did.
11. Why are entrepreneurial companies important to our economy?
12. What are the seven characteristics of successful entrepreneurs?
13. Why is it important for a beginning entrepreneur to perform a personal assessment?
14. Why should entrepreneurs take past experiences into account whendeciding to start their own business?
15. Why is it important to have an aptitude for the business you decideto own?
16. List the four advantages and four disadvantages of entrepreneurship.
17. What resources can you use to research business opportunities?
18. Why should you set both financial and nonfinancial goals for yourselfas an entrepreneur?
a. aptitudeb. employeesc. entrepreneursd. entrepreneurshipe. self-assessmentf. trade show
19Chapter Review • Chapter 1
b
e
f
c
a
d
ASSESSAssign Vocabulary Builder andReview Your Knowledge toassess student understanding.
ANSWERSReview Your Knowledge 7. Entrepreneurs are different
from employees becausethey assume risk.
8. To leave the fast-pacedcorporate environment;to be at home but stillearn an income; topursue a personal dream.
9. Manufacturing: producethe products they sellusing resources andsupplies. Wholesaling:sell products to peopleother than the finalcustomer; Retailing: sellproducts directly to thepeople who use orconsume them; Service:sell services rather thanproducts; Agricultural:generate fresh produceand other farm products;Mining and extracting:take resources out of theground so they can beconsumed.
10. Answers will vary (exam-ples in text: CyrusMcCormick, Madam C. J.Walker, Lydia MossBradley, John D.Rockefeller, Henry Ford,Olive Ann Beech,Clarence Birdseye, RoseKnox).
11. Entrepreneurial com-panies employ moreworkers than all of thecountry’s large corpora-tions combined.
12. 1. Independence, 2. Self-confidence, 3. Determi-nation and perseverance,4. Goal orientation, 5. Aneed to achieve and sethigh standards forthemselves, 6. Creativity,7. Ability to act quickly.
13. You must know yourstrengths and weak-nesses and make surethat you are choosing afield that interests youand that will provide youwith an experience youwill enjoy.
14. They can help you evaluate what you likedor didn’t like about acertain situation.
15. To be successful, youneed to be proficient atwhatever skill is neces-sary to run yourbusiness.
APPLY WHAT YOU LEARNED19. The six categories of privately owned businesses include manufac-
turing, agricultural, mining and extracting, retailing, wholesaling, andservice. In small groups, brainstorm specific industries and compa-nies that belong to each category of business. Make a list of indus-tries and companies for each type. Share your results with the class.
20. In groups, brainstorm a list of jobs that relate to each aptitude givenin Lesson 1.2. For each job listed, have members vote on whichones they would like to do. Are there any jobs that received morevotes than the others? What are the aptitudes involved in thesejobs? Share your results with the class.
20 Chapter 1 • Should You Become an Entrepreneur?
21. How is entrepreneurship today different from entrepre-neurship during colonial times?
22. What is the relationship between interest in and apti-tude for a particular field? Can interests and aptitudesbe the same? Why or why not?
23. Other than going to the library and attending tradeshows, can you think of other ways to investigate busi-ness opportunities?
24. Why is setting realistic financial goals important to cre-ating a successful company?
25. MATH Ellen Greenberg loves to make and fly kites.Ellen is planning to open a shop selling custom-madekites. She asks for your advice to help her set financialgoals. Ellen estimates that after expenses, she can makea $15 profit on each kite she sells. If her annual incomegoal is $15,450, how many kites will she have to sell? Isthis goal realistic?
26. RESEARCH Find information on the life and career ofa famous historical entrepreneur. Find out informationsuch as birthplace, the type of business started, andwhat effect the person had on the economy and history.Is the business still operating? Write a short reportabout your findings.
27. COMMUNICATION For the above Research question,find a creative way to present your findings to the class.Use visual aids, skits, costumes, games, etc.
16. Advantages: 1. Being your own boss,2. Choosing a businessthat interests you, 3. Being creative, 4. Making lots of money.Disadvantages: 1. Risky,2. Uncertain andirregular income, 3. Longhours, 4. Making decisionsalone.
