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Why do people start businesses?
- Seize opportunity
- Personal accomplishment
- Be own boss
- Lots of $
- Use experience
- Make a living
- Frustrated with previous job
- Create job for themselves
Why don’t people start businesses?
Lack of funds Time consuming Risk Uncertainty/ insecurity Lack of capital, initiative, knowledge, skills
What are three advantages of business ownership?
Own boss Use skills and interest with job they enjoy Very rewarding
What are three disadvantages of business ownership?
Risky Time consuming Lots of stress
How do entrepreneurs contribute to economic growth?
Creates jobs Economic development New products/ services
Approximately how many businesses survive 5 years?
Why do businesses fail?
- Poor cashflow management
- Over borrowing
- Poor market research
- No communication
- Lack of financial planning
- Failure to innovate
- Poor inventory management
- Poor debt management
- No adequate performance monitoring
What are the components of a successful venture?
Entrepreneur Organization Strategy Opportunities Resources Business plan
Approximately how many businesses are there in Canada?
Approximately what % of businesses are “Small”?
Approximately how many businesses start each year?
What is the most critical element of success in any business?
What are some of the desirable attributes, characteristics or skills an entrepreneur should possess to be successful?
- self reliance
- team builder
- need to achievereliable
What are the 3 elements of Entrepreneurial DNA?
- Skills: communication,
- problem solving, creativity,
- management, decision making
- Attitudes and Behaviours Knowledge: the market, the business, the business process
What does Social Entrepreneurship mean?
Someone who recognizes aa social problem and uses entrepreneurial principles to organize and manage a venture the make a social change.must be socially responsible, being sustainable, giving back to the community supporting events, giving donations
Why is being ethical so important for a business owner?
- Don’t want to hurt your business.
- Whatever owner of business says they’re going to do, they should follow up on
- 1. Is it lega l2. Is it gairdoes it make you feel good about yourself
Why is being social responsible so important for a business?
Benefits society and the business
Where Do Entrepreneurs Get the Ideas for their Businesses?
- Their brain/ inspiration
- Something they have seen before
- Improvementsmarket gapsprior business experiencebusiness associates
Where could you “search for ideas”?
Previous employmenthobbiescasual observationdeliberate search
What are two creative techniques you can use to generate business ideas?
What is a key function of the right side of the brain?
Right: holistic thought, intuition, creativity, art and musicleft: analytic thought, logic, language, science and math
Does every idea represent a business opportunity?
No, may not be profitable or have significant demand
How would you define a business opportunity?
Ask Q’s. profitability, provide way of life, salary, employ others.
What are the two main purposes of a business plan?
- financing business
What are 3 advantages of preparing a business plan?
- -identify obstacles
- -facts= more credible= less risk
- -greater confidence
What does a business plan contain?
Finances marketing operational
What are two common mistakes in preparing a business plan?
- Poor research
- inaccurate financial projections
What are the 3 entry paths to business ownership?
- a. Buy existing business
- b. Purchase a franchise
- c. Start a business
What are 2 advantages and disadvantages of buying a business rather than purchasing a franchise or starting one of your own?
- · Reduce risk
- · Proven location
- · Acquired at good price
- · Financing
- · Old facilities
- · Poor location
- · Less freedom to change business
- · Inventory may be dead stock
- · Human, financial, physical problems
What are 3 factors to consider when purchasing a business?
- a. where do we find one to buy
- b. how do we evaluate it
- What’s the best price to pay?
When purchasing a business what are two methods of determining the price to pay?
- balance sheet method
- earnings based methods
What are 2 advantages and disadvantages of purchasing a franchise rather than buying a business or starting one of your own?
- advantages ·
- Well-known name ·
- Reduced risk of failure ·
- Special financing and credits ·
- Assistance in location and employee training, advertising,& bookkeeping Disadvantages ·
- Frequent inspection ·
- Report regularly ·
- Mark up costs ·
What are 3 factors to consider when purchasing a franchise?
- History of operation,
- Franchise agreement details,
- Franchise fees
What is an advantage and disadvantage of starting your own business rather than buying a business or purchasing a franchise?
- Advantages ·
- Freedom of choice, name,
- positioning ·
- Potentially lowest cost approach ·
- Easier to start
- Higher risk of failure ·
- Difficult to get financing ·
- Challenges: locate resources,
- brand image, customer base
What are 3 legal forms for establishing a business?
- sole proprietorship
- partnership- general and limited
- corporation- public and private
What is an advantage and disadvantage of organizing your business as a sole-proprietor?
- adv. Simple and inexpensive to start
- disadv. Unlimited liability
What is an advantage and disadvantage of organizing your business as a partnership?
- adv. Potential for growth
- disadv. Divided authority
What is an advantage and disadvantage of organizing your business as a corporation?
- adv. Tax advantages
- disadv. Cost
Identify 6 factors to consider when starting a business of your own.
- name, positioning strategy
- legal requirements and risk assessment business plan
- projecting cash flow
- self assessment
- market assessment
We generally have to assess all business opportunities or ideas from 3 perspectives. They are:
- Personal feasibility
- technical feasibility
- Commercial feasibility
How do we measure the commercial viability of an opportunity?
- How much profitone-time start up expensesongoing operating expenses$ needed to start business
- determine revenue and sales for business
What is the formula for profitability?
What is the formula for effective decisions?
80% information, 20% intuition
What is the difference between ongoing expenses and start-up expenses?
Ongoing- costs that are to be paid frequently ex. Rent
Start up –costs paid before the business is opened. Usually only have to pay once
What does a Sources and Uses of Funds statement contain? What financial statement does it form the basis of?
Start up costs Sourcesequity forms basis of assets?
What are two types of financing?
What are the advantages and disadvantages of debt financing?
- Adv. – don’t give up share of business, term of debt is limited, interest is tax deductible
- Disadv.- difficult to get for risky project, if “demand” loan- can be called by lender at any time, lenders want restrictions, too much debt= burden
What are the advantages and disadvantages of equity financing?
- Adv. – may be only option for high risk ventures, used to fund larger projects, investor contributes expertise, contacts and money
- Disadv.- give up ownership, danger of incompatibility between investors, difficult to terminate relationships
What are 3 criteria used by lenders?
- Applicant management ability
- experience in industry
- credit history
What are the 5 C’s of Credit?
- capacity to pay
What is the primary reason that businesses fail?
What are the 4 key functions of every manager?
What is the difference between “efficiency and effectiveness”?
- Efficiency- doing things right,
- restricted to present state
- effectiveness- doing the right things,
- involves long term
What are the four resources that every manager must manage?
What are the 3 key roles of every manager?
What are 3 key skills that every manager should possess?
Conceptual- analyze and diagnose situationhuman- understand, lead, altertechnical- job specific knowledge
What are the 2 elements that most managerial theories are based on?
- Task: focus on getting work done
- people: focus on well being of human resources
What is the difference between Theory X and Theory Y assumptions?
Theory X has greater results.
- Theory x- little ambition
- dislike work
- avoid responsibility
- theory y- self directed
- enjoy work
- accept responsibility
What are the 3 Leadership Styles?
- free rein
What is the concept behind the “Situational Leadership Model”?
Adapt leadership style given the willingness of the employee for the assigned task