ED 373 196

TITLE

DOCUMENT RESUME

CE 067 030

Your Potential as an Entrepreneur. Unit 1. Level 1.Instructor Guide. PACE: Program for AcquiringCompetence in Entrepreneurship. Third Edition.Research & Development Series No. 301-01.

INSTITUTION Ohio State Univ., ColumbusCenter on Education andTraining for Employment.

PUB DATE 94

NOTE 24p.; For the complete set, i.e., 21 units, each doneat three levels, see CE 067 029-092. Supported by theInternational Consortium for EntrepreneurshipEducation, the Coleman Foundation, and the Center forEntrepreneurial Leadership Inc.

AVAILABLE FROM Center on Education and Training for Employment, 1900Kenny Road, Columbus, OH 43210-1090 (order no.RD301-01 IG, instructor guide $4.50; RD301-01 M,student module, $3; student module sets, level1--RD301M, level 2--RD302M, level 3--RD303M, $45each; instructor guide sets, level 1--RD301G, level2--RD302G, level 3--RD303G, $75 each; 3 levels andresource guide, RD300G, $175).

PUB TYPE Guides Classroom Use Teaching Guides (For

Teacher) (052) Guides Classroom UseInstructional Materials (For Learner) (051)

EDRS PRICE MFO1 /PCO1 Plus Postage.

DESCRIPTORS Behavioral Objectives; *Business Education; CareerPlanning; *Competency Based Education;*Entrepreneurship; Individual Characteristics;Learning Activities; Postsecondary Education;Secondary Education; *Self Employment; *SelfEvaluation (Individuals); *Small Businesses; StudentEvaluation; Teaching Guides

IDENTIFIERS *Program for Acquiring Competence Entrepreneurship

ABSTRACTThis instructor guide for a unit on entrepreneurship

potential in the PACE (Program for Acquiring Competence inEntrepreneurship) curriculum includes the full text of the student

module and lesson plans, instructional suggestions, and other teacherresources. The competencies that are incorporated into this module

are at Level 1 of learning--understanding the creation and operation

of a business. Included in the instructor's guide are the following:unit objectives, guidelines for using PACE, lists of teachingsuggestions for each unit objective/subobjective, model assessmentresponses, and overview of the three levels of the PACE program. The

following materials are contained in the student guide: activities tobe completed in preparation for the unit, unit objectives, studentYreading Materials, individual and group Learning activities,Tcasestudy, discussion questions, assessment questions, and references.Among the topics discussed in the unit are the following: whatentrepreneurship is, how entrepreneurship benefits the economy, -

whether entrepreneurship can be learned, how people's needs relate toentrepreneurship, what entrepreneurship is about, characteristics ofsuccessful entrepreneurs, aptitudes/skills needed by entrepreneurs,

ways of learning about owning a business, advantages and

disadvantages of being an employee, advantages and disadvantages of -

self-employment, and the importance of goal settin& andself-assessment as steps toward entrepreneurship. (MN)

UNIT ILEVEL 1

PACETHIRD EDITION

/lob, CENTER ON EDUCATIONAND TUNING FOR EMPLOYMENT

COO EGE OF EDuCA110NT'.E Coo s*.*E

Program for AcquiringCompetence inEntrepreneurship

,c Ih.r1"pinvitt St-rto. No. 101.01

Objectives:

Define entrepreneurship.

,

INSTRUCTOR GUIDE

Unit 1

Your Potential as anEntrepreneurLevel 1

HOW TO USE PACE

Use the objectives as a pretest. If a studentis able to meet the objectives, ask him orher to read and respond to the assessmentquestions in the back of the module.

Duplicate the glossary from the ResourceGuide to use as a handout.

PERMISSION TO REPRODUCE THISMATERIAL HAS BEEN GRANTED BY f. Use the teaching outlines provided in the

TO THE EDUCATIONAL RESOURCESINFORMATION CENTER (ERIC)"

Identify characteristics, aptitudes, and skills of suc-cessful entrepreneurs.

Describe careers you would like to be involved in dur-ing your lifetime.

Compare the advantages of owning a business versusworking for someone.

Establish the importance of setting goals.

Assess your aptitudes and skills._)

NAssess your potential to become an entrepreneur.

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Instructor Guide for as .ance in focusingyour teaching delivery. The left side ofeach outline page lists objectives with thecorresponding headings (margin questions)from the unit. Space is provided for you toadd your own suggestions. Try to increasestudent iavolvement in as many ways aspossible to foster an interactive learningprocess.

When your students are ready to do theActivities, assist them in selecting thosethat you feel would be the most beneficialto their growth in entrepreneurship.

