1. Starting and Running Your Own Business www.AssignmentPoint.com

2. Some Reasons for Starting a Business  An inventor or a person with an original idea for a service will go into business to exploit the idea.  Hoping for a higher standard of living as an owner than an employee.  The desire for independence, a feeling that they possess talents that are not being fully utilized.  Redundancy and the fear of never finding another job can also persuade someone to start a business. www.AssignmentPoint.com

3. Ways to Start a Business  Buy a Business that already exists.  Management buy-outs  Invest in a Franchise.  Start a New Business www.AssignmentPoint.com

4. Buying a Business That Already Exists  Some Major Advantages: Has all records of sales and profits which will remove some of the uncertainty from the enterprise. Already has customers, which reduces the possibility of failure at the beginning of the life of the business. www.AssignmentPoint.com

5. Management buy-outs  Also known as Leveraged buy-outs  Usually occurs when a conglomerate decides to rationalize its operations and concentrate resources on a narrow range of products. (the unwanted products may be successful on the market but no longer fit the overall plan of the business )  It is a situation in which the existing management of a subsidiary buys it from the parent company. When the majority of the required capital is provided by external loans it is called a leveraged management buy-out. www.AssignmentPoint.com

6. Cont…..  Advantage : Existing experience and expertise of the Managers The managers know the product and its market The capabilities of the production unit and the personal skills of the workforce.  Disadvantage : The cost of servicing the loans (interest) which made the buy-out possible. www.AssignmentPoint.com

7. Invest in a Franchise  A franchise is a license sold by one firm to another, allowing it to produce and sell a product or service under specific terms and conditions. Or in other words, a legal agreement giving permission for a business to a market product or service developed by another business.  Franchisor : The firm that sells the license  Franchisee : Who buys it www.AssignmentPoint.com

8. What does Franchising offer ?  National reputation.  National advertising and sales promotion programs.  Proved work layout refined for maximum efficiency in minimum space.  Advice about site selection.  Assistance in negotiating leases and purchase agreements for equipment and other items.  Blue prints and bill of the material for constructing the building www.AssignmentPoint.com

9. Cont…..  Training in how to manage the business for maximum profitability  An employee training program  An accounting system developed to meet the needs of this business and the reporting requirements of the parent company  Grand opening materials and the assistance of the parent company employees  Group business insurance program through the parent company (at a lower cost than if the franchisee bought insurance alone) www.AssignmentPoint.com

10. Cont…..  Ability to purchase furniture and equipment from the parent company at a lower cost  Advertising and sales promotion allowance  Advertising materials geared to various national promotions  Purchases of inventory items and supplies through the parent company at lower cost.  Well-defined and protected territory  Financing assistance www.AssignmentPoint.com

11. Restrictions and Conditions  Investment of a minimum amount of capital  Payment of a percentage of gross profits ( and possibly a fixed fee) to the parent company at specified times  Approval from parent company for – choice of location – installation of any furniture and fixtures – Deviation from prescribed menu or inventory – Purchase of disposables or inventory from anyone other than the parent company – Pricing changes – Involvement in any other business of a similar nature – Changes in prescribed hours of operation www.AssignmentPoint.com

12. Cont…..  Full involvement in management and daily operations  Personnel required to present a specified appearance  Detailed accounting reports furnished to the parent company  Minimum amount of insurance purchased as dictated by the parent company  Shelf-life standards dictated by the parent company for perishable inventory  Minimum amount of money spent each year for advertising and sales promotion  Periodic training as required by the parent company at a specified location. www.AssignmentPoint.com

13. . Being a Franchisee is like driving a car with dual controls. The Franchisor, like an experienced driving instructor, can intervene if the driver seems headed for trouble. The Franchisee, the driver, finds a reassuring presence nearby. www.AssignmentPoint.com

14. What do you need to know about a Franchise ?  How long has it been in operation ?  What is the initial purchase price and fee ?  Is there a location policy ?  What services are offered ?  Do you have the access to the records of the franchisor ?  Is it a member of the trade association ?  What do existing franchisees think of the service ? www.AssignmentPoint.com

15. Start a New Business An Entrepreneur is a person who accepts the risk of the business and organizes the resources needed for the production of the good or service. Before beginning a business of her/his own, s/he should be asking her/himself the following questions : Have I the skills, experience and determination to run a Business ? What product (/service) will I be making (providing) ? Who will buy my product ? Can I supply the product at the right time, in the required quantities, the desired quality and at the right place ? Have I the money to buy or lease the necessary premises, machinery and other equipment? Can I afford the materials I will need ? How am I to combine the different functions listed above so that they will work together for the maximum output for the minimum input ? www.AssignmentPoint.com

16. SWOT Analysis  Strength  Weakness  Opportunity  Threat www.AssignmentPoint.com

17. Business Plan  A Business Plan is a detailed statement of the long-short- and medium-term objectives of the business, together with an analysis of the resources needed to achieve them and the steps that will be taken to ensure that the objectives are reached.  3 main reasons for a Business Plan: Thorough investigation into costs, markets and available finance presented, will help in identifying the areas of weakness in the original idea and allow them to be eradicated before they cost money and/or lead to failure. Draws attention to the areas in which the entrepreneur lacks experience, and needs training A necessary part of a proposal for a loan. www.AssignmentPoint.com

18. Business Plans should be updated on a yearly basis. It helps the owner :  Check objectives and the extent to which they have been achieved  Identify reasons for success/failure in achieving stated objectives  Identify objectives for the coming year  Identify additional needs. For instance, training, finance, etc. www.AssignmentPoint.com

19. Principles of Planning  Information: Plans should be based on accurate and factual information.  Time: The environment in which a business operates is constantly changing.  Flexibility: A plan should be constantly changed.  Control: Its progress must be constantly checked if it is to be implemented properly. www.AssignmentPoint.com

20. Example : A Project Proposal  Introduction  Background (include SWOT)  Rationale  Aim  Objectives  Marketing Activities  Monitoring & Evaluation  Expected Outcomes  Finance & Budget www.AssignmentPoint.com