FBLA Entrepreneurship Study Guide

Steps of a Business Plan

1. Executive Summary 2. Business Description 3. Market Strategies 4. Competitive Analysis 5. Design and Development Plan 6. Operations and Management Plan 7. Financial Factors

Sustained competitive advantage

A cost saving manufactoring proccess that competitors can't imitate.

Mixed Economy

A market economy mixed with government regulations/involvement. Examples - Most developed economies (USA, Japan etc) are a mixed economy.

Sherman Law

Against monopolies

Limited Partnership

Allow partners to have limited liability, along with limited input. More attractive to investors of short term projects.

SWOT (Strengths, Weakness, Opportunities, Threats)

Analysis evaluates dangers and benefits of projects and business ventures

Cash Flow Statement

Analysis of all transactions in business, where it got cash and how cash was used. Company may be profitable but lose cash, useful in ability to pay bills, encompasses a time period.

Liabilities

Assets owed to others: accounts payable, notes payable, interest payable, wages payable, taxes payable

The typical first step in the hiring process is to have prospective employees...

Complete a job application

Distinctive competence

Concentrating on things one does well

Market Economy

Consumer based economic system where the economy relies on the choices of the consumer. Examples - Most developed countries (USA, Japan etc) have some form of market economy but really no one has a totally pure one (see mixed economy).

What is an example of identifying a new niche in an established market?

Developing a meat product that looks and tastes like ham but has a shelf life of twenty years. (Spam =O)

Strategic formulation

Establishing strategy and tactics necessary to achieve the mission of the organization.

Traditional Economy

Family or community based economic system that relies on history and rituals to make economic decisions. Examples - Aborigines, Indian/Native American Tribes etc

Buying an existing business

Historical records answer questions about cash flow problems (Mike's Place)

The overall purpose of a business plan is to...

Identify all actions required up to the point when the firm opens its doors.

Abby and her dad have created a product. They operate a business that makes and sells their product to large companies. This is a small company that has contributed to the economy with its...

Inavation and importance to a big company

Funding Request

Include Current Funding requirement, future funding requirements, what you expect to use funding for.

Organization and Management

Includes company's organizational structure, details of ownership in company, profiles of management team, qualifications of Board of Directors

Revenue

Inflows

Assets

Liabilities + Equity

Starting a business from scratch

May not be able to negotiate favorable credit terms with suppliers (Danielle's Art Gallery =P)

The Equal Pay Act

Men and women who do equal work must receive equal pay

Fair Labor Standards Act

Minimum Wage

Personal financial resources

Most common source of funds for entrepreneurs

Researching the Market

Most important in developing a business plan.

Sale of stocks

Not a method used by entrepreneurs to finance their new business

Federal Trade Commision (FTC)

Not a source of management advice for an entrepreneur.

The ranking of coworkers by their supieror

Not an objective measure of performance appraisal

Provision of capital to large businesses

Not generally considered to be a role performed by small businesses

Buying a franchise

Obtains ongoing access to advice from experts (Micky D's)

Cash flow problems

One of the four factors contributing to the failure rate of small businesses.

Expenses

Outflows

Entrepreneurs

People who start businesses.

Company description

Provides high-level review of a company, describes the nature of a business + market, and an explanation of how your product satisfies that market. Explains how your product/service meets those needs, and list specific consumers that you are serving. Ending with your competitive advantages.

Final and often most difficult part of performance appraisal

Providing feedback to the employee in a face to face meeting.

Economy of scale

Relationship between cost and production

Income Statement

Revenue-Expenses; results of entity's operations during a period of time.

When looking to hire a new employee once the firm has developed a pool of applicants the next step is...

Screening job applicants

Market Analysis

Should illustrate industry and market knowledge as well as research findings on market and conclusions.

Service or Product Line

Specific benefits of product or service, describe product/service and its benefits to its potential and current customers.

Job analysis

Systematic collection and recording of info about jobs in the organization

Executive Summary

Tells the reader key, but main info, such as where your business is (in terms of goals etc), where you want to take it, and why it will be successful. It also includes a mission statement (explains what the business is about), company info (who, when, where) and what your products are., product information as well it concludes with financial info such as examples of company growth, what financing you are seeking (if any) and info regarding current investors along with a summary of future plans.