Assess your students on the unit contentwhen they indicate they are ready. Youmay choose written or verbal assessmentsaccording to the situation. Model re-sponses are provided for each module ofeach unit. While these are suggestedresponses, others may be equally valid.

Objectives Teaching Suggestions

1. DEFINE ENTREPRENEURSHIP

What is entrepreneurship?

How does entrepreneurship benefitthe American economy?

. Can entrepreneurship be learned?

How do people's needs relate toentrepreneurship?

Is entrepreneurship only aboutprofit?

2. IDENTIFY CHARAC 1 ERISTICS,APTITUDES, AND SKILLS OFSUCCESSFUL ENTREPRENEUR

What are the characteristics ofsuccessful entrepreneurs?

What aptitudes/skills does theentrepreneur need?

Why is vision important to entre-preneurs?

How can you learn about owninga business?

3. DESCRIBE CAREERS YOUWOULD LIKE TO BE IN-VOLVED IN DURING YOURLIFETIME

Why do people start their ownbusinesses?

The instructor should open the discussion by explaining the con-cepts of entrepreneurship and entrepreneur. Assess the impor-tance of entrepreneurship in American society.

From a historical perspective stress the importance of entrepre-neurship on American society. Ask students to give examples offamous American entrepreneurs whose innovations became revo-lutionary for the American economy.

Further previous discussion by using famous entrepreneur'sexamples.

Refer to above suggestion.

Lead students in a discussion on what motivates entrepreneurs.Guide the discussion toward profit motive and achievementneeds.

Create a chart listing characteristics of successful entrepreneurs.Have students comment on these characteristics.

List aptitudes/skills of successful entrepreneurs. The instructorcould also distribute a simple aptitude assessment tool.

Look for articles in your local newspaper or magazines (e.g.,INC, Entrepreneurship, Entrepreneur, Business Week, etc.) whichpresent successful entrepreneurs. After you briefly present thearticle, have students identify the vision of the entrepreneur (e.g.,introduction of a new product, attach new features to a service,find a niche in a competitive market for a product/service, etc.)

Describe the methods used in learning how to become an entre-preneur. Have students add their own thoughts on how entrepre-neurs can learn more about owning a business.

Divide the chalkboard or overhead into two columns. Help stu-dents list active and reactive reasons why people become entre-

,teurs. Encourage creativity in adding to the list.

Objectives

4. COMPARE THE ADVANTAGESOF OWNING A BUSINESSVERSUS WORKING FORSOMEONE

What are the advantages of beingan employee?

What are the disadvantages of be-ing an employee?

What are the advantages of self-employment?

What are the disadvantages of self-employment?

5. ESTABLISH THE IMPORTANCEOF SETTING GOALS

How important is goal setting tothe entrepreneur?

6. ASSESS YOUR APTITUDESAND SKILLS

Why is it important to assess yourcharacteristics, aptitude, and skillsas an entrepreneur?

7. ASSESS YOUR POTENTIAL TOBECOME AN ENTREPRENEUR

Teaching Suggestions

Lead students in a discussion about the adva ages of workingfor someone else.

Refer to above suggestion.

Continue the previous discussion by assessing advantages of self-employment. Address the unemployment and economic cycle is-sues to make students understand why self-employment may bea solution to job and financial security.

Consider other macroeconomic factors previously mentionedwhich could work against entrepreneurs.

The instructor should explain why goal setting is critical. Thenstudents should extend the discussion and express their opinionson why goal setting is important to entrepreneurs.

Again, a simple self-assessment exercise would be helpful.Stress the impf.Atance of self-assessment in helping individuals toimprove themselves and to reach their goals.

What are the final ingredients to Conclude the discussion by reviewing factors relating to successbe an entrepreneur? in entrepreneurship.

MODEL ASSESSMENT RESPONSES

1. Entrepreneurship is the element of the American economic system that produces tomorrow's goods and ser-vices, in anticipation of future market needs, at some risk, and for profit to the entrepreneur.

2. Successful entrepreneurship requires the introduction of new products and services to satisfy existing market

needs or create potential new market demand.

4

3. Some characteristics exhibited in many entrepreneurs are: desire to achieve, hardworking, risk-taker, strong

leadership, tough mindedness, and flexibility.

4. Advantages of owning a business include: possibility of earning more money, independence and personalfreedom, satisfaction of personal need to achieve recognition, ability to utilize creativity and inventiveness.

5. Some of the disadvantages of being self-employed are: taking risks involved with running a business,working long hours, complying with government regulations and standard business practices, finding the

capital to start the business, and staffing-related problems.

6. Being an employee is advantageous because working for somebody is more often times safer than beingself-employed. You can rely on a -easonably safe income and regular hours. Also, you are not personallyliable for the business. Usually, you are paid for working overtime (if hourly), and have paid vacations and

fringe benefits.

