Employability Characteristics of a Successful Worker in the Modern Workplace Career Development Relating to Entrepreneurship Opportunities Class Notes Key The United States is often referred to as the “land of opportunity”. Our country’s economic system is based on the free enterprise system, which provides everyone an equal opportunity to make individual dreams a reality. This type of economic system is the foundation for entrepreneurship. Entrepreneurship is the process of taking part in the organization, operation, and assumption of risks involved in starting a business venture. A(n) entrepreneur is an individual who takes the role of creating, organizing, and owning a business. In many independently owned small businesses, the owner usually also serves as the manager. Over 25 million small businesses exist in the United States. These small businesses employ more than half of the total workforce, produce about half of the private sector output, generate more than half of the nation’s income, and are the principal source of new jobs. THE FREE ENTERPRISE SYSTEM Six major factors on which the free enterprise system in the United States exist include: •

private ownership & control of productive resources

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a free market

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the profit motive

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supply & demand

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competition

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limited government involvement

Private ownership is the opportunity for all citizens to own resources and to be able to decide how to use those resources. Examples of productive resources include: land, labor, equipment, and capital. Profit is the amount of money made in excess of the cost of producing a product or resource. Risk involves making a decision when the outcome of an event is unknown. The amount of available resources for sale is supply. The amount of materials and services consumers are willing to buy create the demand for 1

the products or services. Competition is the right of any individual or business to enter the same business as others and compete for a share of the market. Types of business ownership in the free enterprise system include: •

proprietorship

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partnership

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corporation

A proprietorship is a business owned by only one person. Advantages of this type of business structure include: •

the ease of starting a business;

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operating the business according to personal desires;

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the freedom of the proprietor to make decisions; and

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not having to share the profits of the business with others.

A disadvantage of this type of business structure is unlimited liability, which means that the business owner must take full personal responsibility for the business’ debts. A business started by two or more people is a partnership. In this type of business structure, the owners contribute unique skills and experiences to the business, resulting in its increase in efficiency and its likelihood to succeed. However, should one of the partners leave the business, the business must be reorganized. A corporation is an example of the most complicated type of business structure. In this type of business structure, the sale of stocks or shares of ownership makes up the ownership of the corporation. In return, the stockholder receives a share of the profits and votes on how the business operates. A major advantage of this type of business structure is its limited legal liability, which means that its stockholders are only financially responsible for the amount of money they have invested. Contributions of small businesses into the free enterprise system include the: •

introduction of new and innovative ideas into the economic system;

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competition within the free enterprise system;

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encouragement of businesses to form new business groups;

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improvement or expansion of product lines; and

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development or creation of new products. 2

ENTREPRENEURS AND SELF-EMPLOYMENT Characteristics of successful entrepreneurs include: desire to be a self starter

goal setting and achieving

self-motivation

anticipation

flexibility

risk taking

competitiveness

researching

innovative thinking

planning

decision-making skills

good management skills

When considering a community in which to locate a business, an entrepreneur must consider: •

aesthetics of the community

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economic base of the community

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demographics

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labor supply

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economic incentives

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competitors

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characteristics of the location

For some businesses, operating from the home may be an option to renting an office space. Businesses that require minimal personal contact with customers are good possibilities for this type of business arrangement. However, other factors to consider for this type of business arrangement include the: •

type of business

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need for space and equipment

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effects on others living within the household.

An important consideration in establishing a price for a product or service is to price the product or service to cover costs while making the product available and affordable to the consumers. Zoning involves the designation a city has set on an area regarding its use or purpose, which includes those designated for residential, commercial, industrial, or public use. Licenses are required for certain types of professions or businesses to protect consumers from unskilled or unqualified business operators. Additionally, a business permit may be required from a local governmental agency to gain permission to operate and run a business.

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Money needed for financing the startup of a business may be obtained from: •

personal savings accounts;

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family and friends;

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financial lending institutions, and/or

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investors.

When borrowing money to finance the startup costs of a business, all agreements should be in the form of (verbal / written) agreements, and should include a record of the following information: •

the amount of money being borrowed and financed;

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the rate of interest at which the money is borrowed; and

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the method of repayment.

Professionals to whom an entrepreneur of a new business can seek advice include: •

financiers;

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lawyers;

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accountants; and

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insurance agents.

BUSINESS MANAGEMENT Managerial duties within a business include providing direction and establishing goals, as well as giving oversight to: •

employee relations;

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customer relations; and

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financial management.

One of the responsibilities of a business manager is to hire effective employees, supervise and manage existing employees, and terminate unproductive employees. A manager that is effective in working with people develops respectability and credibility among employees, thus nurturing a pleasant working environment that results in higher productivity.

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According to management researchers Thomas Peters and Robert Waterman, managerial excellence occurs when managers: •

take action, rather than analyze plans to death;

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listen to their customers and put themselves in their customers’ shoes;

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encourage their employees to act independently, be innovative, and treat the business as if it were their own;

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stress respect for persons as individuals;

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instill commitment to values and objectives by keeping in touch with all employees;

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keep the business focused on its mission and what it does best;

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keep their organization simple, flexible, and efficient; and

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keep their operations under control and pay attention to detail.

A decline in managerial respect resulting in a loss of employee confidence may occur due to: •

indecisive decision making;

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unclear focus or goal;

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short-term planning instead of envisioning the big picture;

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focusing more on the managerial position than on managing;

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lack of employee support;

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treating employees as a handicap to the company instead of as an asset; and

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an erosion of trust and the image of integrity perceived by those who work within the business.

DEVELOPING ETHICAL BUSINESS BEHAVIOR The development and implementation of a(n) ethical guide for a business should be a part of the direction, goals, expectations, and mission of a business.

This can help educate employees and

supervisors of their expectations within the business and reduce the likelihood and occurrence of unethical activity. Employers and employees that have a clear set of guidelines along with a concise mission statement will work together to reduce repercussions when an employer or employee violates business policy.

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SUMMARY Thanks to the free enterprise system, Americans are assured the opportunity to indulge their entrepreneurial spirit and pursue the establishment of their own businesses. Research and careful decision-making regarding the type of business, business location, product or service offered, and the price of the product or service, are important in ensuring the success of a new business. In small businesses, the entrepreneur, owner, and manager are often (the same person / different people). In addition to starting a business, an entrepreneur is also usually responsible for establishing directions and goals, relations among employees and customers, and the financial aspects of the business. As an entrepreneur, a person not only has the satisfaction of bringing an idea to fruition, but also the contentment of knowing that his/her efforts can have a positive impact on the economy, clients served, and people employed.

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