Why are small businesses generally more effective than large companies in specialty retailing?

The dollar size of the specialty market is too small for large companies.

Command Economy

The economy is controlled by the government. Examples - Almost all communist or dictatorship country (Cuba, North Korea etc)

Engage in self analysis

The first step for the entrepreneur in planning his or her business

GDP

The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though it is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

A desirable characteristic of the industry being considered is...

The new company will sell a newly patented invention that is not yet well known but is expected to dominate the market.

Size of initial capital investment

The reason service businesses are the fastest growing segment of all small business enterprises.

Debt financing

You borrow the money and agree to pay it back in a particular time frame at a set interest rate. You owe the money whether your venture succeeds or not. Bank loans are what most people typically think of, but there are more options

Equity financing

You sell partial ownership of your company in exchange for cash. The investors assume all (or most) of the risk--if the company fails, they lose their money. But if it succeeds, they typically make much greater return on their investment than interest rates.

S Corporation

a form of corporation that elects to become an s corporation. In order to have an election to this, a company must have only one class of stock, have less than 100 shareholders and be a liable entity

Wheeler Lea

against deceptive advertising and false advertising

Robinson Patman Act

against price discrimination on customers

FDA

ensures safety of food and drugs

Prospective Financial Data

forecasted income statements, balance sheets, cash flow statements

Resource deployment

how to spend your resources to achieve the goals

Historical Financial Data

income statements, balance sheets, cash flow statements, collateral

C Corporation

main form of corporation in the United States. It has the power of a person in a legal sense, meaning that it can be sued and commit crimes, but that it can also file lawsuits and buy and sell property.

Clayton Law

no tying products one another, forcing people to buy one thing with another

Immigration and Nationality Act

only US citizens and individuals with work visas can work, business must keep I-9 file on hand

FTC

protects consumers from unfair practices

Safety and Health Act of 1970

provide safe and sanitary work environments

Employee Retirement Income Security Act

receive retirement plan and health plan benefits

FCC

regulates broadcast signals (TV and Radio)

CPSC

regulates everything that is not regulated by others (not food and drugs etc.), created by Consumer Product Safety Act in 1972

PERT Diagram (Program Evaluation and Review Technique)

statistical tool for project management, analyze and represent tasks involved in completing a certain project, used to see dependencies and connections of things

Limited Liability Corporation (LLC)

the newest form of corporation in the USA, being founded from the 1960s-1980s (depending on the state). It combines the simplicity of a partnership with the tax benefits of a corporation

Cons of S Corporation

○ All officers and owners of an s corporation must make a salary ○ Require annual fees and periodic filings to the state

Cons of a Partnership

○ All owners are personally liable for the company's debts ○ Partners have to bear with other partner's decisions ○ Poorly organized partnerships (like on a handshake) can lead to conflict regarding decision making etc.

Cons of C Corporation

○ Annual meetings + many formalities ○ Most expensive to set up ○ Require annual fees and periodic filings to the state

Pros of S Corporation

○ Eliminates double taxation ○ Owners are protected from personal liability regarding the debts of the company

Pros of an LLC

○ Few ongoing formalities - don't require annual meetings 6 ○ Owners are protected from personal liability regarding the debts of the company

Pros of C Corporation

○ Owners are protected from personal liability regarding the debts of the company ○ Can easily turn public ○ Can easily raise capital via selling securities ○ Can easily transfer ownership via transfer of securities ○ Unlimited lifetime

Cons of Sole Proprietorships

○ Personally liable for company's debts ○ Rarely survive the death of owner ○ Cannot sell shares in the company

Pros of a Partnership

○ Start up is relatively inexpensive and easy ○ Do not have to pay the minimum tax that is required for corporations or LLCs ○ More sources of capital + knowledge

Pros of Sole Proprietorships

○ Start up is very inexpensive and easy ○ Only needs to register his or her name and secure local licenses ○ Can freely mix business and personal assets

Cons of an LLC

○ Very hard to go from LLC to a public company. Would likely need a change to a regular corporation before filing to go public. ○ More expensive to set up than partnerships ○ Requires annual fees + filings to the state