On the other hand, there are some disadvantages of standard employment, such as restricted salaryincreases, risk of being lain off during economic recessions, mandatory retirement, etc.

7. Goal setting provides you with both short-term and long-term guidance throughout your career. Setting

your goals in advance will help you focus your efforts to achieve. You should modify your goals as youlearn from your experiences and those of others.

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Incorporates the needed competencies for creating and operating a small business at three levels of learning, with experiences and

outcomes becoming progressively more advanced.Level 1 Understanding the creation and operation of a business.Level 2 Planning for a business in your future.Level 3 Starting and managing your own business.

Self-contained Student Modules include: specific objectives, questions supporting the objectives, complete content in form of answers

to the questions. case studies, individual activities, group activities, module assessment references. Instructor Guides include the full text

of each student module and lesson plans, instructional suggestions, and other resources. PACE,Third Edition, Resource Guide includes

teaching strategies, references, glossary of terms, and a directory of entrepreneurship assistance organizations.

For information on PACE or to order, contact the Publications Department at theCenter on Education and Training for Employment, 1900 Kenny Road, Columbus, Ohio 43210-1090

(614) 292-4353, (800) 8484815.

Support for PACE, Third Edition provided in whole or in part by:

International Consortium for Entrepreneurship Educationand

International Enterprise AcademyCenter on Education and Training 'for Employment

The Ohio State University

The Coleman Foundation

5 Center for Entrepreneurial Leadership Inc.Ewing Marion Kauffman Foundation

UNIT 1LEVEL 1

Help forthe

Entrepreneur

LegalIssues

RecordKeeping

D

CENTER ON EDUCATIONAND TRAINING FOR EMPLOYMENT

COLLEGE OF EDUCATIONTHE OHIO STATE UNIVERSITY

Program for Acquiring11 Competence in

Entrepi eneurship

0

Research & Development SeriesNo. 301-01

YOUR POTENTIAL AS AN ENTREPRENEUR

BEFORE YOU BEGIN . . .

1. Consult the Resource Guide for instructions if this is your first PACE unit.

2. Read What are the Objectives for this Unityou can meet these objectives now, consult

3. Look for these business terms as you readmeanings, ask your instructor for a copy ofResource Guide.

CapitalEconomyEntrepreneurEntrepreneurial aptitude/skillsEntrepreneurshipMarketplaceNetworkingTechnical assistanceVisionWorking capital

Copyright 1994, Center on Education and Training for Employment,The Ohio State University. All rights reserved.

on the following page. if you thinkyour instructor.

this unit. If you need help with thethe PACE Glossary contained in the

YOUR POTENTIAL. AS AN ENTREPRENEUR

WHAT ARE THE OBJECTIVES FOR THIS UNIT?

Upon completion of this unit you will be able to

define entrepreneurship,

identify characteristics, aptitudes, and skills of successful entrepreneurs,

describe careers you would like to be involved in during your lifetime,

compare the advantages of owning a business versus working forsomeone,

establish the importance of setting goals,

assess your aptitudes and skills, and

assess your potential to become an entrepreneur.

WHAT IS THIS UNIT ABOUT?

The economy experiences growth when newresources, or factors of production, are put towork. The four basic factors of productionare land, labor, capital and entrepreneurship.Just what is entrepreneurship? Do entrepre-neurs have special skills? What are theadvantages of working for oneself versusworking for someone? This unit providesanswers to these questions and others. Mostimportantly, this unit helps you examineyour own characteristics, aptitudes, and skills

3

in order to determine your potential tobecome an entrepreneur. Finally, the impor-tance of goal setting is discussed.

WHAT ISENTREPRENEURSHIP?

The word entrepreneurship comes from theFrench language and means to undertake.An entrepreneur in our society is an individ-ual who undertakes all the risks related to

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Organize the business

Manage the business

Assemble the other factors of production

Make business policy decisions

forming and operating a small business.This involves performing all business func-tions associated with a product or serviceand includes social responsibilities and legalrequirements. Specifically, entrepreneurs

organize the businesses,

manage the businesses,

assembleand

the other factors of production,

make business policy decisions.

Entrepreneurship is a special element of theAmerican economic system that determinestomorrow's needs and produces the goodsand services to meet those needs. Entrepre-neurs operate the small businesses (fewerthan 500 employees) that employ more thanhalf the workers in the United States. There

is always a risk for entrepreneurs, becausethey can never be 100 percent sure aboutwhat the needs of the marketplace will be.This is why planning is very important tothe entrepreneur.

