SIE Exam #2 (ch. 11, 12, 14, 20)

Define Nondirect Distribution

*middlemen= provide the service of getting the product to the end consumer -inventory control, advertising and promotion

What are the best 3 things to look for in a house? Business?

-Location, Location, Location!

What is a Data Collection Method using a Questionnaire?

-SURVEY

How does Money go In and Out?

-almost 2/3 of all small businesses experience money problems -1/5 of small business managers reported that cash flow is a CONTINUING problem

Define Reconciling

-an accounting process that identifies the causes of all differences beween book and bank balances

What are the most useful websites for finding fast marketing research?

-bizstats.com -census.gov -business expense survey

How should sales forecasts show sales?

-by month for the next 12 then by year for the following 2-5 years

Define Direct Mail

-easy for part-time entrepreneurs a method of selling in which catalogs, brochures, letters, videos, and other pieces of marketing materials are mailed directly to customers from which they can mail, call, or e-mail an order. Direct faxing and direct e-mailing are more modern forms of direct mail.

What advertising tools can you use?

-flyers -internet -print ads -television -radio -banners -posters -schedule

What are the Issues with Direct Distribution?

-have possession and DO it yourself; you pay shipping -Do it yourself; buyer pays shipping -Fulfillment Center

What is the Market Planning Checklist?

-have you analyzed the total market for your product? -have you described how your product will benefit your clients? -have you prepared a pricing schedule? -have you prepared a sales forecast? -how will you distribute your product?

Define Remote Location (your firm's location)

-in this type of service, face-to-face meetings with the client are infrequent. These typical services include medical transcription, data processing, fulfillment centers, and some consulting work. (good for home-based businesses)

Where does Sales Growth Come from?

-increasing sales to existing steady customers -make occasional customers into steady customers -expand areas where you have small customer base

Define Leasing

-it is rare that a small business start-up buys its first location -it makes more sense to rent or lease your facility to save more money for other things

Define Commercial Paper

-notes issued by credit worthy corporations -short term financing -(30 days to 1 year)

Define Sales Forecasting

-one of the most important pieces of marketing plan -knowing what your sales will be -companies often base sales forecasts on historical sales, but new companies cannot do that

Define Direct Sales

-primary way of selling to businesses methods of going directly to your customer in order to sell your product. vending machines, door-to-door salespeople, leasing space, at a craft fair, famers' market, party sales, and most industrial sales are methods of direct selling.

What does Company Book Balance include?

-records of all inflows of cash -cash from sales -receipts on receivables -checks received from customers -deposits made directly to the bank through electronic transfers -records of all outflows of cash -checks written to pay for wages, salaries, inventory, services, taxes and so on

Define Mutually Accessible Location

-services using this approach often have too much specialized equipment to be readily transported and a need for at least some client involvement. (ex) barbershops, dentist offices, video rental stores, and restaurants.

Define the Client's Location

-usually these services include things such as house or office cleaning, pest control, remodeling, lawn and gardening services, carpet cleaning, and similar services which must be performed at the client's location.

Define Internet

-very cost-effective and efficient way to contact your customers -small businesses need to have a website whether they use it or not for sales

What are the issues that you could have with deciding which location is the best deal?

1. "A is" vs Compliant Property= if the location has problems who should fix them? the landlord would want you to do it 2. HVAC= jargon for heating, ventilation, and air conditioning. can be most expensive repair 3. Signs= signage in the business. it can be on the street, you want a landlord who will work with you on size, placement, and visibility.

What are the 3 Questions for putting together an Export Strategy?

1. Are we ready? 2. Where should we go? 3. Whom do we contact over there?

How to keep off customer complacency?

1. RECENCY= be among the people your customers have seen in the last few days 2. FREQUENCY= stay in touch with customers on a frequent basis 3. POTENCY= be remembered for the right reasons 4. RECOMMENDATION= making clear recommendations to show your customers you care about them

What are the 3 Critical Site Selection Considerations?

1. Traffic 2. Customer Ease 3. Competition

What are the 2 Reasons balances differ?

1. bank knows info about your account that you cannot know until the bank tells you 2. you know info about your account that the bank cannot know, bc relevant transactions have not yet reached the bank

What are the ONLY 3 sources cash can come from?

1. cash can be obtained by selling products and services 2. cash can be obtained from investments the business has made 3. cash through financing

What are the 3 Typical Locations for Services?

1. client's location 2. a mutually accessible location 3. Your Firm's Location

What are the 3 Primary causes of Cash Flow Problems?

1. difficulty collecting money due 2. seasonal variation in sales 3. unexpected decreases in sales

What 4 Purposes does Reconciliation Serve?

