Exam 1 Small Business Management
4 levels of social responsibility
-Economic -Legal -Ethical -Philanthropic
advantages of starting from scratch
-freedom to mold new creation into whatever you feel is appropriate -create own distinctive competitive advantage -no carryover baggage of someone else's mistakes, location, employees, products - establish own image
disadvantage of starting from scratch
-high risk of failure -trouble indetifying market needs that you are able to satisfy -difficult to build awareness about your business -unforeseen details that are impossible to plan
Business ideas can come from
-prior work experience -corridor principle -hobbies and avocations -chance happening (come to you unexpected and you have an open mind)
Attributes and behaviors of entrepreneurs
Commitment and determination Leadership Opportunity obsession Tolerance of risk, ambiguity, and uncertainty Creativity, self-reliance, and adaptability Motivation to excel
franchise agreement
an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory
disadvantages of buying an existing business
business image hard to change if negative existing employees may not meet your standards overcoming previous owners`precedents business operation, inventory, equipment may be outdated possible liability for previous owners`existing contracts
disadvantage of a family business
business strucuture, rilvaries, limited perspective, inability to choose family
small buisness
concerned more with long term stability, day-to-day challenges
competitive advantage
gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices
Strategic planning
guiding process used to identify business direction
mentor
important to any small business owner
Entrepreneurship
involves the start-up
Advantages of a Family Business
loyalty, flexibility, family-owned marketing, lower early years expenses
Franchisor
parent company
ethics
rules of moral values that guide decision making
franchisee
small business that pays for exclusive rights
3 main strategies for competitive advantage
-Lower cost -Differentiation Focus strategies: aiming at a narrow segment of a mark
•Three primary reasons for writing business plans
-Proving feasibility -Attracting capital -Provide direction
side gigs
-completely understand your company policies and agreements -represent great opportunities to test before making permanent commitment -43% of the U.S. workforce by 2020
due diligence
-disclosure, assimilation of public and proprietary information of business -not just a financial review -investigate pending litigation
6 stages of the start-up process model
Entrepreneurship, Small business management, growth, maturity, harvest,
Facts about small business
Largest sector of the U.S. economy Defined typically as "small" when 100 or less employees Often financed through personal savings, friends and family Classified by industry using NAICS codes (example from list of codes on slide 5) Based on annual sales revenue or number of employees
failure
a business closes with financial loss to a creditor
Termination
a business no longer exists
business plan
what you think/want to happen
Social Responsibility
•obligations to maximize positive effects on society, minimize the negative effects
