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may not meet your standards overcoming previous owners`precedents business operation, inventory, equipment may be outdated possible liability for previous owners`existing contracts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