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Part 2: How to PlanPart 2: How to Planand Organize a Businessand Organize a Business

5.5. Becoming the Owner of a Becoming the Owner of a Small BusinessSmall Business

6.6. Planning, Organizing, and Planning, Organizing, and Managing a Small BusinessManaging a Small Business

7.7. How to Obtain the Right How to Obtain the Right Financing for your BusinessFinancing for your Business

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Chapter 5Chapter 5Becoming the Becoming the

Owner of a Small Owner of a Small BusinessBusiness

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

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Becoming The OwnerOf A Small Business

Steps/Procedures For Steps/Procedures For Going Into BusinessGoing Into BusinessIdentify Your Niche’Identify Your Niche’Start Or BuyStart Or BuyFranchisingFranchising

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McGraw-Hill/Irwin

BusinessBusinessFormation & OperationFormation & Operation

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Steps ToSteps ToGoing Into BusinessGoing Into Business1)1) Identify NeedIdentify Need

2)2) Study MarketStudy Market

3)3) Start, Buy Start, Buy Existing Or Existing Or FranchiseFranchise

4)4) Set Mission, Set Mission, Objectives, Objectives, Strategies Strategies

5)5) Make Make Operational Operational PlansPlans

6)6) Make Make Financial Financial PlansPlans

7)7) Develop Develop Business PlanBusiness Plan

8)8) Implement Implement PlanPlan

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Finding Your NicheFinding Your Niche

Search For Search For Good/Service To Good/Service To SellSell

Niche Marketing- Niche Marketing- FindingFinding

SmallSmall

ProfitableProfitable

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Searching ForSearching ForProduct/ServiceProduct/Service

NewspaperNewspaperoBusiness For SaleBusiness For Sale

oProducts For SaleProducts For Sale

Hobbies/RecreationHobbies/Recreation

Talk To PeopleTalk To People

Observe/Study & Observe/Study & LuckLuck

PhotoLink/Getty Images

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Questions To AskQuestions To Ask

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GovernmentGovernmentSources Of Advice/HelpSources Of Advice/Help

Small Business Administration- Small Business Administration- http://www.sba.govhttp://www.sba.govService Corps of Service Corps of Retired ExecutivesRetired ExecutivesState Economic State Economic Development Development AgenciesAgenciesU.S. Department Of Commerce- U.S. Department Of Commerce- Office Of International TradeOffice Of International Trade

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OtherOtherSources Of Advice/HelpSources Of Advice/Help

Directory of Trade Directory of Trade Associations in the U.S.Associations in the U.S.

Local CollegesLocal Colleges

Public LibrariesPublic Libraries

Chambers Of CommerceChambers Of Commerce

Royalty-Free/CORBIS

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BusinessBusinessSelection ChecklistSelection Checklist

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Study MarketStudy MarketMarket Research = PotentialMarket Research = Potential

Location/Segment Location/Segment Being Satisfied?Being Satisfied?

Select 1 Market Segment Select 1 Market Segment Or 1 Product Or 1 Product

Limited Resources = Limited Limited Resources = Limited OptionsOptions

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EstimatingEstimatingMarket SizeMarket Size

Industry Size?Industry Size?Where Is Market?Where Is Market?How Large Is Market?How Large Is Market?Identify Target Market & It Size?Identify Target Market & It Size?Size & Distribution Of Population Size & Distribution Of Population

Income?Income?Sales = Growing, Stable, Declining?Sales = Growing, Stable, Declining?Competitors = Successful?Competitors = Successful?Industry Technology?Industry Technology?

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Start, Buy,Start, Buy,Or Franchise?Or Franchise?

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Reasons To Start AReasons To Start ABusiness = Owner’s FreedomBusiness = Owner’s Freedom

+Define NatureDefine Nature

+Physical FacilitiesPhysical Facilities

+InventoryInventory

+Select/Develop Select/Develop PersonnelPersonnel

+Technology, etc.Technology, etc.