HOW DOES ENTREPRE-NEURSHIP BENEFIT THEAMERICAN ECONOMY?

One of the best examples of an Americanentrepreneur is the inventor Thomas Edison.In 1878, Edison told people he would inventa light that would not use gas or flame, andin 1879 he invented the electric light bulb.He put on quite a show with the first lightbulbs. Edison developed a special electricgenerator to power 40 light bulbs that hestrung up with copper wires around his hometown of Menlo Park. His demonstration wasa huge success.

CAN ENTREPRENEUR SHIPBE LEARNED?

Thomas Edison was a new kind of inventor.He did not work alone. He believed that in-vention required organization and planning.He worked with teams of people who fol-lowed a coordinated plan to turn out inven-tions just as regularly as a factory producesgoods. Edison learned something from eachof his team members. There are many re-sources available through organizations likethe U.S. Small Business Administration thatwill help educate the entrepreneur. There ismuch to discover. As you learn more aboutthe skills and knowledge needed to run a

5

business, you should begin to assess yourown potential as an entrepreneur.

HOW DO PEOPLE'SNEEDS RELATE TOENTREPRENEURSHIP?

Edison's first invention was a machine thatrecorded votes via telegraph. He decided toinvent the machine when he discovered thatit took a long time for Congressmen to countthe votes by hand. The voting machine letCongressmen register votes simply by press-ing a button. However, Congress didn't"buy" his machine; they liked doing things

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the old way. So from then on, Edison madesure that people really wanted his inventionsbefore he spent time and money developingthem. He invented for the marketplace.

One of the most important elements of beinga successful entrepreneur is the ability toanticipate whether or not the marketplacewill buy a product or service. In otherwords, entrepreneurs must be able to ascer-tain whether or not people will buy whatthey have to sell.

IS ENTREPRENEURSHIPONLY ABOUT PROFIT?

Because entrepreneurs must always keep inmind that they will fail if they do not makea profit, it sometimes seems that their onlymotivator is money. Just because they areconcerned with money does not mean thatthey do not have a social conscience. Amer-ican capitalism is our country's way of sat-isfying everyone's basic needs for food,shelter, and clothing. But when these needsare met, people find that they also haveother needsthat is, protection, serviceableroads, transportation, education, betterhealth, entertainment, a better environment,and the list goes on and on. When thesehigher needs are expressed, entrepreneursmust attempt to meet them.

The needs of the marketplace are dictated bythe development of a nation and the prosper-ity of its people. Today's and tomorrow'sentrepreneurs must anticipate changing needsin the marketplace if they are to be success-ful. And, the well being of our nation, now

and in the future, depends on how healthyour economy is.

WHAT ARE THECHARACTERISTICSOF SUCCESSFULENTREPRENEURS?

The common characteristics of successfulentrepreneurs have been studied by many ex-perts. Some of these characteristics are asfollows:

ACHIEVEMENT ORIENTED. Al-

most without exception, successful entre-preneurs are highly motivated to achieve.They tend to be doers and are often verycompetitive.

HARD WORKING. Starting a businessis hard work. Without the willingness towork hard, success comes very slowly, ifat all.

NON-CONFORMIST. Entrepreneurstend to be independent persons who wantto set their own goals.

STRONG LEADERSHIP. Starting asmall business is full of uncertainty andrisk. To make it through these tough,early days, entrepreneurs must havestrong leadership skills.

TOUGH MINDED. Entrepreneurs mustbe able to make and stick by decisionsthat are based on some amount of intu-ition. Tough-minded entrepreneurs are

1

not frightened by the unknown. Theylead the way for the rest.

SELF-CONFIDENT. Entrepreneursneed to be self-confident in the decisionsthey make. Self-confident entrepreneursfeel that their decisions are probablyrightbut if riot, adjustments can makeit work.

RISK - TAKER. Entrepreneurs feel thatresults are controllable, not strictly up tochance. They must be willing to take"reasonable" risks.

FLEXIBLE. Entrepreneurs need to beflexible in order to meet changing goals,pressures, technologies, and competition.Entrepreneurs feel that their own flex-ibility will allow a chance to changethings if decisions turn out badly.

GOAL-SETTER. Entrepreneurs envi-sion the future possibilities and recognizethe results of today's efforts.

ENTHUSIASTIC. Enthusiasm helpssuccessful entrepreneurs maintain thelevel of creative thinking and focusedactivity necessary to carry out goalssuccessfully.

OPTIMISTIC. An optimistic outlookallows entrepreneurs to see potentialbenefits in negative situations. Entre-preneurs don't dwell on the negatives.They focus on the positive possibilitiesin every situation.

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RESOURCEFUL.

