Small Business, Entrepreneurship, and Franchises
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1 Small Business, Entrepreneurship, and Franchises Ahmad Yamin Chapter 5-1
2 The Small Business Independently owned and operated Not dominant in its field Relatively small annual sales Fewer than 500 employees Chapter 5-2
3 Economic Roles of Small Business Provide jobs Introduce new products Service large corporations Engage in specialization Chapter 5-3
4 Types of Small Business Lifestyle Run by Individuals Limited Products/Services Limited Resources Limited Marketplace High-Growth Run by Teams Multiple Products/Services Investment Capital Large Marketplace Chapter 5-4
5 How Entrepreneurs Spend Their Time Dealing with employees Keeping records Direct selling Production Maintenance Dealing with suppliers Arranging financial matters Planning growth and change Other services Chapter 5-5
6 Traits of Entrepreneurs Highly disciplined Like to control their destiny Listen to their intuition Relate well with others Eager to acquire new skills Learn from their mistakes Chapter 5-6
7 Characteristics of Entrepreneurs Stay abreast of market changes Willing to exploit new opportunities Seldom follow trends Driven by ambition Think positively Prefer risk taking over security Chapter 5-7
8 Factors Contributing to Small Business Growth Technology and the Internet Women and minorities Downsizing and outsourcing Chapter 5-8
9 Women Starting Businesses Entrepreneurial idea Glass ceiling Bored in job Downsized Fell into it Family event Born entrepreneur Reenter workforce Chapter 5-9
10 Starting a Small Business Starting a new business Buying an existing business Obtaining a franchise Chapter 5-10
11 Starting a New Business Advantages + Control your destiny + Reach your potential + Unlimited profits + Recognition + Doing what you enjoy Disadvantages Uncertainty of income Risk of loss Long hours & hard work Complete responsibility High stress levels Chapter 5-11
12 Buying an Existing Business Advantages + Customer base + Business systems + Product or service + Location + Financing Disadvantages Alienated customers Obsolescence Location Personality clashes Outstanding receivables Chapter 5-12
13 The Franchise Alternative Franchisee Franchisor Types of franchises Product Manufacturing Business-format Chapter 5-13
14 The Pros and Cons of Franchising Advantages Get a viable business Instant name recognition Built in support group Marketing & advertising Disadvantages No guarantee of success Expensive to obtain High monthly royalties Limited independence Chapter 5-14
15 How to Evaluate a Franchise What does the initial franchise fee cover? How are periodic royalties calculated and when are they paid? Are all trademarks and names legally protected? Who provides and pays for advertising and promotion? Who selects the location of the business? Chapter 5-15
16 How to Evaluate a Franchise Is the franchise assigned an exclusive territory? Does the franchisee have the right of first refusal on additional nearby franchises? Is the franchisee required to purchase equipment and supplies from the franchisor? How can the franchise agreement be terminated? Can the franchise be assigned to heirs? Chapter 5-16
17 Importance of a Business Plan Guides company operations Outlines a strategy Attracts lenders and investors Chapter 5-17
18 A Formal Business Plan Summary Mission and objectives Company and industry Products or services Market and competition Management Marketing strategy Chapter 5-18
19 A Formal Business Plan Design and development plans Operations plan Overall schedule Critical risks and problems Financial forecasts and requirements Exit strategy Chapter 5-19
20 Why New Businesses Fail Management Incompetence Diminished Customer Base Lack of Industry Experience Uncontrolled Growth Inadequate Financing Inappropriate Location Poor Business Planning Poor System of Controls Unworkable Goals Lack of Entrepreneurial Skills Chapter 5-20
21 Sources of Small Business Assistance SCORE Incubators The Internet Small Business Administration Chapter 5-21
22 Private Sources of Financing Friends and family Commercial lenders Corporate financing Venture capitalists Angel investors Credit cards Chapter 5-22
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