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Unformatted text preview: W300 Final Study guide I N TRODUCT ION TO NEW VENTURES Entrepreneurship : a dynamic process of vision, change, and creation. Nearly 80% of would-be entrepreneurs in the United States are between the ages of 18 and 34 E = f(e) states that entrepreneurship is a function of the entrepreneur Advantages to Starting New Ventures : Independence Disadvantages of Starting New Ventures Sales Fluctuations Business Failure can be defined as a halt of operations Specific causes of failure Incompetence #1 New Venture Management Trap: Inadequate Records NEW VENTURE OPPORTUN I T I ES STARTING A NEW VENTURE New-New Approach New products or services entering the market New-Old Approach An individual piggybacks on someone elses idea The Scientific Method: 4 Steps 1.Fact gathering 2.Organizing the facts 3.Analysis of the facts 4.Implementation of an action plan (covers 3 areas) 1.The Entrepreneur as a person 2.The Financial Picture 3.Other key Factors (Marketing, Insurance, Building, etc) THE FINANCIAL PICTURE Evaluation Upside gain and downside loss Risk versus reward analysis Other Key Factors The location / building Merchandise and equipment Record keeping Insurance and legal concerns Marketing and personnel BUYING AND ONGO ING VENTURE Advantages of buying an ongoing venture 1. Since the enterprise is already in operation, its successful future operation is likely Key Question to Ask: o Why is this Business being sold? Assessing the Price 1. Book value 2. Replacement value 3. Liquidation value 4. Past earnings 5. Cash Flow DETERMINGING THE VALUE OF A BUSINESS (6 step process) 1. Spending time in the trenches 2. Create a sound business plan 3. Secure working capital and backup resources 4. Invest in a strong brand / image 5. Keep accurate and complete records 6. Make a profit Negotiating the Deal Four critical elements should be recognized: 1. Information 2. Time 3. Pressure 4. Alternatives NEW VENTURE OPPORTUN I T I ES The Nature Of F ranchising A franchise is a system of distribution that enables a supplier (the franchisor ) to arrange for a dealer (the franchisee ) to handle a specific product or service under certain mutually agreed on conditions When a product is franchised, the franchisee receives the goods from the franchisor and sells them through a wholesale or retail outlet o Illustration: an auto dealership When a service is franchised, the franchisee receives a license for a trade name and the particular services to be sold FRANCH ISE FACTS Conversion franchising: the conversion of independent, ongoing concerns into franchise-systems members- More than half a million franchise businesses exist in the United States alone, employing more than 9.8 million- Franchised businesses accounted for $803 billion in annual sales- Franchises represent 42% of all U.S. retail sales- There are over 600,000 Franchises in U.S....
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This note was uploaded on 04/19/2011 for the course BUS 100 taught by Professor Mo during the Fall '08 term at Indiana.

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adownload_doc.php - W300 Final Study guide I N TRODUCT ION...

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