MGT491 exam 2

Advantages of making a buy-in

1. it allows the purchaser to leverage inside knowledge 2. aids in keeping key employees -keeping the current owner as an active participant of the business reassures employees that large changes are not likely to occur

12 indicators of start up success

1. start the business in a business incubator 2.take part in a mentoring program 3. have a detailed start up budget 4. produce a product or service for which there is a proven demand 5. secure outside investment 6. start with more than one founder 7. have experience managing small firms 8. have industry experience 9. have previous experience in creating a start up business 10. choose a business that produces high margins 11. start the business with established customers 12. build trust in your story

value of a franchise is determind by

1. the rights granted 2. the cash flow potential to the franchisee

conflicts of interest

happens when what is best for your part time business is different from what is best for your full time employer or when people cannot be sure which of the two firms you represent -key is to keep full time and part time jobs seperate -do not contact customers of your part time job when you are at fully time -a person faces two or more competing standards or goals

venue

a place where something takes place- what makes a popup a pop up is that its venue is temporary- here today gone tomorrow

trade name franchising

an agreement that provides to the franchisee only the rights to use the franchisor's trade name and/or trademarks -true value hardware and associated grocers

makers

invetors- use specialty platforms like etsy. use crowdsourcing sites like quirky for idea generation or kickstarter for funding. may use techniques like 3D printing or do it yourself kits

greatest advantage of a franchise

it comes with a complete business system -many come complete with computer software for budgeting inventory control, ordering, point of sale computerized chas register, and complete accounting application

multichannel marketing

using several different ways to reach customers

true statements about twitter

-free service that lets a person send 140 character or less message -must subsribe to another persons twitter -stocktwits uses tweets to inform members about up to the second trends in the stock market

what should a potential franchisee know before signing a franchise agreement

-if and how you can transfer the franchise license to someone else -how you may terminate the contract -how the franchisor may terminate the contract -what disclosures you are required to make

conversion franchsing

provides and organization through which independent businesses may combine resources -Century 21 real estate -individual real estate businesses combine to create a nationwide brand name and enhanced advertising effectiveness

Product Distribution Franchising

provides the franchisee with specific brand named products, which are resold by the franchisee in a specified territory -snap on tools and auto dealerships

conversion franchising

provides the opportunity for independent businesses to combine resources

intellectual property

refers to original works like inventions, visual and performing art works, books, and computer programs; property coming from some sort of original thought

the reserve price

a bottom offer you will accept and if the bidding does not exceed this price the sale will not go through

ESOP- employee stock owenership plan

a buyout occurs when the owners of a company sell a majority of stock to employees through an ESOP -ESPOS are complicated transactions that require highly skilled professionals to implement them - a formalized legal method to transfer some or all of a businesses ownership to its employees

outsourcing

when you employ outsiders who are not your employees to handle all or part of a functional area of your business

statements regarding moving from being a part time to full time entrepreneur

-some start out in hopes of becoming full time and landing a major contract or sale may be the indicator of the right time -some want to stay part time -key question is usually fincncial -having enough to cover personal and family expenses and business expenses -new costs like health insurance

which of the following statements describes an advantage of a stand business

-start with little investment -don't require a lot of investment in inventory -variety of locations -quickly established and easily ended -vary widely in products

spin-off

a way to start with established customers -a regular business practice that is done by businesses of all sizes and all stages of development -some are created to get rid of noncore activities -this reduces captial requirements and provides a tighter focus for management on the remaining business -some are created when the parent lacks either the interest or resources to pursue the opportunity -by being spun off the start up can gain access to resources othe than those of the parent -created by seperating part of an operating business into a seperate entity

competitors

any other business in the same industry as your business

delegation

assinging work to those over who you have power usually people you employ, those volunterring to help or family members. key is to leverage other peoples time -makes sense when others can do things better than you and when you want your business to operate when you are not present

part time

business is one in which the owner either participates fewer than 35 hours per week or operates on a temporary or seasonal basis while maintain employment elsewhere for wages or a salary

poisoning the well

creating a negative impression among your employers customers -if you use your business contacts through your day job as the basis for your part time job you will find customers do not want to hear your sales pitch

search engine optimization

designing a website so that search engines like google are likely to rank your site high (closer to first listing), free; many web hosting packages include programs to help you edit your website to improve your ranking

business format franchising

exemplified by the Mcdonalds corp. -includes the right to use Mcdonalds many trade names, specifications of the product to be sold, operating methods, marketig plan and national advertising -franchisees pay to the franchisor both an up front fee to obtain the franchise rights and a percentage of gross sales

aggrandizing

making the firm seem bigger, more substaintial or more capable than it really is

35

people who work fewer than______ hours per week have part time employment

statements true about delegation

-makes sense when others can do things better than you and when you want your business to operate when you are not present -someone who is good at sales may be a wiz at the books -done well delegation frees the owner to pursue thing that make the biggest difference in the business

master franchises

-subway sandwich shops -require opening multiple stores in a specified area

steps that should be taken when a business is acquired

1. conduct extensive interviews with the sellers of the business 2. study the financial reports and other records of business 3. make personal examination of the site of the business 4. interview customers and suppliers of the business 5. develop a detailed business plan for the acquisition 6. negotiate an appropriate price for the business based on the business plan projections 7. obtain sufficient capital to purchase and operate the business

cannibalizing

taking business away from your employer -can come from your taking sales away from your employer or taking working hours away to do your own business -problem if your part time business is similar to your full time

important considerations when starting a part time business

the cost to start up, time to start up, and the permanence of the business, expected returns

disadvantages of a buy in

the prior owner and management remain with the business (same as advantage) this often causes friction when the new owner wishes to make changes and the old owner and managers do not

buy-in

when someone acquires only part of the ownership of an existing business -any amount of ownership may be considered a buyin as long as be less than 100%of the ownership is transferred -can be made in any form of business -if one buys into a sole proprietorship it becomes a partnership -corps and limited liability companies may conitune without a change of the form of entity

moonlighting

working on your own part time after your regular job

reciprocal links

you display a link to another website and that website displays a similar link to yours; listed live connections to a different website which in turn displays a similar link to the first website