The Challenges of Starting a Business:

What Is an Entrepreneur?
An entrepreneur is an individual who, rather than working as an employee, founds and runs
a small business, assuming all the risks and rewards of the venture. The entrepreneur is
commonly seen as an innovator, a source of new ideas, goods, services and business. Some
of world-famous entrepreneurs are Steve Jobs, Bill Gates, Walt Disney, Jack Ma, Jeff Bezos

Characteristics of entrepreneurial activity

Innovation: Entrepreneurship generally means offering a new product, applying a new

technique or technology, opening a new market, or developing a new form of organization
for the purpose of producing or enhancing a product.

Running a business: It’s an activity that combines resources to produce goods or services.
Entrepreneurship means setting up a business to make a profit.

Risk taking: The term risk means that the outcome of the entrepreneurial venture can’t be
known. Entrepreneurs, therefore, are always working under a certain degree of uncertainty,
and they can’t know the outcomes of many of the decisions that they have to make. Many of
their steps are motivated mainly by their confidence in the innovation and in their
understanding of the business environment in which they’re operating

Why do people start their Own Business?

• To be your own boss

• To accommodate a desired lifestyle
• To achieve financial independence
• To enjoy creative freedom
• To use your skills and knowledge

What Is a “Small Business”?

A small business is one that is an independently owned and operated, exerts little influence
in its industry, and (with a few exceptions) has number of employees. In Pakistan, SMEs
constitute nearly 90% of all the enterprises in Pakistan; employ 80% of the non-agricultural
labour force; and their share in the annual GDP is 40%

Why Are Small Businesses Important?

• Create jobs
• Spark innovation
• Provide opportunities for many people, including women and minorities, to achieve
financial success and independence
• Helping large organizations by providing them with components, services, and
distribution of their products
 • contribute to growth and vitality in specific areas of economic and socioeconomic
development.
• Small Businesses Keep Local Economies Strong

What Industries Are Small Businesses In:

An industry is a group of companies that compete with one another to sell similar products.
There are two broad types of industries or sectors

The goods-producing sector whose primary purpose is to produce tangible goods. includes
all businesses involved in manufacturing, construction and agriculture.
The service-producing sector includes all businesses that provide services but don’t make
tangible goods. They may be involved in retail and wholesale trade, transportation,
communications, finance, insurance, real estate, and such professional activities as health
care, advertising, accounting, and personal services.

Advantages and Disadvantages of Business Ownership:

Advantages:

Independence: As a business owner, you’re your own boss and you have the freedom to make
the decisions that are crucial to your own business success.

Lifestyle: It also gives you freedom to manage things according to your own style. You are
responsible for scheduling of every activity as you oversee everything. You don’t have to ask
for the time off. Given today’s technology, you might decide to run your business from your
own.

Financial reward: Running your own business gives you a chance to make more money than
if you were employed by someone else. You get full benefits from your own hard work.

Learning opportunities: As a business owner, you’ll be involved in all aspects of your business.
This situation creates numerous opportunities to gain a thorough understanding of the
various business functions.

Disadvantages:

Financial risk: The financial resources needed to start and grow business can be extensive.
You may need to commit most of your savings or even go into debt to get started. If things
don’t go well, you may face substantial financial loss. In addition, there’s no guaranteed
income.

Stress: As a business owner, you are the business. Managing Every business activity is not an
easy job. There are many things to worry about—competition, employees, bills, equipment
breakdowns, customer problems. As the owner, you’re also responsible for the well-being of
your employees.
Time commitment: People often start businesses so that they’ll have more time to spend
with their families. Unfortunately, running a business is extremely time-consuming. In theory,
you have the freedom to take time off, but, you may not be able to get away. In fact, you’ll
probably have less free time than you’d have working for someone else.

Undesirable duties: When you start up, you’ll undoubtedly be responsible for either doing or
overseeing just about everything that needs to be done. As a business owner, you’ll probably
have to perform some unpleasant tasks, like firing people etc

Distinguishing Entrepreneurs from Small Business Owners:

An entrepreneur is an individual who starts the business, focusing on new and innovative
offerings, and is responsible for all the risks and rewards of his or her business venture while
Small businesses usually deal with known and established products and services

Entrepreneurs invent things, look to do things in different ways and are often technically
minded while Small business owners are more likely to do something others are doing, such
as opening a shop, outlets etc

Entrepreneurs are looking to change things, develop things, create more energy while Small
business owners are often happy with how things are, content to carry on (if successful).

Entrepreneurs want to change the world while Small business owners want to make a living,
and often serve their local community first and foremost.

