4-1 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.

4-2 Becoming The Owner Of A Small Business Steps/Procedures For Going Into Business Steps/Procedures For Going Into Business Identify Your Niche’ Identify Your Niche’ Start Or Buy Start Or Buy Franchising Franchising Chapter 4

4-3 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Business Formation & Operation

4-4 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Steps To Going Into Business 1)Identify Need 2)Study Market 3)Start, Buy Existing Or Franchise 4)Set Mission, Objectives, Strategies 5)Make Operational Plans 6)Make Financial Plans 7)Develop Business Plan 8)Implement Plan

4-5 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Finding Your Niche Search For Good/Service To Sell Niche Marketing- Finding SmallProfitable

4-6 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Searching For Product/Service Newspaper Newspaper Business For Sale Business For Sale Products For Sale Products For Sale Hobbies/Recreation Hobbies/Recreation Talk To People Talk To People Observe/Study & Luck Observe/Study & Luck PhotoLink/Getty Images

4-7 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Questions To Ask

4-8 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Government Sources Of Advice/Help Small Business Administration- Service Corps Of Retired Executives State Economic Development Agencies U.S. Department Of Commerce- Office Of International Trade

4-9 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Other Sources Of Advice/Help Directory of Trade Associations in the U.S. Local Colleges Public Libraries Chambers Of Commerce Royalty-Free/CORBIS

4-10 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Business Selection Checklist

4-11 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Study Market Market Research = Potential Location/Segment Being Satisfied? Select 1 Market Segment Or 1 Product Limited Resources = Limited Options

4-12 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Estimating Market Size Industry Size? Industry Size? Where Is Market? Where Is Market? How Large Is Market? How Large Is Market? Identify Target Market & It Size? Identify Target Market & It Size? Size & Distribution Of Population? Size & Distribution Of Population? Sales = Growing, Stable, Declining? Sales = Growing, Stable, Declining? Competitors = Successful? Competitors = Successful? Industry Technology? Industry Technology? Your Share? Your Share?

4-13 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Start, Buy, Or Franchise?

4-14 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Reasons To Start A Business = Owner’s Freedom +Define Nature +Physical Facilities +Inventory +Select/Develop Personnel +Technology, etc. +Competitive Environment Doug Menuez/Getty Images

4-15 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Reasons To Not Start A Business  Right Business?  Assemble Resources  Established Product Line  Production Problems  Market & Distribution  Systems & Controls  Start-Up vs. Existing vs. Franchise Amos Morgan/Getty Images

4-16 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Reasons For Buying Existing Business +Experienced Employees +Existing Facilities +Existing Product & Market +Desirable Location +Bank Credit Relationships +Revenues, Profits, & Goodwill C Squared Studios/Getty Images

4-17 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Reasons For Not Buying Existing Business  Facilities = Old/Obsolete  Poor Employees  A/R Past Due/Uncollectible  Bad Location  Poor Financial Condition/Relations  Inventory = Poor/Obsolete Royalty-Free/CORBIS

4-18 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Questions Before Buying  Why For Sale?  Present Owner Intentions?  Changing Environment?  Facilities Suitable- Present/Future?  Operating Efficiently?  Financial Condition?  Investment?  Return On Investment?  Price Right?  Managerial Ability?

4-19 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Reasons For Buying Franchise  Successful/Proven Operation & Image  Experience Guidance  Many To Chose From  Combines Your Talent & Desires

4-20 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Franchise Questions? How Much Help? How Much Help? Franchise Help = Cover Costs? Franchise Help = Cover Costs? Professional Advice Professional Advice Legal Legal Accounting Accounting Source/Cost Of Supplies Source/Cost Of Supplies PhotoLink/Getty Images

4-21 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.  Cost  Initial Investment  Royalties  New?  Owner Fit?  Independence  “White Elephant”? Reasons For Not Buying Franchise

4-22 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Franchising Benefits Franchisee & Franchiser

4-23 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Franchising Opportunities 2,552 Franchises 2,552 Franchises 75 Countries 75 Countries International Franchise Association - International Franchise Association Jason Reed/Getty Images

4-24 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Franchising Franchise Agreement Franchise Agreement Franchiser Franchiser Franchisee Franchisee Royalty-Free/CORBIS

4-25 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Franchisor Startup Assistance Startup Assistance Proven System Proven System Standardized Accounting Standardized Accounting Some Financial Assistance Some Financial Assistance Purchase/Construction Purchase/Construction Training Training Advertising Program Advertising Program Customer Service Standards Customer Service Standards Changing Market Opportunities Changing Market Opportunities Quantity Discounts Quantity Discounts

4-26 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Product/Trademark Franchise

4-27 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Business Format Franchise

4-28 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Franchise Popularity  Already Identified Need, Product Created, Marketing  Failure Rate Lower  Established Systems PhotoLink/Getty Images

4-29 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Future Of Franchising  Growth Areas  Restaurants  Motels  Convenience Stores  Technology  Auto Parts  Two-Income Families  Global

4-30 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Franchises Teaming Up

4-31 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Checklist For Franchise Investment