17. Books on entrepreneur-ship, magazines forentrepreneurs, trademagazines for certainbusinesses, governmentpublications, CountyBusiness Patterns, TheSmall BusinessAdministration
18. Setting financial goalsbefore starting a busi-ness can ensure that itwill be able to earn theprofits you need. Settingnonfinancial goals isimportant because thegoals will help youunderstand why youwant to be anentrepreneur (what youwant to get out of theexperience).
Apply What You Learned19. Answers will vary, but
will be similar to thechart in Lesson 1.1.
20. Answers will vary.
Think Critically21. Entrepreneurs today
have many morechoices. Prior toindustrialization, therewere few ways to strikeout on one’s own.Technology has madeentrepreneurshippossible for many morepeople. These people arecreating products andoffering services thatwere not neededdecades ago.
22. A particular field may beof interest to you, but youmay not have theaptitude or skillsnecessary to compete inthat field. Interests andaptitudes are oftensimilar. Most people areinterested in things thatthey have an aptitude for.
23. Answers will vary, butstudents may listnewspaperadvertisements, trademagazines, etc.
24. If the financial goals are not realistic, theentrepreneur will bediscouraged and may not continue the venture.
21Chapter Review • Chapter 1
This activity will help you identify a business opportunity thatmay be right for you. You will use this business idea for the“This Is Your Business Project” throughout the book.
1. Divide a sheet of paper into two columns. In the first columnlist all your interests. In the second column, list businessideas that relate to each interest.
2. Make a list of your strengths and weaknesses. Comparethis list with your list of business opportunities. For whichbusiness ideas would your strengths most apply? For whichbusiness ideas would your weaknesses hurt the most?Based on your strengths and weaknesses, cross out thosebusiness ideas that no longer seem suitable for you.
3. Assess your aptitude, using the checklist in Lesson 1.2. Puta checkmark next to the business opportunities that relateto your aptitudes.
4. For the business opportunities remaining on your list,assess the advantages and disadvantages of each. Crossout any whose disadvantages outweigh its advantages.
5. Using the library or Internet, find sources of information thatrelate to the business opportunities that remain on your list.Make a list of these sources. Locate at least one of thesesources for each business opportunity. For each source,write a sentence stating the type of information that you canobtain from it. On your list, cross out business opportunitiesfor which you could not find any information.
6. Choose one of the business opportunities remaining onyour list. Answer the six Compare Different Opportunitiesquestions based on this business opportunity.
7. Set personal financial goals for a five-year period based onthe business opportunity you chose. Be realistic. Assumeyou will need to borrow money to get started. Estimate bothyour income and expenses to determine the amount ofprofit you can expect to make. Next, set nonfinancial goalsyou hope to achieve with this business. Be sure to includespecific activities for each goal.
THIS IS YOURBUSINESS
PRO
JECT
THIS IS YOUR BUSINESS PROJECT1. Answers will vary. 2. Answers will vary. 3. Answers will vary; the aptitude test in the chaptershould be used. 4. Answers will vary. 5. Answers will vary. 6. Answers will vary, but the sixCompare Different Opportunities questions in Lesson 1.3 should be used. 7. Financial goalsmay include making money and paying off debts in two years. Nonfinancial goals may includehelping the community or having personal independence.
Make Connections25. She will have to sell
1,030 kites ($15,450� $15 = 1,030). This goal is realisticif Ellen can make 4 or 5 kites a day(assuming sheworks five days aweek for 50 weeksout of the year).
26. Answers will vary,but should includeall of the topicslisted in theexercise.
27. Answers will vary.
APPLY• Assign Apply What
You Learned.• Critical Thinking:
Assign the ThinkCritically questions.
• Connections: Assignthe Make Connectionsactivities.
RETEACHReview sections of thechapter to reinforce thechapter content.
ENRICHAssign This Is YourBusiness Project.Students will usetechniques described in the chapter to select a business opportunitysuited to their owninterests and aptitudes.Once identified, thisbusiness idea will beexpanded at the end of every chapter.