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Entrepreneurs areable to accomplish a lot by combininglimited resources and ingenuity.

INDEPENDENCE. Persons who ownand operate their own businesses oftenare looking for the freedom to maketheir own decisions.

Many experts quickly point out that any for-mula for entrepreneurial success must con-tain vision, or the ability to see what mightbe. In addition, owners of small businessesshould look for opportunities to improvetheir knowledge in these specific areas:

Problem solving

Decision making

Human relations

Team building

Networking

The success of any business is directlyconnected to knowledge and skills in theseand other areas. As the marketplace contin-ually changes you will find that the skillsand knowledge that will be required willalso change. You must be alert to thesechanges. Remember, knowledge is power.

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WHAT APTITUDES /SKILLSDOES THE ENTREPRENEURNEED?

Aptitudes are the natural abilities or talentsthat people have to do certain things. Someexamples of aptitudes that entrepreneurs findhelpful are as follows:

Verbal and nonverbal communicationskills (written or spoken words or actionsthat communicate ideas, emotions, orevents). Making a speech at a class orclub, acting in a play, and hugging afriend are all methods of communication.

Verbal comprehension skills (understand-ing the meanings of ideas or emotions inverbal or nonverbal communication).Listening and reacting to a friend'sproblem, discussing politics, and tryingto sell neighbors on your abilities tomow their lawns are examples of verbalcomprehension.

Logic (applying reason or logic to prob-lems). Solving a math problem or mea-suring the fabric available and decidingif there is enough to make a skirt areexamples of logical abilities.

Artistic skills (creativity, using artistictalents, using musical talents, using dra-matic talents). Being able to draw, writepoetry, arrange flowers, play a musicalinstrument, take photographs, sing, ordesign an outfit are all uses of artistictalents.

Mechanical skills (understanding rela-tionships between parts of machines,making things work). Fixing the motorof an automobile, putting a radio backtogether, unjamming a sewing machine,and driving a car all use mechanicalability.

Numerical understanding (working withnumbers). Solving math problems,determining how many miles a car trav-els per gallon of gasoline, or doubling arecipe to feed eight instead of four areexamples of numerical abilities.

Clerical skills (arranging and recordingnumber and letter combinations). Alpha-betizing or putting items in a specialorder, filing, typing, and word processingare all clerical skills.

Spacial understanding (understandinghow parts of things fit together, multi-dimensional). Being able to put togethera jigsaw puzzle, rearranging furnitureattractively in a room, and putting to-gether a model airplane all use spacialunderstanding.

Physical skills (bodily strength and coor-dination, manual dexterity). Liftingweights, enjoying aerobic exercise, mov-ing furniture, and hanging up pictures ina straight line all use physical skills.

Organizational skills (planning, imple-menting, evaluating). Planning a partyor conducting a meeting makes use oforganizational skills.

Intellectual abilities (original thinking,seeking knowledge, thinking ahead).Reading a mystery novel and deciding"th butler did it," studying for an exam,and analyzing the problem in repairing acar are examples of using intellectualskill c.

No one has all of these aptitudes/skills, andno one aptitude/skill is required to be a suc-cessful entrepreneur. It is important for eachwould-be entrepreneur to identify his or herspecial talents and consider developing abusiness that uses these talents. Weaknessesa would-be entrepreneur might have can besupplemented by hiring others who havethose skills and abilities, or by taking advan-tage of available technical assistance.

WHY IS VISIONIMPORTANT TOENTREPRENEURS?

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This vision fuels the entrepreneur's passion,sustains optimism and energy, and providesa foundation on which to build. Studieshave shown that the fastest growing busi-nesses are future- and goal-oriented.

HOW CAN YOU LEARNABOUT OWNING ABUSINESS?

If you have decided that going into businessis a possible career choice for you, the firststep is to find out as much as you can aboutentrepreneurship. You can begin by lookingaround your neighborhood and investigatingthe successful and not-so-successful busi-

Most entrepreneurs are visionaries, that is,they have the ability to see what might be.It is important for the entrepreneur to beable to identify potential business needs.

nesses. You might ask how long they havebeen in operation. Do they seem to bedoing well? Are they making a profit or arethey just hanging on?

Typically, successful entrepreneurs have hadprior work experience. For instance, personsgoing into landscaping might have prior ex-perience working in a nursery where theylearned about seeding, watering, cutting, and

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light requirements for different types ofplants.

What kind of business would you like toown? Do you believe you have some spe-cial qualities or knowledge that will makethis business a success? What are yourreasons for wanting to go into business?Following are some of the reasons whypeople start their own businesses and theadvantages and disadvantages on both sidesof the issue to help you decide.

WHY DO PEOPLE STARTTHEIR OWN BUSINESSES?

