1/27/11 Business Notes

Chapter #1
Gain Competitive advantage – pg. 17-19
1. Customer Focus
2. Quality PE
3. Integrity & Responsibility
4. Innovation
5. Special Niche
6. Lower Cost

Chapter #3
1. SWOT – page 75
S= Strenths (Internal)
W= Weaknesses (Internal)
O= Opportunities (External)
T= Threats (External)
2. Factors that Judge- page 83-86
Whether a new business
1. Fatal Flaw
2. Market Potential
3. Industry Attractiveness
4. Competitive Advantage
5. Can it make a profit?
Swot qualities examples
Weakness of McDonnalds: quality of food, customer service is bad
Strengths of In’n out: good food, nice people, hidden menus

Fatal flaw- a circumstance of development that alone could render a new business
unsuccessful.

Market Potential- Customer to be prospects, need for it, money for it, approachable

Industry Attractiveness- Something other guys don’t have, do customers like it? Is it
worth it?
Ex. Apple: customers excited about products, willing to pay a lot for it

Can you make a profit?

Chapter 4 Franchising

1. Advantages pg.97 (Test #2)

a. Management Support
b. Training
c. Financial Assistance
d. Quicker Start Up Time
e. Lower Failure Rate

2. Disadvantages
a. Fees Royalties
b. Restriction On Growth
c. Less Independence
d. Buy All Items From franchise
e. Must follow procedures
f. Termination/Renewal Clauses

Chapter 6

Business plan pg. 149

Why do a business plan?

A. identify nature and context of your business
B. to outline approach to be successful
C. to recognize the factors to be successful
D. Tool for raising capital
E. Tool to hire management

Summary page 151

Preparing a business plan pg. 153
Contents page 154 exhibit 6-3

Price
Place
Product

Financial Plan-

1. Start up cost (in cash) investment in business

2. Sales, Cost, Profit
4 quarters of the first year
(Prepare for a loss)
 2/24/11

Chapter 9

1. Building a management
Team- pg 201-203
2. Forms of legal organization – pg.205-217
Question on test 2 3/10/11

A. Sole proprietorship
1. Not a Legal entity
2. Unlimited Liability
3. Single Taxation
4. Cant write of benefits
B. Partnership
1. Legal entity
2. Unlimited Liability
3. Subject to arguments
Therefore no 50/50 ownership
C. “C” Corporation
a. Legal entity
b. Limited liability
c. Double taxation
D. Sub Chapters or LLC
a. Legal entity
b. Limited liability

Chapter 9&10
Review Ed’s Auto Parts case
Le Travel Store- Case 9 pg.641

Chapter 9 Location

1. Factors in choosing Location

a. Customer accessibility- pg 233
b. Business environment –pg. 234
c. Availability of Resources- pg.236
d. Personal Preference- (Near Home??) pg. 236
e. Site Availability- pg. 237
Discuss- case 9- pg.641
2. Home Based Business- pg. 241
3. E- Commerce
a. Business to business pg.247
b. Business to consumer pg.243
c. Action Sites- pg.247
 d. Gambling, ect.

Balance Sheet pg. 267 (test question)

1. Current Assets- (cashed within a year)

Cash
Accounts Payable or Receivable- 30 day credit
Inventory- product available to have ready to sell

2.Fixed Assets – Can be written off (depreciation) legally so the IRS doesn’t
freak out

=Total Assets

Equipment- depreciate a certain percent each year

Buildings -
Lands
Current Liability
Accounts Payable
Short Term notes

Income statement – pg. 264

1 a month after start then once every 3 months

Sales in dollars

-Cost of goods sold (direct cost)

=Gross Profit

- Indirect Cost

= Operating Profit (net profit before taxes)

-Taxes

=Net Profit

Helps to find and solve problems, list everything and analyze.

 Test Questions

Pg. 97-99 Name 5 advantages of franchising over starting your own business.
Answer and give franchises examples. Tell why each advantage is important to
business success.

1. Formalized Training – put through program so you can run the business
(ratios/training from people who have experiences) from success!
2. Financial Assistance- because of success they can loan you money to run the
company because of success of stores.
3. Proven Marketing Methods- They have done it so they know how to
advertise.
4. Managerial Assistance- Know how to run it and they can and will help
5. Quicker Start up time- already have plans for building and equipment and
have experience doing it.
6. Net Result of all this help, less failure rate, cut chances to fail down a lot!