FORMALASSESSMENT• Assign ExamView®
Chapter 1.• Assign Chapter 1 Test
A or B.
CLOSEAsk one or morestudents to describesome of the choicesmade in completing ThisIs Your BusinessProject.
COOPERATIVELEARNING• The two Apply What
You Learned activitiesare specificallydesigned as groupactivities. Brainstorm-ing is a common toolfor solving businessproblems.
• The MakeConnectionsCommunicationActivity may also beassigned as a groupactivity.
22 Chapter 1 • Should You Become an Entrepreneur?
CA
SE STUD
Y
SUCCESSFUL DOUGHNUT COMPANYNOW MAKES WEDDING CAKES
Krispy Kreme Doughnutswas started by VernonRudolph in 1933 when he
purchased a doughnut shop inPaducah, Kentucky, receiving thecompany’s assets, goodwill, andthe rights to a secret yeast-raiseddoughnut recipe.
Rudolph and his partner movedthe Krispy Kreme operations toNashville, Tennessee, where othermembers of the Rudolph familyjoined the business, opening shopsin Atlanta, Georgia, andCharleston, West Virginia.
Krispy Kreme initially began asa delivery business that solddoughnuts to local grocery stores.In 1937, Rudolph left Nashville toopen his own doughnut shop inWinston-Salem, North Carolina. Inorder to start the new business,Rudolph relied on two partners, a1936 Pontiac, $200 in cash,doughnut-making equipment, thesecret recipe, and, most impor-tant, the name Krispy KremeDoughnuts. The three partnersused their last $25 to rent a build-ing across from Salem Collegeand Academy.
Delivering the doughnuts wascrucial for success. Rudolph tookout the back seat of the Pontiacand installed a delivery rack. Thefirst Krispy Kreme doughnuts weremade and sold on July 13, 1937, atthe Winston-Salem shop. Soonpeople began stopping by theshop wanting to buy hot dough-nuts. The consumer demand wasso great that Rudolph opened theshop for retail business by cuttinga hole in the shop’s wall to sell thedoughnuts—the beginning of
Krispy Kreme’s modern-day win-dow service.
Krispy Kreme is famous for itsfresh, glazed, yeast-raised dough-nuts called “Krispy Kreme OriginalGlazed.” Other products baked byKrispy Kreme include more than adozen varieties of cake and yeast-raised doughnuts, real fruit pies,cinnamon buns, and several vari-eties of snack foods.
Doughnut Wedding Cakes?Krispy Kreme doughnuts are
emerging as a new ingredient forwedding cakes and as a souvenirfrom the ceremony. Brides andgrooms are choosing to givedeparting guests two- and four-doughnut gift packs, some carryingdesigner stickers with the bride’sand groom’s names on them.
InStyle Weddings may havejump-started the trend in its 2001magazine when it listed the friedconfections as a way to add atouch of the unusual to nuptials.Wedding cakes have evolved froma simple tiered stack of doughnuts.Some customers opt to buy thedoughnuts and have a local cakedecorator create something forthem.
Neighborhood stores and thecorporate offices are fielding asmany as 40 calls a week as thewedding trend grows. A dough-nut wedding planner helps easethe fears that go along withbuilding a wedding centerpiecefrom a snack.
Krispy Kreme doughnuts alsohave become popular for birth-days and bar mitzvahs as well asfor banquets, fund-raisers, andweddings.
CASE STUDYKrispy Kreme Doughnutswas started by entrepre-neurs who thought out-side of the box and werewilling to take financialrisks. The case empha-sizes sacrifices thatentrepreneurs were will-ing to make in order torun a successful busi-ness. The major pointsin this case includeentrepreneurial risk,products offered, andproduct diversification.
Think CriticallyAnswers1. Rudolph possessed
all of the characteris-tics of an entrepre-neur: independence,self-confidence, deter-mination, goal orienta-tion, the need toachieve and to sethigh standards, cre-ativity, and the abilityto act quickly.