+Competitive EnvironmentCompetitive Environment

Doug Menuez/Getty Images

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Reasons To NotReasons To NotStart A BusinessStart A Business

Right Business?Right Business?Assemble ResourcesAssemble ResourcesEstablished Product LineEstablished Product LineProduction ProblemsProduction ProblemsMarket & DistributionMarket & DistributionSystems & ControlsSystems & ControlsStart-Up vs. Existing vs. FranchiseStart-Up vs. Existing vs. Franchise

Amos Morgan/Getty Images

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Reasons ForReasons ForBuying Existing BusinessBuying Existing Business

+Experienced EmployeesExperienced Employees

+Existing FacilitiesExisting Facilities

+Existing Product & Existing Product & MarketMarket

+Desirable LocationDesirable Location

+Bank Credit RelationshipsBank Credit Relationships

+Revenues, Profits, & GoodwillRevenues, Profits, & Goodwill

C Squared Studios/Getty Images

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Reasons For NotReasons For NotBuying Existing BusinessBuying Existing Business

Facilities = Old/ObsoleteFacilities = Old/ObsoletePoor EmployeesPoor EmployeesA/R Past Due/UncollectibleA/R Past Due/UncollectibleBad LocationBad LocationPoor Financial Poor Financial

Condition/RelationsCondition/RelationsInventory = Poor/ObsoleteInventory = Poor/Obsolete

Royalty-Free/CORBIS

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Questions Before BuyingQuestions Before Buying

Why For Sale?Why For Sale?Present Owner Intentions?Present Owner Intentions?Changing Environment?Changing Environment?Facilities Suitable- Present/Future?Facilities Suitable- Present/Future?Operating Efficiently?Operating Efficiently?Financial Condition?Financial Condition?Investment?Investment?Return On Investment?Return On Investment?Price Right?Price Right?Managerial Ability?Managerial Ability?

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Reasons ForReasons ForBuying FranchiseBuying Franchise

Successful/Proven Successful/Proven Operation & ImageOperation & Image

Experience GuidanceExperience Guidance

Many To Chose FromMany To Chose From

Combines Your Talent Combines Your Talent & Desires & Desires

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Franchise Questions?Franchise Questions?

How Much Help?How Much Help?

Franchise Help = Cover Franchise Help = Cover Costs?Costs?

Professional AdviceProfessional Adviceo LegalLegal

o AccountingAccounting

Source/Cost Of SuppliesSource/Cost Of SuppliesPhotoLink/Getty Images

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CostCostInitial InvestmentInitial InvestmentRoyaltiesRoyalties

New?New?Owner Fit?Owner Fit?IndependenceIndependence““White Elephant”?White Elephant”?

Reasons For NotReasons For NotBuying FranchiseBuying Franchise

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Benefits toBenefits toFranchisee & FranchiserFranchisee & Franchiser

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Franchising Franchising OpportunitiesOpportunities

2,552 Franchises2,552 Franchises

75 Industries75 Industries

International Franchise International Franchise Association - Association - http://http://www.franchise.orgwww.franchise.org

Jason Reed/Getty Images

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FranchisingFranchisingFranchise AgreementFranchise Agreement

FranchiserFranchiser

FranchiseeFranchisee

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FranchisorFranchisorStartup AssistanceStartup AssistanceProven SystemProven SystemStandardized AccountingStandardized AccountingSome Financial AssistanceSome Financial AssistancePurchase/ConstructionPurchase/ConstructionTrainingTrainingAdvertising ProgramAdvertising ProgramCustomer Service Customer Service

StandardsStandardsChanging Market OpportunitiesChanging Market OpportunitiesQuantity DiscountsQuantity Discounts

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Product &Product &Trademark FranchiseTrademark Franchise

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BusinessBusinessFormat FranchiseFormat Franchise

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Franchise PopularityFranchise PopularityAlready Identified Already Identified

Need, Product Created, Need, Product Created, MarketingMarketing

Failure Rate LowerFailure Rate Lower

Established SystemsEstablished Systems PhotoLink/Getty Images

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Future Of FranchisingFuture Of FranchisingGrowth AreasGrowth Areas

RestaurantsRestaurantsMotelsMotelsConvenience StoresConvenience StoresTechnologyTechnologyAuto PartsAuto Parts

Two-Income Two-Income FamiliesFamilies

GlobalGlobal

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Franchises Teaming UpFranchises Teaming Up

SynergySynergyTypesTypes

oCombinationCombination

oMultiformatMultiformat

oDual BrandingDual Branding

oComplementary BrandingComplementary Branding

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2007 Top Global Franchises2007 Top Global Franchises

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Checklist ForChecklist ForFranchise InvestmentFranchise Investment