Pg. 149 A business plan has four basic objectives. Name the four and give
examples. Tell why each objective is important in having a successful business
plan. Who are 4 of the potential people/users/readers that will read this
business plan? And what are they interested in?

1. Identify nature and context of the business opportunity- why does the
opportunity exist??
2. To outline the approach the entrepreneur plans to use the exploit the
opportunity- why should they buy from you?
3. To recognize factors that will determine whether the venture will be
successful. – What are some of the goals
4. It certainly is a tool for raising capitol. – Why should they favor you?
5. Give to someone you might want to hire in management situation

4 people
1. people who will give you money
2. people who will work for you
3. people who you will give extended credit terms too

Pg. 179 What are the four P’s of a marketing mix? Give Examples of each. Why
is it vital that you put each of the P’s into the marketing section of your
business plan?

-Product, Price, Promotion, Place

example: Steve T’s No analyses of location and price and failed horribly.

Pg. 205-215 What are the 4 forms of business ownership? What are the
advantages and disadvantages of each?
Pg. 264-267 What are an income sheet and a balance sheet? What are the major
categories on each statement? Why is each important in determining the financial
health of a company?

Chapter 12

1. Debt vs. Equity- pg.312-313

2. Sources of Financing- pg.217-332 (Test #3)
a. Personal Savings
b. Friends and Family
c. Other Investors
d. Banks
e. Business Suppliers
f. Asset Based Lenders
g. Small Business Admin
h. Venture Capital
i. Public Sales (IPO)

Chapter 13

Harvesting (Methods of Ownership Change)

1. Selling- pg 340-343
2. Dissolving The Company- pg. 343-345
3. IPO- pg. 346-347
4. Private Placement- pg.348-349
Chapter 17-

1. Promotional Budget- pg.443

a. Percentage of sales
b. How much can be spared
c. Equal competition
d. How much is needed
i. For Project
2. Salesmanship
a. Prospect Planning
b. Pre- approach
c. Getting sales appointed
d. Presentation
e. Responding to objections
f. Obtaining commitment
i. Direct request
ii. Benefit summary
iii. Give prospect a choice
g. After the sale
3. Advertising
A- Attention
I- Interest
D- Desire
A- Action
4. Sales Promotional Tools – Test #3
a. Pg 457-460
b. Specialties- or advertising
c. Trade Shows
d. Publicity
e. Direct Mail
#4 What are 3 different types of promotion, other than salesmanship or advertising?
Describe and give examples.
(pg 457-460)

Specialties
Trade Shows
Publicity- something read by target market
Direct Mail- Mail list from a magazine, from mail house

#3 What is personal selling? What are the important concepts you use?

Face to face discussion presenting of products or services in attempt to sell

something to them.

Get list of suspects to turn them into a possible buyers or prospect

Promotion piece- get customers
All about customer focus and how to make money with that
Wherever your customers are that’s where you should be getting an appointment
Make it as fast as possible
Respond to objections in a polite non-argued way
(Chapter 17 notes)

#2 Chapter 16 pgs 419-428

What are 5 pricing strategies that a small businessman can use to market his
product? describe and give examples

Cost determination- how much it cost you, and mark the price up to (your price)
Without cost you cant price anything!
Penetration pricing- more rapid market acceptance
Be careful can work to disadvantage
New product skims it, and realizes competitors will come in
Watch prices
(Follow the leader)
Price Lining- similar items

#1 pg 317-331 Where do you get your sources of funds to start your business?

Personal Savings
Most people lack that savings
Friends and family (can cause big problems)
Bank financing- line of credit (want collateral)
Accounts payable- factoring creating collateral
Assets Based lending- working capital assets
Private equity investors- investing in early stages of investors
Chapter 20- Human Resources

1. Quality, Honest Employees- pg 522-523

2. Job Description- pg. 528
a. Experience
b. Foundation
3. Sources of Employees – p.524-526
a. Walk ins
b. Help Wanted Ads
c. Schools
d. Public Unemployment offices
e. Private Employment/Internet
f. Employee Referrals

Chapter 18- Leadership

1. Leadership- pg. 495

2. Effective Leader- pg.496
3. Leadership Styles- Pg. 496
4. Owner defines Company- pg. 498
5. Limitations of founders- pg.500
a. Weakness- pg. 500
6. Outside management- assistance- pg.512
a. Board of Directors
b. SBA- score