1. estimate the bank's available balance for the purpose of managing your cash flows 2. identifies any mistakes that were made by either the bank or by your own bookkeeper 3. checks the accuracy of both the bank and business records -let's you know about items on the bank statement that would not otherwise be included in the business's accounting records

What are the sizes of types of firms in order from big to small?

1. lifestyle/part time firms 2. traditional small businesses 3. high performing small businesses 4. high growth ventures

What are the 4 P's?

1. product 2. pomote 3. price 4. place

What are the strategies employed by small businesses for handling money Shortages?

1. use personal money 2. borrow 3. adjust scheduled purchases 4. adjust scheduled payments 5. try to collect money due 6. sell investments 7. sell receivables 8. lay off employees

Define Wholesaler

A middleman business which buys (typically in large quantities) and sells (typically in smaller quantities) to businesses rather than consumers.

What % do Exporters make up?

Big Guys= 4% of exporters Small Outfits= 96% of exporters

What is a Typical Distribution Channel?

From -manufacturer -wholesaler -retailer -consumer/industrial buyer

Define Just-in-Time Inventory

Having just enough product on your shelves to meet the immediate purchases. This usually requires frequent shipment from your supplier.

Define Cash Budget

a cash budget identifies when, how, and why cash is expected to come into the business, and when, how, and why it is expected to leave

Define Fulfillment Center

a company that will warehouse your products and fill your customers' orders for you.

Define Survey

a data-collection method using a questionnaire-in person, on phone, on paper, or on the internet. 1. in-person= tends to be the most expensive 2. mail= the least expensive 3. internet surveys= gaining in popularity

Define Letter of Credit

a document issued by a bank that guarantees a buyer's payment for a specified period of time upon compliance with specified terms.

Define Documentary Draft

a draft which can be exercised only when presented with specified shipping documents.

Define Growth Trap

a financial crisis that is caused by a business growing faster than it can be financed.

Define Workout

a form of business termination in which the firm's legal or financial obligations are not fully met at closing

Define Focus Group

a form of data gathering using a small group led by a moderator. -8 to 20 people -make sure questions are asked the right way -participants paid for their time

Define Employee Stock Ownership Plan

a formalized legal method to transfer some or all of the ownership of a business to its employees

Define Word of Mouth

a great way to get customers and is usually the 1st technique an entrepreneur uses.

Define Being Incorporated

a lawyer is likely to give small business owners advice and help them avoid some of the major pitfalls of a new firm

Define Concentrated Strategy

a marketing strategy in which a marketer selects 1 specific group of consumers and designs a marketing mix specifically for that group.

Define Differentiated Strategy

a marketing strategy in which a marketer selects 2 or more distinct groups of consumers and designs specific marketing mixes to meet their needs.

Define Undifferentiated Strategy

a marketing strategy that uses no segmentation; assumes that all consumers have virtually identical needs and can be reached by the same marketing mix.

Define Timing Purchases

a method of controlling the timing of cash outflows that is invisible to suppliers and vendors

Define Agent

a middleman business which represents a manufacturer's product or service to other business-to-business middleman firms.

Define Retailer

a middleman business which sells to consumers or end-users of a product. (typically in single or small quantities)

Define Overdraft

a negative balance in a depositor's bank account

Define Born International

a new firm that opens a website immediately, thus being exposed to customers from around the world.

Define Sheltered Workshop

a nonprofit organization or institution that provides business services by using handicapped or rehabilitated workers.

Define Takeoff

a period of exceptional growth that might come from -landing an unexpectedly gigantic contract, expanding into multiple locations, or just being in the right place at the right time -most small businesses never go through the take off phase

Define Discounts for Prompt Payment

a reduction in sales price provided to credit customers for paying outstanding amounts in a timely manner

Define Charge Back

a reduction in the bank account of a merchant by a credit card company

Define Cash Disbursements Budget

a schedule of the amounts and timings of payments of cash out of a business

Define Cash Receipts Budget

a schedule of the amounts and timings of the receipt of cash into a business

Define Microinventory

a set of goods or service that consists of only one or a few items.

Define Nonsufficient Funds

a situation that occurs when a check is returned to a depositor because the writer of the check did not have a bank available balance

Define Marketing Plan

a systematic written plan of all phases of marketing for a business, including info on the product, price, distribution, and promotion strategy, as well as a clear identification of the target market and competition.

Define Manufacturer's Suggested Retail Price

a target price set by a manufacturer for a product or service intended to provide profit for each intermediary in the distribution channel.

Define Consolidation

a transfer method in which a small business is bought by a larger firm for the purpose off quickly growing the larger firm

Define Bot

a web-based program that uses artificial intelligence techniques to automate tasks such as searches.

Define High Growth Ventures

aim to achieve growth rates of 25% or more and sales of $1,000,000 +

Define Payables

amounts owed to vendors for merchandise or services purchased on credit

Define Receivables

amounts that are owed to a business for merchandise that was sold on credit

Define Money

an accepted medium of exchange

Define E-Tailer

an electronic retailer; a store that exists only on the internet.

