Swift
Lesson 1:
Commands -
Composition - The process of using old commands to create new ones
functions - define functions between { }
define a function between { }
call - call a function means run it
decomposition - The process of breaking a large problem into smaller, more manageable piece
Patterns
Loops
Commands -
Composition - The process of using old commands to create new ones
functions - define functions between { }
define a function between { }
call - call a function means run it
decomposition - The process of breaking a large problem into smaller, more manageable piece
Patterns
Loops
Application
Many simply equate entrepreneurship with starting one’s own business. Most economists believe it is more than that. To some economists, the entrepreneur is one who is willing to bear the risk of a new venture if there is a significant chance for profit. Others emphasize the entrepreneur’s role as an innovator who markets his/her innovation. Still other economists say that entrepreneurs develop new goods or processes that the market demands and are not currently being supplied. Established ways of doing business are destroyed by the creation of new and better ways to do them.
Business expert Peter Drucker (1909-2005) took this idea further, describing the entrepreneur as someone who actually searches for change, responds to it, and exploits change as an opportunity. A quick look at changes in communications—from typewriters to personal computers to the Internet—illustrates these ideas. Most economists today agree that entrepreneurship is a necessary ingredient for stimulating economic growth and employment opportunities in all societies. In the developing world, successful small businesses are the primary engines of job creation, income growth, and poverty reduction. Therefore, government support for entrepreneurship is a crucial strategy for economic development.
Business expert Peter Drucker (1909-2005) took this idea further, describing the entrepreneur as someone who actually searches for change, responds to it, and exploits change as an opportunity. A quick look at changes in communications—from typewriters to personal computers to the Internet—illustrates these ideas. Most economists today agree that entrepreneurship is a necessary ingredient for stimulating economic growth and employment opportunities in all societies. In the developing world, successful small businesses are the primary engines of job creation, income growth, and poverty reduction. Therefore, government support for entrepreneurship is a crucial strategy for economic development.
- Why and how do people become entrepreneurs?
- Why is entrepreneurship beneficial to an economy?
- How can governments encourage entrepreneurship, and, with it, economic growth?
Everfi Vault
Everfi Venture
Everfi Future Smart
|
Decisions and Downfalls
Preparatory work includes evaluating the market opportunity, developing the product or service, preparing a good business plan, figuring out how much capital or money is needed, and making arrangements to obtain that capital. Through careful analysis of entrepreneurs’ successes and failures, economists have identified key factors for up-and-coming business owners to consider closely. Taking them into account can reduce risk. In contrast, paying them no attention can precipitate the downfall of a new enterprise. They are:
• Motivation: What is the incentive for starting a business? Is it money alone? True, many entrepreneurs achieve great wealth. However, money is almost always tight in the startup and early phases of a new business. Many entrepreneurs do not even take a salary until they can do so and still leave the firm with a positive cash flow.
Entrepreneurship is an attractive career choice. But many decisions have to be made before launching and managing a new business. Among the questions that need to be answered are:
Answers to these questions are not empirically right or wrong. Rather, the answers will be based on each entrepreneur’s judgment. An entrepreneur gathers as much information and advice as possible before making these and other crucial decisions.
• Motivation: What is the incentive for starting a business? Is it money alone? True, many entrepreneurs achieve great wealth. However, money is almost always tight in the startup and early phases of a new business. Many entrepreneurs do not even take a salary until they can do so and still leave the firm with a positive cash flow.
- Strategy: What is the strategy for distinguishing the product or service? Is the plan to compete solely on the basis of selling price? Price is important, but most economists agree that it is extremely risky to compete on price alone. Large firms that produce huge quantities have the advantage in lowering costs.
- Realistic Vision: Is there a realistic vision of the enterprise’s potential? Insufficient operating funds are the cause of many failed businesses. Entrepreneurs often underestimate start-up costs and overestimate sales revenues in their business plans.
Entrepreneurship is an attractive career choice. But many decisions have to be made before launching and managing a new business. Among the questions that need to be answered are:
- Does the individual truly want to be responsible for a business?