2. Krispy Kreme quicklyresponded to customerdemand for retail ser-vice. It expanded itsproduct line to includemore varieties ofcakes, doughnuts, fruitpies, cinnamon buns,and snack foods tosatisfy customerneeds. It expandedinto new markets, suchas weddings and ban-quets.
3. By diversifying withthe doughnut weddingcakes and souvenirs,Krispy Kreme hasbeen able to createnew demand for itsproducts.
4. Answers will vary.Ideas may includedoughnuts for meet-ings, doughnut packsfor school outings, ordoughnut-baseddesserts, such asstrawberry shortcakeor ice cream sundaes.
23
EVEN
T PREP
Franchise OpportunitiesThe grand opening of a Krispy
Kreme store involves long lines ofpeople anticipating the delicious,addictive warm doughnuts. Strictand consistent quality controlcontributes to the huge success ofKrispy Kreme. All Krispy Kremedoughnut mixes are prepared in amodern, state-of-the-art, 135,000-square-foot manufacturing plantin Winston-Salem and are deliv-ered directly by the company’sown fleet of trucks to KrispyKreme stores.
The Krispy Kreme market isgrowing due to area developerswho share the vision, standards,and objectives of the successfulcompany. Building successful rela-tionships that have long-range
benefits for area developers andthe business is the top goal forKrispy Kreme.
www.deca.org/publications/HS_Guide/guidetoc.html
1. What entrepreneurial char-acteristics did VernonRudolph possess?
2. List three factors that havecontributed to the successof Krispy Kreme.
3. How is product diversifica-tion a key element in thesuccess of Krispy Kreme?
4. Invent one additional prod-uct marketing idea forKrispy Kreme doughnuts.
ROLE PLAYThe Full ServiceRestaurant ManagementRole Play has the stu-dent owning a popularrestaurant that servesbreakfast, lunch, and din-ner throughout the day.Regular customers arekey to the success of therestaurant. One of thebest waitresses has arun-in with regular cus-tomers who tried to use acoupon that had expiredby one week. The stu-dent must resolve theconflict with the customerand assure the waitressthat she is still a keyplayer at the restaurant.1. Answers will vary, but
students should rec-ognize the importanceof preserving thegoodwill of regularcustomers while main-taining the loyalty of avalued employee.
2. Answers will vary.Students may suggestcontacting Mr. andMrs. Fold to offer anapology and a gift cer-tificate for a fixedamount or for two freemeals.
3. Answers will vary, butstudents should rec-ognize the importanceof assuring Sally thatshe behaved appropri-ately by checking theexpiration date. Sallymay need somecoaching on how todeal with this type ofsituation in the future.
4. Answers will vary.Students may suggestthat coupons containno expiration date orthat coupons be pre-sented at the time theorder is placed so thatthe expiration date canbe checked before thecustomer orders.
FULL SERVICE RESTAURANT MANAGEMENT
You own a popular restaurantthat serves breakfast, lunch, anddinner throughout the day. Yourrestaurant has coupon specials inthe Wednesday and Sunday news-papers. Many of your regular cus-tomers take advantage of thesecoupons. You have stressed toyour wait staff the importance ofaccepting only nonexpiredcoupons. Sally, your best waitress,is careful to look for expirationdates on coupons.
Bill and Penny Fold, regularcustomers who eat at your restau-rant at least twice a week,ordered lunch with a coupon.They did not realize that thecoupon had expired the weekbefore. Sally had worked a
10-hour shift and got into a con-frontation with Mr. and Mrs. Foldover the expired coupon. NowMr. and Mrs. Fold are upset andhave indicated that they will taketheir loyal business to a competi-tor. Sally is very upset about thesituation.
1. How will you handle this situa-tion?
2. How will you maintain cus-tomer loyalty from Mr. andMrs. Fold?
3. What will you do to make Sallyfeel better about the situa-tion?
4. What adjustments can youmake to your coupon promotions to avoid future misunderstandings?