Noted business professor and entrepreneurBill Stolze, (Startup: An Entrepreneur'sGuide, 1992) divides the reasons people starta business into two broad categories. Theyare the reactive reasons and the activereasons.

Reactive Reasons:

Promotion and Salary Policy. The entre-preneur wants rewards based on accomp-lishment not seniority.

Adversity. Problems experienced by thecurrent employer limit future prospectsand opportunities. Examples includesudden or unexpected unemployment; outof school; military service, or jail; andloss of support system due to divorce ordeath.

Red Tape And Politics. These are short-comings of all large organizations andare difficult for most entrepreneurs toaccept.

Strong Belief in a Product or Idea. Faithand self-confidence are often a spring-board to entrepreneurship.

Active Reasons:

To Be Your Own Boss. Many entrepre-neurs have personality traits that make itdifficult for them to work for others.

Fame and Recognition. Some, but cer-tainly not all, entrepreneurs feel that thisis an important reason to start a business.

Personal Financial Gain. Gains are po-tentially greater and much quicker thanwhen working for someone else. On theother hand, the risk is also greater.

Joy of Winning. Entrepreneurs are theultimate achievers. They like to win.

When people consider career optionsthey should recognize the option tocreate their own jobs. There are manypaths that lead to this option. Choicesthat people often make that lead to busi-ness start-up are as follows:

To start a business right after graduatingfrom high school, technical school, com-munity college, or a university.

To start a part-time business with no in-tentions of ever working full-time.

To start a business and when it becomessuccessful, quit your present job.

To work for someone with the intent ofstarting your own business once you be-come experienced.

Begin a hobby that later becomes abusiness.

To work for an employer who later willsell you the business.

To develop your own clients whileemployed.

To use entrepreneurial skills to becomea better employee.

WHAT ARE THEADVANTAGES OFBEING AN EMPLOYEE?

Being employed or working for someoneelse does have some advantages. For onething, it is generally safer to be a salariedemployee. As an employee you will proba-bly have less personal financial responsibil-ity or risk. If the business has debts, youwill not lose your personal savingsbecauseyou are not responsible for the debts.

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Many employees put in regular hours andare paid overtime if extra work is required.Not all employees, of course, work regularhours; many put in time over and beyond thejob's working hours. However, most em-ployees are guaranteed vacation time andsuch fringe benefits as life insurance andhealth plans. Generally speaking, they cancount on a somewhat stable lifestyle. Theyhave a fairly good idea of what their incomewill be, from year to year, as well as whatthe job requirements will be.

WHAT ARE THEDISADVANTAGES OFBEING AN EMPLOYEE?

Being a salaried employee also has dis-advantages. Advances in salary becomelimited. By the time many people reach themiddle of their careers, they are at the top ofthe salary scale. In some careers, the older,more experienced, higher-paid employeesmay be laid off during a recession, whereasyounger, "less-expensive" employees arehired. Top management personnel in the de-fense industry lost their jobs in the early1990s when their industry experienced majorcutbacks. In industries governed by unioncontracts, all the low seniority employeesmay be laid off during a recession whenthere is not enough work. Companies mayrelocate and require employees to make jobtransfers. The concept of mandatory retire-ment may also be a disadvantage to the cap-able, if not phy,ically young, worker.

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WHAT ARE THEADVANTAGES OFSELF-EMPLOYMENT?

Self-employment has many advantages.The possibility of making money is an over-whelming reason that many people start theirown business. There is a chance to make aprofit while doing something you enjoy.Once the business has been successfullyestablished, there is a degree of financialsecurity. In fact, statistics show that thelifetime earnings of most employees are lessthan the lifetime earnings of most successfulentrepreneurs. There is also a lot of per-sonal freedom that comes from being able tomake decisions that directly affect your owndestiny.

WHAT ARE THEDISADVANTAGES OFSELF-EMPLOYMENT?

If you talk to entrepreneurs in your com-munity, they can easily tell you some of thedisadvantages of self-employment. The riskinvolved in owning a business may causereal headaches. Economic failure is, ofcourse, the biggest risk of all, and is thegreatest disadvantage of self-employment.Competition is another factor to consider.Complying with government regulations andstandard business practices, working longer,unpaid hours, finding the capital to start abusiness, and staffing are other possibledisadvantages.

HOW IMPORTANT ISGOAL SETTING TOTHE ENTREPRENEUR?

Goal setting is important whether you de-cide to start your own business or to workfor someone else. Goals serve as "light-houses" guiding you on your "career voy-age." Setting goals helps you focus yourefforts. When determining how to investyour time and energy, you should always beworking toward reaching your goals. Goal-directed entrepreneurs tend to be oppor-tunistic about how they reach their goals.There are several types of goals thinkabout.

