1. Lecture 8

2. Chapter 4 Understanding Entrepreneurship & New Ventures

3. Start/Operate Small Business Business Plan Start From Scratch? Financing Buying Existing?

4. Business Plan Includes: –Goals and Objectives –Sales Forecast (strength and weakness) Summarizes Strategy Identifies Implementation

5. Business Plan- Projected Financial Statements Cash Budget- Most Important Income Statement Balance Sheets Breakeven

6. Startup Business Buying and existing business Starting from scratch My Customers? Where? Price? Quantities Will Be Bought? Competitors? Product Differentiation?

7. Financing Small Business- Traditional Family/Friends Personal Savings Lenders Investors Government

8. Other Sources Of Financing Venture Capital Companies –Group of small investors –Make profit on companies with rapid growth potential

9. Franchise System  Franchise Agreement  Franchisor  Franchisee

10. Franchise Contract Franchisor, Inc. Franchisee Branded Product/Service PerformanceMonitoring $$$$$

11. Franchise System  Access to big businesses  Rapid growth – money provided by the franchisee  Franchisee does not build business from scratch  Disadvantage – start up cost

12. Trends In Small Business E-Commerce Big Business Crossovers –Utilize business idea –Burned our in corporate world Minorities & Women Global Trade/Suppliers Better Survival Rates

13. Reasons For Failure Source: The Coleman Chronicles, Vol. 1 Issue 20, “The Most Common Reasons for Small Business Failure… http://www.coleman.bc.ca/publications/chronicles/vol1issue20.htm

14. Reasons For Success Hard Work, Drive, & Dedication Demand For Product/Service Managerial Competence Luck

15. Legal Entities of Business Ownership Sole Proprietorship Partnerships –General –Limited –Master Limited Cooperatives Corporations –Closely-Held vs. Publicly- Held –Limited Liability –Professional –Multinational (Transnational)

16. Sole Proprietorship  Freedom  Easy To Form  Low Start-up Costs  Tax Benefits  Unlimited Liability  Lack Of Continuity  Resources of One Person AdvantagesDisadvantages

17. General Partnership  More Talent & Money  Easily Created  Partners Taxed As Individuals  Unlimited Liability  Lack Of Continuity  Difficult To Transfer Ownership AdvantagesDisadvantages

18. Corporation Sue and be sued Buy, hold and sell property Make and sell products Commit crimes and be tried and punished for those

19. Corporation  Limited Liability  Continuity  Access To More Capital  Ease Of Ownership Transfer  Ease Of Ownership Transfer  Startup Cost- Legal Requirements  Double Taxation AdvantagesDisadvantages

20. Legal Entities of Business Ownership Sole Proprietorship Partnerships –General –Limited –Master Limited Cooperatives Corporations –Closely-Held vs. Publicly- Held –S Corporation –Limited Liability –Professional –Multinational (Transnational)

21. Corporate Governance Shareholders Board Of Directors Officers Business Employees

22. Stock Ownership Preferred –Fixed Dividend –Priority Common –Dividend If Profitable –Last Claim –Voting Rights

23. Corporate Ownership- Special Issues Joint Ventures & Strategic Alliances Mergers & Acquisitions Divestitures & Spin-Offs