- What product or service should be the basis of the business?
- What is the market, and where should it be located?
- Is the potential of the business enough to provide a living wage for its employees and the owner?
- How can a person raise the capital to get started?
- Should an individual work full or part time to start a new business? Should the person start alone or with partners?
Answers to these questions are not empirically right or wrong. Rather, the answers will be based on each entrepreneur’s judgment. An entrepreneur gathers as much information and advice as possible before making these and other crucial decisions.
Choosing a market and a product
Advantages of Having a Partner:
- Team members share decision making and management responsibilities.
- They can give each other emotional support, which can help reduce individual stress.
- Companies formed by teams have somewhat lower risks. If one of the founders is unavailable to handle his or her duties, another can step in.
- Team interactions often generate creativity. Members of a team can bounce ideas off each other and “brainstorm” solutions to problems.
- Studies show that investors and banks seem to prefer financing new businesses started by more than one entrepreneur. This alone may justify forming a team.
- The benefits of teaming come from combining monetary resources and expertise.
Disadvantages of Having a Partner
- Teams share ownership
- Teams share control in making decisions. This may create a problem if a team member has poor judgment or work habits (Remind Mr. Erick to tell the story of his friends detail car wash or the guy who rents our field day jumpers).
- Most teams eventually experience serious conflict.
- Teaming up may involve management plans, operational procedures, or future goals.
- Unequal commitment of time
- Personality clash. Sometimes such conflicts can be resolved; in others, a conflict can even lead to selling the company or, worse, to its failure (Remind Mr. Erick to tell you about his friends detail shop).
In general, strong teams have a better chance at success. This is particularly true when the team includes a marketing expert. Entrepreneurs of different ages can create complementary teams also. Optimism and a “can-do” spirit characterize youth, while age brings experience and realism.
Entry Strategies for new Startups
Many factors need to be considered when starting a new business including:
- An idea’s market potential - why would a consumer choose to buy goods or services from this new firm? The competition
- Financial resources
- One’s skills and interests
- The uniqueness of the idea
Selling Online
Many entrepreneurs sell goods or services on the Internet. Why? The Internet provides access to a large and growing market. Approximately 627 million people were shopping online worldwide in 2005, according to ACNielsen, a global information-marketing company. By selling on the Internet, a neighborhood shop or home-based firm can reach a national or even international group of potential customers. When entrepreneurs sell online, they are on a more level playing field with larger competitors. There are costs to Internet selling, certainly. But the price of creating and managing a Web site has dropped, and the number of Web site design and management companies has grown. In fact, some entrepreneurs find it less costly to run an Internet store than to hire a large sales force and maintain one or more bricks and mortar (or actual stores). Some businesses — books, airline travel, and the stock market, for example — have been transformed by their success in online sales. Others, such as amusement parks, bowling alleys, or utility companies, may not at first seem well suited to the Internet. But a Web site also can be used for selling tickets, offering discounts, or letting customers make payments over the Internet. To start an online business, an entrepreneur must:
- Register a domain name — an Internet name and address.
- Purchase a server or contract with an Internet service provider to host the Web site. Buy Internet software to create a Web site or hire an expert to do so. Design an attractive and easy-to-navigate online store.
- Create an online catalog. Provide clearly written information, without technical language or jargon. Use lots of photos to encourage potential customers to buy. Include clear instructions to order by phone or online.
- Establish a payment method. Some companies bill a customer before or after shipping merchandise. This may cause payment delays, however. Another option is to have customers use credit or debit cards online. A business can get a bank-authorized transaction processing account (merchant account) for handling the revenue (and fees) from credit card transactions from a bank or other institution that processes credit cards online. Alternately, it is possible to hire an online payment service, such as WorldPay (www.worldpay.com), to handle these transactions.
- Make the Web site secure, especially to protect customers’ financial information. Hiring a technology expert is time and money well spent as compared to the potential risk of security violations.
- Establish a policy for shipping. Options include letting the business absorb the cost (no charge), including costs in the listed prices, or explicitly listing shipping charges. Customers should never be surprised at the end of a transaction with shipping costs. Customers may cancel the sale.
