Chapter 7 Starting a New Business Cengage Learning. All Rights Reserved. May not be scanned, copied or!1

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Jeremy Hutchinson
5 years ago
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2 Advantages of Starting from Scratch Freedom of creating Ability to create a distinctive competitive advantage Experiencing the challenge of beginning a new enterprise Taking pride in realizing personal goals Involves no carryover baggage of others mistakes, location, employees, or products 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or 2

3 Disadvantages of Starting from Scratch Facing a higher risk of failure Trouble faced in identifying market needs which can be satisfied Difficulty in publicizing to people about the existence of business Dealing with the unexpected details 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or 3

5 E - Business Shares information, maintains customer relationships, and conducts transactions by means of telecommunication networks Advantages Low startup and overhead costs One-to-one connection Global market reach Challenges No single e-business model Constantly changing technology 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or 5

7 Advantages of Home-Based Business Control over work hours Convenience Ability to care for domestic responsibilities Low overhead expenses Lack of workplace distractions Decreased commute time Tax advantages 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or 7

8 Disadvantages of Home-Based Business Difficulty setting aside blocks of time Insufficient workspace Demands on family members to cooperate Lack of respect Domestic interruptions Lack of workplace camaraderie Zoning issues 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or 8

9 Starting a Business on the Side Requires organizational skills, discipline, and transitional period Prepares you psychologically, experientially, and financially to leave your job Requires knowing current company s moonlighting policy and avoiding participation in activities that raise conflict of interest 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or 9

10 Evaluating Potential Startups Business ideas Considered as opportunities Creates or adds value for its buyer or end user Window of opportunity: Period of time in which an opportunity is available Product life cycle: Stages that products in a marketplace pass through over time 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or 10

11 Questions to be Considered about a Business Idea Does the idea solve a consumer s want or need? If there is a demand, is it enough to support a business? How much competition for that demand exists? Can the idea be turned into a profitable business? What skills are needed to take advantage of the opportunity? Why hasn t anyone else done it? If others have, what happened to them? 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or 11

12 Getting Started Initial steps Reaching a decision not to work for others Generating ideas for a product that is buyable by people Evaluating need for the business in a location during a period of time 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or 12

13 Importance of Planning to a Startup Requires writing a business plan Helps in determining the direction of the business Shows the banker that the business opportunity is appropriately evaluated and ways to pay back loans are considered 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or 13

Steps in Starting a Business 2016 Cengage Learning.

Figure 7.5 - On Which Mountain will You Compete?