xiii Copyright Goodheart-Willcox Co., Inc. Content is presented in an easy-to-comprehend and relevant format. Practical activities relate everyday learning to enable you to experience real-life communication situations and challenges. Amplify Your Learning Objectives After completing this section, you will be able to: • Explain the basics of business. • Describe the discovery process for generating new business ideas. • Discuss the economics of creating products and services. • Explain the ways an entrepreneur can start a • Identify the risks and rewards of becoming an entrepreneur.entrepreneur. • List the reasons many businesses fail. Key Terms business revenue expenses small business functions of businessa production finance need want good service product economics supply and demand economic resources manufacturer wholesaler retailer opportunity costthought market structure franchise cash flow Critical Thinking Think about the activities you enjoy most. You are probably good at them as well. Take time to observe needs in the community that also tie into favorite activities. This could lead to a potential entrepreneurial idea Liofyour activities and how they could beco id What are some factors that affect the success of a new business? Wha t are s om factors th at af Create Exposure, located in Charlotte, North Carolina, is a marketing and communication company that provides marketing research, public relations, and design services for a variety of clients including the Susan G. Komen for the Cure® foundation. Its founder and managing partner is Krystal Harrell. This entrepreneur got her start at the age 13 with a $20 loan from her mother. Krystal’s Lucky You Designs began by selling pajamas and moved on to other apparel and accessories. Krystal sold Lucky You Designs in 2009 and used profits to start Create Exposure, which specializes in designing marketing campaigns that target younger consumers. Krystal attended Columbia College where she studied communications and The Art Institute of Charlotte where she studied fashion marketing and managem t Sh in the US A Picture Yourself Here Krystal Harrell business.artbusiness. y the risks and r ewards of becoming an • List the reason s many businesses fail. Key Term s busin ess reven ue expen ses small business functions of business production finan ce need want good service product economics suppl y and demand economic resour ces manufacturer wholesaler retailer opportunity cost marke t str ucture franc hise cash flow Critical Thinking em Think about the actiavities you as well T w busine ss? hem e acti vitie s you as well Tak Copyright Goodheart-Willcox Co., Inc. y lling to pay top value when the ner wants to sell. You Do the Math Functions Both businesses and individuals invest money and take out loans. Compound interest is exponential. This means that previously earned interest itself earns interest in the future. This can be of as interest on interest. The future value of balance with compound interest is calculated by multiplying the present value by one plus the annual interest rate taken to the power of the number of terms. FV = PV × (1 + r)n In this equation, FV is the future value, PV is the present value, r is the annual interest rate, and n is the period of time over which interest is compounded. Solve the following problems. 1. $10,000 has been placed in certificate of deposit (CD) that earns 3.78 percent interest per year. The term of the CD is three years. At the end of the term, what will be the total amount of money in the CD? 2. A business owner has taken out a small business loan for $25,000 over a term five years. The interest rate is 2.9 percent annually. How much interest will have been paid at the end of the loan? , North , s a marketing and communication company that provides market ing research, public relations, and design services for a variety of clients including the Susan G. Komen for the Cure® found atio n. Its founder and managing par tner is Krystal Harrell. Thi s entrepreneur got her start at the age of 13 with a $20 loan from her mother. Krystal’s Lucky You Designs began by selling pajamas and moved on to other apparel and accessories. Krystal sold Lucky You Designs in 2009 and used the profits to start Create Exposure, which specializes in designinthemarketing g campaigns that target younger consum ers. Krystal atte nded C l ers. y tal atte nded C l p s since urant business. Global Entrepreneurs Global Entrepreneurs Mark Zuckerbergof In the early 2000s, Mark Zuckerberg was at Harvard University studying computer science and psychology and already had the knowledge to create a website. Little did he know then that in a few years the website he was to create would be the foundation of the multibillion dollar, international corporation Facebook. Facebook was launched on February 4, 2004. Initially, it was only open to Harvard students. In March 2004, Facebook expanded to other Ivy League schools, including Columbia, Yale, Stanford and NYU. In October 2005, Facebook went global. It expanded to the United Kingdom, Puerto Rico, and Mexico first, followed by other countries. Facebook earns revenue primarily by selling advertisements that are placed on Facebook pages. Over one-third of Faceb from international Chapter 13 N EVENT E E E E E E N N N N N N N N N N N N T PREP P P P P P P P P P P P EVENT PREP T N N N N N N N N N N N N N N N N N N N N N N T T T T N N N N N T T T T T T T T T T T NT N N N N N N N N N N T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T N N T T T V V V V V V N N N N N N T V N N N N E E E E E E E E V V V V V V V V V V V E E E E E E E N N N N N N N N N N N T EVEN E E E E E E E E E E E E E E E E E E E E E E E E E E E E V V V V V V V V V V V V V V V V V V V V V V V V V V V V V E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N E E E V V V E E E N N N V V V V T T T N E E V V E E E E N P P P P P P P P P P P P P P R R R R E E P P P P P P P P P P P P P P R R R R R R R R R P P P P P R P P P P P P P P P P P P P R R R R R R R R R R R E E E E E P P P P P P P P P P PREP P P P P P P P P P P P P P P P P P P P P P P P P P P P R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R E E E E E E E E E E E E E E E E E E E E E E E E E E E P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P P R R R E E E P P P PREP PREP P P P P P P P P P P P P P P P P P P P P P R R R R R R R R R R R R R R R R R R R R R R R R E E E E E E E E E E E E E P P P P P P P P P P P P P P P R R R E E P P P P P P P P P P P P P P P P P P R R R E E E P P CTSOs Promoting Entrepreneurship. Many competitive e vents for Career and Technical Student Organizations (CTSOs) student organization competitions offer events that include a community service project. This project is usually carried out by the entire CTSO chapter and will take several months to complete. There will be two parts of the event—written and oral. The chapter will designate several members to represent the team at the competitive event.event, To prepare for this complete the following activities. 1. Read the guidelines provided by your organization. Make certain that you ask any questions about points you do not understand. It is important you follow each specific item that is outlined in the competition rules. 2. Contact the association immediately at the end of the state conference to prepare for next year’s event. 3. As a team, select a theme for your chapter’s community service project. D ide which roles are needed for the team. There may be one person h i the secretary, and any other f • Each chapter opens with a pretest and concludes with a posttest. The pretest will help evaluate your prior knowledge of chapter content. The posttest will help evaluate what you have learned after studying the chapter. • The Essential Question at the beginning of each section engages you with the important points presented in the content. • A You Do the Math activity in each chapter focuses on skills that are important to your understanding of math for business. • Event Prep–CTSOs features present information to use when preparing for the competitive activities and events of career and technical student organizations (CTSOs). • The Math Skills Handbook provides you with a quick reference for basic math functions and helps clarify business math that is presented in the chapters. Ever wonder how other people with an idea started a business? The entrepreneurial experience comes to life through stories about real-life entrepreneurs. • Picture Yourself Here highlights entrepreneurs who got an early start on becoming business owners. • Chapter introductions present entrepreneurs who overcame challenges as small-business owners. • Global Entrepreneurs features entrepreneurs who took a local business to an international location. • Social Entrepreneurs demonstrates how business owners can be socially and ethically responsible within their communities.