Define Transfer

an endgame strategy in which ownership is moved from one person or group to another

Define Termination

an endgame strategy in which the owner closes down the business -more likely for young firms

Define Clearinghouse

an entity that processes checks and electronic fund transfers for banks and other financial organizations.

Define Liquidity Enhancement

an estate planning strategy which focuses on generating cash to cover likely estate assets

Define Tax MGMT

an estate planning strategy which focuses on minimizing estate tax payments

Define Estate Freeze

an estate planning strategy which focuses on transferring assets to heirs when the asset costs are low.

Define Contract Manufacturing

an existing firm with the correct manufacturing capabilities makes your product for you.

Define Bankruptcy

an extreme form of business termination which uses a legal method for closing a business and paying off creditors when debts are substantially greater than assets

Define Short-Term Debt

any debt that must be paid in less than 1 year from the date of the financial statement on which it is reported

Define Bearer

any person or business entity who possesses a security

Define Low Customer Contact Businesses

are manufacturing businesses, the headquarters of client location-based services, or remote location services. Customer access is relatively unimportant.

Define Cash Equivalents

assets that may be quickly converted to cash

Define Benefit Segmentation

benefits they seek (speed, capacity, safety, etc) -good value vs reputation

Define Factoring Receivables

borrowing money secured by a firm's accounts receivable

Define Walkaways

business terminations in which the entrepreneur ends the business with the obligations met

Define Technological Growth

can take 2 forms -use technology to improve efficiencies and profits -use it to create new products or services

Define Deposits and Progress Payments

cash payments received before product is completed or delivered

What does Cash represent?

cash represents the lifeblood of the business, and knowing how to use it can make the difference between boom and bankruptcy

Define Indirect Competition

companies that provide alternatives that are dissimilar to your product/service that consumers might choose to meet a similar need; for example, indirect competition for Coca-Cola includes any other company providing items to quench thirst.

Define Comprehensive Budget

comprehensive budgets are often referred to as Master Budgets

Define Telemarketing

contact via telephone for the express purpose of selling a product or service. telemarketing can either be inbound (customer calls company) or outbound (company calls customer). -most expensive direct mkting

Define Inbound Telemarketing

customer calls the manufacturer or service provider

Define Ethnographic Research

data gathered by simple observation-seeing what consumers do, rather than asking them.

Define Float

delays in the movement of money among depositors and banks CAUSED BY- 1. delays in transferring money due to internal procedures 2. delays in delivering checks

Define Success

develop info, skills, and routines to grow the business' profits -this is a stage that lasts a long time

Define Indirect Exporting

exporting using intermediaries/middlemen such as agents, export management companies, or export trading companies.

Define Direct Exporting

exporting using no intermediaries/middlemen

Define Pro Forma Balance Sheet

final step is to put everything together to create a complete set of pro forma financial statements that you can use for raising money, for evaluating your operations, and for managing your business

Define Freight Forwarders

firms specializing in arranging international shipments- packaging, transportation, and paperwork.

Define Employees

get more done, appeal to a larger market, source of expertise

Define Existence

having the business in operation, but not yet stable -risk is high -owners lack key info

Define Community

how the business relates to the community -community impact -building trust -promoting a positive culture -enhancing flexibility -fostering innovation

Define Demographic Segmentation

income, ethnicity, sex, education level, marital status, etc

Define Secondary Data

information already collected for some other purpose than the current problem

Define Secondary Research

information already collected for some other purpose than the current problem or questions.

Define Primary Data

information is extremely current -take some more time and money to gather it

Define High Performing Small Businesses

level off after success stage, sales between $100,000-$1,000,000 grow at rates of 5-15% a year

Define Geographic Segmentation

many business choose to operate in 1 country. -service industries have no choice but to do this

Define Demand Deposits

money held in checking and saving accounts -make up most of noncurrency cash

Define Cash

money that is immediately available to be spent

Define Primary Research

new information collected to solve a problem at hand or answer current questions

Define Traffic Generators

other businesses that bring customers (generate traffic) to the area. -may include supermarkets, office complexes, schools, and malls.

Define Direct Competition

other companies that make a similar product or provide a similar service; for example, direct competition for Coca-Cola includes all other soft drink providers.

Define Channels

people and firms who connect producers of goods and services with customers

Define Serial Entrepreneurs

people who open multiple businesses throughout their career

Define Trade Discounts

percentage discounts from gross invoice amounts provided to encourage prompt payment

Define Emergence

person thinks and takes action towards starting a firm -only 7 % actually took steps in 2002

Define Direct Response Advertising

placing an advertisement in a magazine or newspaper, on television or radio, or in any other media. The ad contains an order blank with a phone number and e-mail or regular mail address with the intent of having the customer place an immediate order.