- Offer customers an e-mail address or phone number for complaints, suggestions, or compliments, and respond to them. This can boost customer loyalty. After creating an online store, there is still much to do.
Choosing a Form of Business
In many countries, entrepreneurs must select a form of organization when they start a small business. The basic forms of organization are sole proprietorships, partnerships, and corporations. Each has advantages and disadvantages. Moreover, the laws and regulations that apply to business owners vary from country to country and by local jurisdiction. Entrepreneurs should consult an attorney or other expert to make sure that they have all the necessary licenses and permits, and are aware of all their legal obligations. In many countries, the local Chamber of Commerce or local business council is also a good source of information.
- Sole Proprietorship: In a sole proprietorship, the individual entrepreneur owns the business and is fully responsible for all its debts and legal liabilities. More than 75 percent of all U.S. businesses are sole proprietorships. Examples include writers and consultants, local restaurants and shops, and home-based businesses. This is the easiest and least expensive form of business to start. In general, an entrepreneur files all required documents and opens a shop. The disadvantage is that there is unlimited personal liability — all personal and business assets owned by the entrepreneur may be at risk if the business goes into debt.
- Partnership: A partnership consists of two or more people who share the assets, liabilities, and profits of a business. The greatest advantage comes from shared responsibilities. Partnerships also benefit by having more investors and a greater range of knowledge and skills. There are two main kinds of partnerships, general partnerships and limited partnerships. In a general partnership, all partners are liable for the acts of all other partners. All also have unlimited personal liability for business debts. In contrast, a limited partnership has at least one general partner who is fully liable plus one or more limited partners who are liable only for the amount of money they invest in the partnership. The largest disadvantage of any partnership is the potential for disagreements, regardless of how well or how long the partners have known each other. Experts agree that a partnership agreement drawn up by an experienced lawyer is essential to a successful partnership. It is often used to:
- create a mechanism for resolving disagreements
- specify each partner ’s contribution to the partnership
- divide up management responsibilities; and
- specify what happens if a partner leaves or dies. - Corporations: Corporations are recommended for entrepreneurs who plan to conduct a large-scale enterprise. As a legal entity that has a life separate from its owners, a corporation can sue or be sued, acquire and sell property, and lend money. Corporations are divided into shares or stocks, which are owned by one, a few, or many people. Ownership is based on the percentage of stock owned. Shareholders are not responsible for the debts of the corporation, unless they have personally guaranteed them. A shareholder’s investment is the limit of her liability. Corporations can more easily obtain investment, raise capital by selling stock, and survive a change of ownership. They provide more protection from liability than other forms of business. Their potential for growth is unlimited. However, corporations are more complex and expensive to set up than other forms of business and are usually subject to a higher level of government regulation.
Creating a Business Plan
A comprehensive business plan is crucial for a startup business. It defines the entrepreneur’s vision and serves as the firm’s resume. A business plan can help an entrepreneur to allocate resources appropriately, handle unexpected problems, and make good business decisions. A well-organized plan is an essential part of any loan application. It should specify how the business would repay any borrowed money. The entrepreneur also should take into account all startup expenses and potential risks so as not to appear naive. Other reasons for writing a business plan:
- To convince oneself that the new venture is worthwhile before making a significant financial and personal commitment.
- To assist management in goal-setting and long-range planning.
- To attract investors and get financing.
- To explain the business to other companies with which it would be useful to create an alliance or contract.
- To attract employees.
A business plan can help entrepreneurs gain a deeper understanding of the opportunity they envision. The business plan process helps the entrepreneur shape her original vision into a better opportunity by raising critical questions, researching answers for those questions, and then answering them. A standard business plan is usually about 40 pages in length and should: - Use good visual formatting, such as bulleted lists and short paragraphs.
- The language should be free of jargon and easy to understand.
- The tone should be business-like and enthusiastic.
- It should be strong on facts in order to convince people to invest money or time in the new venture.
