chapter 12 managing a small business eq: what are the key steps to follow in order to start your own...
TRANSCRIPT
Chapter 12Managing a Small BusinessEQ: What are the key steps to follow in order to start your own business?
Identifying the Small Business Owner
Advantages:
independence, control, decision making, setting own schedule
Disadvantages:
long hours, customer complaints, meeting payroll, taking responsibility for all problems.
Small business ownership is risky!!!
Identifying the Small Business Owner
Fewer than half (less than 50%) of all new businesses will survive for 5 years.
Operating a business requires skill in management, finance, marketing, and other business activities.
Who Owns Small Businesses
Years ago—a majority of small business owners were middle-aged males with less than a college degree.
Today, small-business owners are more educated, younger, and more likely to be female or minority
New business owners that are women are increasing at a rate 3 times that of men. (30% of all small business owners are female)
Who Owns Small Businesses People of non-white ethnic and racial
heritage are also a fast growing segment of small business owners.
Minority ownership has doubled since the ’80s
These groups lack financing, limited management experience, prejudicial treatment by financial institutions, vendors, and other business.
Starting a Small Business
An Idea + Experience
Right Place, Right Time
Team Approach
Preparation and Research
Idea + Experience
Ideas come from many sources such as hobbies, interests, and business experiences
Books and magazines also suggest ideas.
Experience is a key—having the know how to be successful in business.
Right Place and Time
Retail and restaurant places require good customer traffic Think Whataburger
If business is hard to find or not easily accessible, then customers will find alternatives.
Starting a business when customer demand is high is also important factor.
Team Approach
Even small businesses need full and part time employees.
Finding the right people is key.
Trust
Reliability
Assistance will also be required from bankers, lawyers, accountants, etc.
Preparation and Research
Includes having adequate information to make good decisions.
Gathering and studying information before starting business will save time and avoid problems.
Information needed about customers, competitors, operations, activities, gov’t regulations.
What is a Business Plan?
A written description of the business idea and how it will be executed, including all major business activities.
Used to persuade lenders and investors to finance the venture.
Business Plan Elements
Description of the Business
Competition
Customer Analysis
Operations Plan
Marketing Plan
Financial Plan
Description of the Business
Business Idea
Major Products and Services
Ownership Structure
Strengths
Weaknesses
Long and Short Term Goals
Competition
Characteristics of Industry
Condition of the Economy
Strengths of Competitors
Weaknesses of Competitors
Customer Analysis
Description of Customers
Location of Customers
Number of Customers
Resources (Income) of Customers
Sales Forecasts
Operations Plan
Organization of the Company
Chart
Description of Major Operations
Analysis of Resources Needed
Human Resource Plans
Marketing Plan
Description of Major Marketing Activities
Description of Resources Needed
Schedule of Marketing Activities
Promotions
Sales
Financial Plans
Start Up Costs
Short and Long Term Financial Needs
Sources of Financing
Budgets and Financial Statements
Types of Financing
Start-Up Financing
Short-Term Financing
Long-Term Financing
Start Up Financing
The amount of money needed to open the business.
Includes the buildings, equipment, inventory, supplies, licenses, etc.
Short Term Financing
The money needed to pay for the current operating activities of a business.
Obtained for a period of less than a year and often for only one or two months.
Long Term Financing
Money needed for the important resources of a business
Examples: land, buildings, and equipment.
Usually require large amounts of money and will be paid over a number of years.
Chapter 12 Assignment
Review Your Reading (1-7) Page 166
Develop Your Business Language (13-16) Page 167