Chapter 6 Starting a Small Business Flashcards
Starting a small business.
Affiliate Marketing:
Internet-marketing strategy where business rewards its customers or other business affiliates for each visitor/customer they send to the business website
Angel Investors
Private people who invest their own private money in hot new companies before they go public
Business Plan Explanation: Company Background
- Company Operations to Date 2. Any legal issues 3. Risks/Opportunities 4. Financial Health 5. Balance Sheets/Cash Flow 6. Insurance coverage
Business Plan Explanation: Capital Required
- amount of capital needed to commence & continue
Business Plan Explanation: Appendix
- Marketing research on goods/services 2. References to research
Business Plan Explanation: Executive Summary:
5 Minutes to Impress Major goals/objectives Business Summary
Business Plan Explanation: Financial Plan
- Five year projections for income/expenses/financial 2. Assumptions Based on Industry/Historcial Trends 3. Offer Scenarios: Best Case & Worst Case
Business Plan Explanation: Location Plan
- Most important: Location 2. Demographic of consumers 3. Traffic Patterns 4. Vehicle/Pedestrian Counts
Business Plan Explanation: Management Team
- List positions/job descriptions/resumes 2. Organization Chart 3. Outside Consultants & Their Qualifications (If used)
Business Plan Explanation: Manufacturing Plan
- Plant Size 2. Machinery Required 3. Inventory Methods/Quality Control 4. Production Capacity 5. Personnel Requirements
CDFI (Community Development Financial Institutions)
Funding for lower-income businesses
Entrepreneurial Risk Includes:
Opportunity, Profit, Independence, Challenge
Good Reasons for Small Business to Go Global
- Absorbs excess inventory 2. Softens downturns in domestic markets 3. Extends products lives
Home-Based Business Challenges:
Getting New Customers, Managing Time, Keeping Work/Family Tasks Separate, Abiding By City Ordianances (Licensing, etc)
Intrapreneurs
Creative people who work as Entrepreneurs within larger corporations
List of Entrepreneurial Attributes:
Self Directed, Self Nurturing, Action-Oriented, Highly Energetic, Tolerant of Uncertainty
Peer-to-Peer Lending (P2P)
Online Idea: Companies that match up people who want money with people who want to lend it via websites
Reasons for Growth of Home-Based Businesses:
Technology Advancements, Corporate Downsizing, Social Attitudes Have Changed, New Laws Allow Expenses of Deductions for Home Offices
Service Corps of Retired Executives (SCORE)
SBA office with volunteers from industry, trade associations & education who council small businesses at no cost
Small Business Advantages Are:
- Offer other advantages over large companies 2. More personal customer service 3. Ability to respond quickly to opportunities
Several Advantages to Small Biz vs Big Biz Overseas
- Global buyers like dealing with individuals instead of large companies 2. Small biz can start shipping much faster 3. Can provide a wide variety of suppliers 4. Can provide personal service
Small Business Difficulties Getting Into the Global Market
- Financing 2. Don’t Know how to get started 3. Don’t know cultural differences 4. Paperwork/Bureauracy
Small Business Investment Company Program (SBIC)
Private investment companies licensed by the SBA to loan money
Two Primary Concerns Starting Your Small Business:
- Planning 2 Financing All functions are important, but these are the top two.
Venture Capitalist
Individuals or companies that invest in new business in exchange for a part ownership (hefty portion) of the business usually 60% or more (ex: Shark Tank)
What are an Entrepreneur’s Sources of Capital?
- Personal Savings 2. Relatives 3. Former Employers 4. Banks 5. Finance Companies 6. Venture Capitalists 7. Govt Agencies (SBA) 8. A Future Supplier (McDonalds Model)
What Are Enterprise Zones?
Specific geographic areas to which governments attract private business investment by offering lower taxes & other govt support to encourage entrepreneurship
What Defines a Small Business According to the SBA?
A business that is: 1. Independently Owned/Operated 2. Not dominant in its Field of Operation 3. Meets Certain Standards of Size in terms of Employees or Annual Receipts (Set by SBA)
What Do Intrapreneurs Use For Resources?
They use the corporations resources (human/financial/physical) to launch new products & generate new profits (ex: 3M & Sticky Notes)
What Do Investor Visas Allow?
* Allows 10,000 people to come to the US each year if the invest $1million in an enterprise that creates or preserves 10 jobs (Arcadia Housing Boom) * Part of the Immigration Act in 1990 to encourage entrepreneurs to come to the US
What Do Small Biz & Global Firms Have In Common?
They both have similar principles of management
What Does a Business Plan Do?
It’s a writte/detailed statement that describes: 1. The nature of business 2. The Target market 3. The advantages in relation to competition 4. Lists resources/qualifications of the owner
What Do You Need for Small Business Success?
- Planning 2. Financing 3. Knowing You Customers (marketing) 4. Managing Your Employees (HR Dept) 5. Keeping Good Records (Accounting)
What is a Market?
People with unsatisfied needs who have both the resources ($) and willingness to buy (demand)
What Is Poor Management?
- Poor Planning 2. Poor Record Keeping 3. Poor Inventory Control 4. Poor Promotion/Marketing 5. Poor Employee Relations
What is the SBA?
A US Govt Agency that advises & assists small business by providing management training, financial advice & loans
What’s a Major Cause of Business Failures?
Poor Management
Who Are Valuable Experts to Have In Your Business?
- Lawyer 2. Commercial Loan Officer 3. Insurance Agent
