Chapter 12 Managing a Small Business
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Transcript Chapter 12 Managing a Small Business
Chapter 12
Managing a Small
Business
EQ: 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