The basic elements of a standard business plan include - Title Page
- Table of Contents
- Executive Summary
- Company Description
- Product/Service
- Market and Competition
- Marketing Selling Strategy
- Operating Plan
- Management/Organization
- Financing Supporting Documents
*The executive summary is the cornerstone of a good plan. This is the section that people read in order to decide whether to read the rest. It should concisely summarize the technical, marketing, financial, and managerial details. More importantly, it needs to convince the reader that the new venture is a worthy investment. The company description highlights the entrepreneur’s dream, strategy, and goals. The product/service section should stress the characteristics and benefits of the new venture. What differentiates it from its competition? Is it innovative? The financial components of a new venture’s business plan typically include three projections: a balance sheet, an income statement, and a cash-flow analysis. These require detailed estimates of expenses and sales. Expenses are relatively easy to estimate. Sales projections are usually based on market research, and often utilize sales data for similar products and services produced by competitors. Writing a business plan may seem overwhelming, but it is important!
The Entrepreneur’s Need for Capital
New businesses rarely show a profit in the early months of operation. Generating sales takes time, and receipts are not usually sufficient to offset startup costs and monthly expenses. Therefore, entrepreneurs need to estimate how much money they need and then raise that amount to transform their dream into a reality. It doesn’t necessarily take a lot of cash to create a successful business. In the mid-1970s, Steve Jobs and Steve Wozniak started Apple Computer by selling a Volkswagen microbus and a Hewlett-Packard scientific calculator to raise $1,300 — enough for a makeshift production line. In 1997, Bill Martin and Greg Wright used the free Internet connections in their college dorm rooms and $175: $75 for a New Jersey partnership fee, $70 to register their Web domain name, and $30 for a month’s hosting fee — to start www.ragingbull.com, which is now a successful financial Web site. Many entrepreneurs start businesses with $5,000 or less, just enough to establish the business, invest in some inventory, and create some advertising materials. There are many ways to reduce expenses: for instance, by initially working out of one’s home rather than leasing an office or leasing office equipment rather than buying it. However, all entrepreneurs need to estimate how much cash they need to cover expenses until the business begins to make a profit.
Sources of Financing
Many entrepreneurs struggle to find the capital to start a new business. There are many sources to consider, so it is important for an entrepreneur to fully explore all financing options. He or she also should apply for funds from a wide variety of sources.
- Personal Finances: One's own money is easy to use, quick to access, has no payback terms, and requires no transfer of equity (ownership). Also, it demonstrates to potential investors that the entrepreneur is willing to risk his own funds and will persevere during hard times.
- Friends and family: These people believe in the entrepreneur, and they are the second easiest source of funds to access. They do not usually require the paperwork that other lenders require. However, these funds should be documented and treated like loans. Neither part ownership nor a decision-making position should be given to these lenders, unless they have expertise to provide. The main disadvantage of these funds is that, if the business fails and money goes lost, a valuable relationship may be jeopardized.
- Credit cards: The entrepreneur’s personal credit cards are an easy source of funds to access, especially for acquiring business equipment such as photocopiers, personal computers, and printers. These items can usually be obtained with little or no money paid up front and with small monthly payments. The main disadvantage is the high rate of interest charged on credit card balances that are not paid off in full each month.
- Banks: Banks are very conservative lenders. As successful entrepreneur Phil Holland explains, “Many prospective business owners are disappointed to learn that banks do not make loans to start-up businesses unless there are outside assets to pledge against borrowing.” Many entrepreneurs simply do not have enough assets to get a secured loan from a lending institution. However, if an entrepreneur has money in a bank savings account, she can usually borrow against that money. If an entrepreneur has good credit, it is also relatively easy to get a personal loan from a bank. These loans tend to be short-term and not as large as business loans.
- Venture investors: This is a major source of funding for start-ups that have a strong potential for growth. However, venture investors insist on retaining part ownership in new businesses that they fund.