In planning your future, you should set long-term goals. These goals should take 5-10years to reach. An example is to manage anauto parts store in 5 years and own one in10. After setting long-term goals, youshould set short-term goalsachievementsthat will support the long-term goals. Ac-complishing the short-terra goals results inreaching the long-term goals. For instance,in order to become a manager at an autoparts store, you may have to graduate fromhigh school, take some business classes, andgain experience working as a parts sales-person. See Figure 1 for an example oflong- and short-term goals.

Both personal and career goals are impor-tant. Personal goals, such as conquering thefear of public speaking or learning how towrite a business letter, will benefit you inmany areas of your life regardless of whatcareer you choose. But being able to dothese things will increase your career op-tions. Any goal that result in personalimprovement will pay off sooner or later. A

specific career goal, such as "owning myown restaurant," can help in making educa-tion and job choices. For instance, if thiswere your goal, you might decide to takebusiness management and food service class-es at the community college and work as aserver at a local restaurant.

It is important to realize that as you gain lifeexperiencesjob, educational, and socialyou will obtain new information about your-self and the world around you that will leadyou to update and alter your goals. It isimportant to set both long-term and short-term goals early. Also, do not be distressedwhen you discover you have changed yourmind and as a result you need to changeyour goals. This is natural and necessary.

The only way to grow to your full potentialas an entrepreneur is to set your goals high.Be sure, however, that your goals are realis-tically attainable. If your goals are impos-sible to achieve, you will experience unnec-essary disappointment.

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WHY IS IT IMPORTANTTO ASSESS YOURCHARACTERISTICS,APTITUDE, AND SKILLSAS AN ENTREPRENEUR?

As mentioned earlier in this unit, going intobusiness for yourself has a certain amount ofpersonal and professional risk. It is criticalfor the small business person to enter intothe process with his/her eyes wide open towhat it will take to be successful. It is help-ful for an entrepreneur to realistically assesshis or her own potential to own a business.This knowledge about your own abilities willhelp direct the search for experience, train-ing, and technical support.

The success of a business depends on howwell the entrepreneur performs. Performanceis a combination of abilities and skills. Ifyou seem to lack any of the necessary skillsand abilities, you should not be discouraged.You may be able to fill the gaps througheither training or self-discipline.

LONG-TERMGOAL

PURCHASE MY OWNBUSINESS

1. WRITE A BUSINESS PLANSHORT-TERM 2. SAVE MONEY FOR A DOWN PAYMENT

GOALS 3. HIRE NECESSARY STAFF4. LINE UP SUPPLIERS AND TECHNICAL

ASSISTANCE5. OBTAIN FINANCING6. CONTACT REALTORS TO CHOOSE LOCATION

Figure 1. Example of long- and short-term goals

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However, as stated earlier, the chances ofbeing successful as an entrepreneur aregreater if skills and experiences are used.Starting a business in an area of interest isvaluable for two reasons. First, the expertisebrought to the business becomes the busi-ness' cornerstone. Second, because of thelong hours often needed to manage a busi-ness, the entrepreneur is a step ahead if heor she truly enjoys what he or she is doing.Whether the business is service- or product-oriented, the needed energy is more easilygenerated if the work is truly a "labor oflove."

Self-assessment is the first and most impor-tant step toward owning your own business.It will take some time and effort on yourpart, but it will provide you with valuableinformation about what you have and whatyou need to have.

WHAT ARE THE FINALINGREDIENTS TO BEAN ENTREPRENEUR?

Having the right skills, aptitudes and per-sonality certainly help ensure an entrepre-neur's success. But this is not enough. Toget started entrepreneurs also need market-able ideas, opportunities to try these ideas,support from the right people, and money tofinance the business.

Every successful business starts with an ideafor a new or improved product or servicethat satisfies a need currently unmet. Evenif the entrepreneur is talented and has a goodidea, he or she still has to find or make theopportunity to try the idea out.

Often to get bankers, suppliers and otherparties to take a risk on a new business idea,the entrepreneur may need an endorsement.Contacts with people who know people inthe business community can open doors.Making and nurturing these contacts iscalled networking (see Unit 6 for more onnetworking). Networking can be the key tothe continued success of the entrepreneur.

Finally, almost every business requires capi-tal or investment money to get started.Without adequate money to invest in equip-ment, inventory, office space, working capi-tal, and so on, a business is not likely to getoff the ground.

ACTIVITIES

The following activities are designed to helpyou apply what you have le.rned in thisunit.

INDIVIDUAL ACTIVITIES

A.

