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                                                                                                Entrepreneurship


                   From a personal perspective, becoming an entrepre-
                neur is not a simple task. It certainly has its drawbacks.
                However, it can also be quite rewarding.


                BENEFITS AND DRAWBACKS OF
                ENTREPRENEURSHIP
                Choosing to create a new business, or even to purchase an
                existing one, is a decision that has a far-reaching impact.
                Long hours, poor pay, and an unclear future are only
                three of the challenges a budding entrepreneur must face.
                And, of course, losing everything one invests in a business
                is a very real risk. In fact, while 885,416 new employer
                firms were created in 1997, as reported by the U.S.
                Department of Labor, 857,073 businesses were termi-
                nated during the same year, with 53,826 of these being
                bankruptcies and 83,384 being failures. Failures and
                bankruptcies are business closures that occur while the
                business owes debts.
                   However, the potential rewards are unlimited. Busi-
                ness owners can profit greatly. Many of the wealthiest peo-
                ple on earth are entrepreneurs, including William Henry
                Gates III (1955– ), the world’s richest person and co-
                founder, chairman, and CEO of Microsoft Corporation.
                Another reward entrepreneurs tend to appreciate is inde-
                pendence. However, entrepreneurs’ time is not necessarily
                their own. The work of the business must be completed,
                and often the entrepreneur is the one who must perform  William Henry Gates, III (1955– ). Entrepreneur Bill Gates
                the most complex tasks of the business. Although others  speaks in Dearborn, Michigan,  April 29, 2005. © REBECCA
                may work for the owner and manager of the business, it is  COOK/REUTERS/CORBIS
                ultimately the responsibility of the entrepreneur to make
                sure that the work gets done. Other rewards cited by
                entrepreneurs include personal satisfaction gained while  dependent on the breadth and depth of the products or
                performing the duties of the business and the resulting  services offered as well as the geographic region served.
                prestige.                                           One option available to someone interested in pur-
                                                                 chasing a business is a franchise. A franchise is a license to
                BUSINESS PLAN                                    organize a business that markets products manufactured
                Planning is a key ingredient in the success of an entrepre-  or owned by a parent company, such as a Kwik Copy,
                neur. A business plan helps to guide the decision making  Sleep Inn, McDonald’s, Play It Again Sports, or other
                needed to operate a business.  The first decision is to  businesses.
                choose what sort of business to own. The business may be:  Another early decision involves choosing the legal
                                                                 form of ownership. Three options are sole proprietorship,
                 • A retail business that markets a tangible product  partnership, and corporation. In a sole proprietorship, a
                   (such as clothing, houses, food)
                                                                 single person owns and operates the business. The owner
                 • A wholesale business that acquires goods from a pro-  assumes all risks and responsibilities for the business,
                   ducer and distributes requested quantities to retailers  including debts.  Two or more individuals may form a
                 • A service business that offers an intangible product  partnership and serve as co-owners of the business. If the
                   (such as insurance, haircuts, consultant services,  partnership is a general partnership, all partners assume
                   construction, financial services)             unlimited liability. However, if the partnership is a limited
                                                                 partnership, one or more of the partners assumes unlim-
                 • A manufacturing business that produces a product
                                                                 ited liability while the remaining partner(s) do(es) not.
                   Of course, a business may perform more than one of  Instead, they may lose up to the amount of their invest-
                these functions. The scope of the business will also be  ment, while having limited involvement in the business.


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