- Formal institutional venture funds are usually limited partnerships in which passive limited partners, such as retirement funds, supply most of the money. These funds have large amounts of money to invest. However, the process of obtaining venture capital is very slow. Several books, such as Galante’s Venture Capital & Private Equity Directory, give detailed information on these funds.
- Corporate venture funds are large corporations with funds for investing in new ventures. These often provide technical and management expertise in addition to large monetary investments. However, these funds are slow to access compared to other sources of funds. Also, they often seek to gain control of new businesses.
- Angel investors: Angel Investors tend to be successful entrepreneurs who have capital that they are willing to risk. They often insist on being active advisers to businesses they support. Angel funds are quicker to access than corporate venture funds, and they are more likely to be invested in a start-up operation. But they may make smaller individual investments and have fewer contacts in the banking community.
- Government programs: Many national and regional governments offer programs to encourage small and medium-sized businesses. In the United States, the Small Business Administration (SBA) assists small firms by acting as a guarantor of loans made by private institutions for borrowers who may not otherwise qualify for a commercial loan.
Intellectual Property: A Valuable Business Asset
Intellectual property is a valuable asset for an entrepreneur. It consists of certain intellectual creations by entrepreneurs or their staffs that have commercial value and are given legal property rights. Examples of such creations are a new product and its name, a new method, a new process, a new promotional scheme, and a new design. A fence or a lock cannot protect these intangible assets. Instead, patents, copyrights, and trademarks are used to prevent competitors from benefiting from an individual’s or firm’s ideas. Protecting intellectual property is a practical business decision. The time and money invested in perfecting an idea might be wasted if others could copy it. Competitors could charge a lower price because they did not incur the startup costs. The purpose of intellectual property law is to encourage innovation by giving creators time to profit from their new ideas and to recover development costs. Intellectual property rights can be bought, sold, licensed, or given away freely. Some businesses have made millions of dollars by licensing or selling their patents or trademarks. Every entrepreneur should be aware of intellectual property rights in order to protect these assets in a world of global markets. An intellectual property lawyer can provide information and advice. The main forms of intellectual property rights are:
- Patents: A patent grants an inventor the right to exclude others from making, using, offering for sale, or selling an invention for a fixed period of time - in most countries, for up to 20 years. When the time period ends, the patent goes into the public domain and anyone may use it.
- Copyright: Copyrights protect original creative works of authors, composers, and others. In general, a copyright does not protect the idea itself, but only the form in which it appears - from sound recordings to books, computer programs, or architecture. The owner of copyrighted material has the exclusive right to reproduce the work, prepare derivative works, distribute copies of the work, or perform or display the work publicly.
- Trade Secrets: Trade secrets consist of knowledge that is kept secret in order to gain an advantage in business. “Customer lists, sources of supply of scarce materials, or sources of supply with faster delivery or lower prices may be trade secrets,” explains Joseph S. Iandiorio, the founding partner of Iandiorio and Teska, an intellectual property law firm. “Certainly, secret processes, formulas, techniques, manufacturing know-how, advertising schemes, marketing programs, and business plans are all protectable.” Trade secrets are usually protected by contracts and nondisclosure agreements. No other legal form of protection exists. The most famous trade secret is the formula for CocaCola, which is more than 100 years old. Trade secrets are valid only if the information has not been revealed. There is no protection against discovery by fair means such as accidental disclosure, reverse engineering, or independent invention.
- Trademarks: A trademark protects a symbol, word, or design, used individually or in combination, to indicate the source of goods and to distinguish them from goods produced by others. For example, Apple Computer uses a picture of an apple with a bite out of it and the symbol (®) which means registered trademark. A service mark similarly identifies the source of a service. Trademarks and service marks give a business the right to prevent others from using a confusingly similar mark. In most countries, trademarks must be registered to be enforceable and renewed to remain in force. However, they can be renewed endlessly. Consumers use marks to find a specific firm’s goods that they see as particularly desirable — for example, Barbie dolls or Toyota automobiles. Unlike copyrights or patents, which expire, many business’s trademarks become more valuable over time.
Numbers
- Spreadsheets, Graphs & Budgets
- Create a budget for a business