Define Distribution

process of getting your product to your customers. -where are my customers? -where should I be?

Define Critical Success Factors

processes, benchmarks, or components of the business that are essential for the business to be profitable and competitive -come from external sources to entrepreneurs

Define Slack Resources

profits that are available to be used to satisfy the preferences of the owner in how the business is run

Define Open-Ended Question

questions that allow respondents to express themselves as they choose. (ex) what do you like about this book?

Define Categorical Questions

questions that are answered by selecting the proper category; for example- what is your ethnicity? white, African American, Hispanic, etc.

Define Scalar Questions

questions that are answered by some sort of scale, for example, on a scale of 1 to 5 how do you like this book?

Define Dichotomous Questions

questions that have only 2 possible choices, for example; have you shopped here before?

Define Harvest

recover value through a sale of a firm or its assets

Define Supplemental Profits

returns above costs intended as a secondary income for entrepreneurs (where self employment is secondary to their main job)

Define Success Profits

returns at levels higher than the entrepreneur could make working for others

Define Substitution Profits

returns intended to equal and replace the salary or wages the entrepreneur could draw working for someone else

Define Noncore Projects

revenue-producing tasks and activities related to, but not part of, the primary strategy of a business.

Define Noncash Incentives

rewards that do not require payment of cash, such as stock options, compensating time off, or added vacation days.

Define Mail Order

sales made from ads in newspapers or magazines, with purchases made online or by phone as well as mail.

Define Direct Marketing

selling your goods or services to consumers without intermediaries, typically to select customer groups and typically with tracking of the results. -can be simple & inexpensive -more control of where your product goes

Define Written Plan

specific details about your target market -present and near future situation -identify differential advantage -major overall goals

Define Family

spend time with your family -leave personal time to make the transition from work to family -clear your work list and your mind

Define Resource Maturity

stable level of sales and profits

Define Marketable Securities

stocks and bonds that are traded on an open market -active auction (ex) NASDAQ

Define Marketing Research

systematic collection and interpretation of data to support future marketing decisions. -can verify size of potential market -shows what competitors are doing correctly

Define Profit

the amount that revenues exceed expenses

Define Currency

the bills and coins printed by governments to represent money -most familiar form of cash

Define Differential Advantage

the characteristic that separates one company from another in product, price, promotion, and/or distribution. -competitive advantage

Define Manufacturer

the entity which produces a product or service to be sold

Define eBay

the mega-mall of E-mails

Define Reorganization

the popular name for a chapter 13 bankruptcy in which a bankrupt firm continues to operate while paying off debts identified by the bankruptcy trustee.

Define Liquidation

the popular name for a chapter 7 bankruptcy in which a bankrupt firm's assets are sold by the bankruptcy trustee and the proceeds used to pay the firm's debts

Define Consignment

the practice of accepting goods for resale, without taking ownership of them and without being responsible to pay prior to their being sold.

Define Barter

the practice of trading goods and services without the use of money

Define Market Segmentation

the process of dividing the market into groups that have somewhat homogenous needs for a product or service.

Define Business Life Cycle

the sequence or pattern of developmental stages any business goes through during its life span.

Define Liability Of Newness

the set of risks faced by firms early in their life cycles that comes from a lack of knowledge by the owners about the business they are in and by customers about the new business

Define Company Book Balance

the sum of cash inflows and cash outflows recorded in the firm's accounting records

Define Bank Ledger Balance

the sum of deposits and withdrawals recorded in a bank's accounting records.

Define Bank Available Balance

the sum of money that has actually been received and paid out of a depositor's account

Define Cash-to-Cash Cycle/Operating Cycle

the time that is required for a business to acquire resources. convert them into product, sell the product, and receive cash from the sale.

Define Guerilla Marketing

the use of creative and relatively inexpensive ways to reach your customer. Examples include door-knob hangers, flyers under windshield wipers, T-shirts, balloons, and messages written on sidewalks.

Define Multichannel Marketing

the use of several different channels to reach your customers, for example, a website, direct mail, and traditional retailing.

What is the entrepreneurs 1st choice of location?

their hometown

Define Empowerment Zones

these are often in economically depressed areas, offer businesses low-cost space and tax advantages for locating there. -in major metropolitan areas

Define Initial Public Offering (IPO)

transfer method describing the first-time public sale of a stock listed on a public stock exchange

Define Gaming the Payment Process

using methods to appear to be paying bills on time, when in fact payment is being delayed or avoided.

Define Party Sales

usually require a range of similar items to be sold, and this kind of selling is not appropriate for every product. (ex) Mary Kay, Pampered Chef, etc

Define Current Situation

what you have done over the past year and how effective these actions were -SWOT analysis -what things you do very well and things you do not so well