The Business Plan:

After addressed some basic questions regarding your business-like legal form of business,
feasibility, financing option etc you’ll be ready to describe your future business in the form of
a business plan—a document that identifies the goals of your proposed business and explains
how it will achieve them.

Purpose of a Business Plan:

Business Plan is an essential document which provide an overview of the industry in which
you are going to operate, describe the goods or services you will provide, identify your
customers and proposed marketing activities, explain the qualifications of your management
team, and state your projected income and borrowing needs.
This information is useful for both investors and lenders. Investors are particularly interested
in the quality of your business concept and the ability of management to make your venture
successful. Bankers and other lenders are primarily concerned with your company’s ability to
generate cash to repay loans. To persuade investors and lenders to support your business,
you need a professional, well-written business plan that paints a clear picture of your
proposed business
Sections of the Business Plan:
Though formats can vary, a business plan generally includes the following sections:

1.Executive Summary:

The executive summary is a one- to three-page overview of the business plan. Its purpose is
to summarize the key points of a document for its readers, saving them time and preparing
them for the upcoming content. It’s the most important part of the business plan: it’s what
the reader looks at first, and if it doesn’t capture the reader’s attention, it might be the only
thing that he or she looks at.

2.Description of Proposed Business:

you present a brief description of the company and tell the reader why you’re starting your
business, what benefits it provides, and why it will be successful. Some of the questions to
answer in this section include the following:

• What will your proposed company do?

• Will it be a manufacturer, a retailer, or a service provider?
• What goods or services will it provide?
• Why are your goods or services unique?
• Who will be your main customers?
• How will your goods or services be sold?
• Where will your business be located?

3.Industry Analysis:

This section provides a brief introduction to the industry in which you propose to operate. It
describes both the current situation and the future possibilities, and it addresses such
questions as the following:
• How large is the industry? What are total sales for the industry, in volume and dollars?
• Is the industry mature or are new companies successfully entering it?
• What opportunities exist in the industry? What threats exist?
• What factors will influence future expansion or contraction of the industry?
• What is the overall outlook for the industry?
• Who are your major competitors in the industry?
• How does your product differ from those of your competitors?

4.Mission Statement and Core Values:

This portion of the business plan states the company’s mission statement and core values.
The mission statement describes the purpose or mission of your organization—its reason for
existence. It tells the reader what the organization is committed to doing
Core values are fundamental beliefs about what’s important and what is (and isn’t)
appropriate in conducting company activities. Core values are not about profits, but rather
about ideals. They should help guide the behaviour of individuals in the organization, Apple’s
“Think Different”, Coca Cola “honesty, integrity, diversity, quality, respect, responsibility, and
accountability”, shell’s “building strong communities”

5.Management Plan:

Management makes the key decisions for the business, such as its legal form and
organizational structure. This section of the business plan should outline these decisions and
provide information about the qualifications and Compensation Package of the key
management and Organizational Structure

6.Goods, Services, and the Production Process:

To succeed in attracting investors and lenders, you must be able to describe your goods or
services clearly. This section explains why your proposed offerings are better than those of
competitors and indicates what market needs will be met by your goods or services

7.Marketing:
This critical section focuses on four marketing-related areas—target market, pricing,
distribution, and promotion

Target market: Describe future customers and profile them according to age, gender, income,
interests, and so forth. If your company will sell to other companies, describe your typical
business customer.
Pricing: State the proposed price for each product. Compare your pricing strategy to that of
competitors.

Distribution: Explain how your goods or services will be distributed to customers. Indicate
whether they’ll be sold directly to customers or through retail outlets.

Promotion: Explain your promotion strategy, indicating what types of advertising you’ll be
using.

8.Global Issues:

In this section, indicate whether you’ll be involved in international markets, by either buying
or selling in other countries. If you’re going to operate across borders, identify the challenges
that you’ll face in your global environment and explain how you’ll meet them. If you don’t
plan initially to be involved in international markets, state what strategies, if any, you’ll use
to move into international markets when the time comes.
9.Financial Plan:
In preparing the financial section of your business plan, specify the company’s cash needs and
explain how you’ll be able to repay debt. This information is vital in obtaining financing. It
reports the amount of cash needed by the company for start-up and initial operations and
provides an overview of proposed funding sources. It presents financial projections, including
expected sales, costs, and profits (or losses). It refers to a set of financial statements included
in an appendix to the business plan.

10.Appendices:
Here, you furnish supplemental information that may be of interest to the reader. In addition
to a set of financial statements, for example, you might attach the résumés of your
management team.