On a sheet of paper list 10 products or ser-vices with which you are familiar that wereenvisioned, designed, manufactured, andbrought to the marketplace to satisfy a spe-cific need. For each, tell why you think it issuccessful.

B.

Make a list of products you would like toinvent and market. Give a short reason foreach. Try to come up with at least threeideas.

C.

Do you have what it takes to be an entre-preneur? On a sheet of paper, skipping aline between each, copy the list of entre-preneurial characteristics presented in thisunit. Next to each characteristic write anumber between 1 and 4 with 1 indicating"most like me" and 4 indicating "least likeme." This activity will help you understandyour strengths as well as areas where youmay need to seek help from others.

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GROUP ACTIVITIES

A.

Invite a local entrepreneur to speak to theclass about his or her experience in startingtheir own business. If the entrepreneur haspreviously worked for someone else, ask theperson to compare being self-employed tobeing an employee. As a class, prepare alist of questions to ask your guest.

B.

BRAINSTORMING

Work in Learns of four to six. Each team,after a discussion about the business need ofthe community, will develop a reportdescribing the kind of business they wouldstart. Each team selects one person as the"owner" of the business and assigns theother members the task of managing specificfunctions in the businessproduction, sales,marketing, customer service, or distribution.The business owner asks for ideas from eachjob function manager that will improvechances for making a profit. Each companyowner makes a 5-minute presentation to theclass on the nature of the business and theteam's ideas for making a profit. The classvotes on the venture "most likely tosucceed".

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CASE STUDY

Here is an example of how goal attainmenthelped Brian Beining become the proudowner of Buckeye Exterminating and Fumi-gation. By tracing Brian's career path onegains insight into the importance of goalsetting. Brian's interest in entomologybegan as a hobby at the age 9 and continuedto grow throughout his high school years.Many of his leadership skills were learned inhis high school vocational agriculture pro-gram. As an FFA member, he won numer-ous awards for entomology judging, com-munity service and parliamentary procedure.

DISCUSSION QUESTIONS

After completing high school, Brian workedfor 4 years in the pest control industry. Thisadditional experience gave him what heneeded to go into to business for himself.When in high school, Brian did not knowthat one day he would own his own pestcontrol business. However, by setting andcompleting short-term goals, he was able toenvision opportunities that he couldn't evenimagine at age 9.

1. Do you think Brian had a good plan? See if you can name Brian's short- and long-termgoals. Can you see how Brian's goals related to his plan to start his own business? Thinkof how you might use Brian's story as a model for setting your own career goals.

2. Explain why it is helpful to use skills you currently have when establishing your long-termgoals.

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ASSESSMENT

Read the following questions to check your knowledge of the topics presented in this unit.When you feel prepared, ask your instructor to assess your competency on them.

1. What is entrepreneurship?

2. How is entrepreneurship linked with the needs of the marketplace?

3. What three types of skills are needed to run a company successfully?

4. List four characteristics exhibited in many entrepreneurs.

5. What are some of the advantages of owning your own business?

6. What are some of the disadvantages of self-employment?

7. What are some of the advantages and disadvantages of being an employee?

8. Describe the importance of goal setting for the entrepreneur.

REFERENCES

Balogh, J., et al. Beyond A Dream: An Instructor's Guide for Small Business Exploration.Columbus, OH: Center on Education and Training for Employment, 1985.

Bird, B. Entrepreneurial Behavior. Glenview, IL: Scott, Foresman and Company, 1989.

Scarborough, N., and Zimmerer, T. Effective Small Business Management. Columbus, OH:Merrill Publishing Company, 1991.

Stolze, W. Startup: An Entrepreneur's Guide to Launching and Managing a New venture.Rochester, NY: Rock Beach Press, 1992.

Level I

PACE

1:4> Unit I. Your Potential as An EntrepreneurUnit 2. The Nature of the Small Business

Unit 3. Business Opportunities

Unit 4. Global Markets

Unit 5. The Business Plan

Unit 6. Help for the Entrepreneur

Unit 7. Types of Ownership

Unit 8. Marketing Analysis

Unit 9. Location

Unit 10. Pricing Strategy

Unit 11. Financing the Business

Unit 12. Legal Issues

Unit 13. Business Management

Unit 14. Human Resources

Unit 15. Promotion

Unit 16. Selling

Unit 17. Record Keeping

Unit 18. Financial Analysis

Unit 19. Customer Credit

Unit 20. Risk Management

Unit 21. Operations

Resource Guide

Instructor's Guide

Units on the above entrepreneurship topics are available at the following levels:

Level 1 helps you understand the creation and operation of a businessLevel 2 prepares you to plan for a business in your futureLevel 3 guides you in starting and managing your own business

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