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The Entrepreneurial Mind (Coverage-based) > (F) Chapter 7: Acquiring Existing Ventures > Flashcards

(F) Chapter 7: Acquiring Existing Ventures Flashcards

1
Q

This means choosing to purchase or buy an already established business instead of starting a new one

A

Acquiring an existing venture

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2
Q

Enumerate where one can find opportunities to acquire an existing venture.

A
  1. Business Brokers
  2. Newspaper Ads
  3. Trade Sources
  4. Professional Sources
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3
Q

Where to Find Opportunities

Professionals that specialize in business brokerage

A

Business Brokers

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4
Q

Where to FInd Opportunities

They help in finding buyers for the business

A

Business Brokers

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5
Q

Where to FInd Opportunities

This is where you may check the classified sections of businesses for sale.

A

Newspaper Ads

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6
Q

Where to FInd Opportunities

Suppliers, distributors, manufacturers, trade publications/associations/schools, etc.

Collective term for all of these.

A

Trade Sources

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7
Q

Where to FInd Opportunities

Management consultants, lawyers, accountants, etc.

Collective term for all of these.

A

Professional Sources

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8
Q

Advantages of Acquiring an Established Venture

Enumerate the advantages of acquiring an established venture.

A
  1. Less fear about successful future operations
  2. Reduced time and effort
  3. Good Price
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9
Q

Advantages of Acquiring an Established Venture

You are sure that there are people who will buy it

A

Less fear about successful future operations

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10
Q

Advantages of Acquiring an Established Venture

There are already assembled facilities, teams, managements, resources, etc.

A

Reduces time and effort

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11
Q

Advantages of Acquiring an Established Venture

Indicative that the business is doing well

A

Good price

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12
Q

Guide to Evaluating a Selected Venture

Enumerate the questions to be asked when evaluating a selected venture.

There are seven questions, ayan na ha.

A
  1. Why was the business sold?
  2. What is the current physical condition of the business?
  3. What is the inventory condition?
  4. What is the state of the assets?
  5. How many employees will remain?
  6. What type of competition does the business face?
  7. What is the financial position of the business?
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13
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ What is the seller going to do after selling the business?

→ Investigate further to find out the real reason

A

Why was the business sold?

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14
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Relationship with the suppliers (do they have a bad reputation with them?

A

Why was the business sold?

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15
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Condition or fate of the building

A

Why was the business sold?

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16
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Bigger competition coming? (malls, supermarkets, etc.)

A

Why was the business sold?

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17
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Is a new city ordinance affecting the business?

A

Why was the business sold?

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18
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Have your attorney draw a non-compete agreement

A

Why was the business sold?

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19
Q

Guide to Evaluating a Selected Venture

This ensures that the original owner will not put up a business that will compete with the business you will set up.

A

Non-compete agreement

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20
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Does the company own a building or facility?

A

What is the current physical condition of the business?

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21
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

Is it leased? Will it cover needed renovations or repairs?

A

What is the current physical condition of the business?

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22
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ What does the building include?

A

What is the current physical condition of the business?

23
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ How much will renovations cost?

A

What is the current physical conditions of the business?

24
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ How much inventory does the seller show in the books?

A

What is the inventory condition?

25
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Does the inventory still exist?

A

What is the inventory condition?

26
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ If there is some inventory left, is it still salable, out-of-date, or badly deteriorated?

A

What is the inventory condition?

27
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Was there any major or minor equipment used? Will it still be useful and until when?

A

What is the state of the assets?

28
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Are there sales records by the company which show which customers are credit risks?

→ Which customers are worth retaining and which are not?

A

What is the state of the assets?

29
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Sales records that show seasonal demands? Peak and lean periods to determine inventory leaks?

A

What is the state of the assets?

30
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Past contracts (when will they expire?)

A

What is the state of the assets?

31
Q

Guide to Evaluating a Selected Venture

This has an indirect monetary value on the business.

A

Goodwill or reputation

32
Q

Guide to Evaluating a Selected Venture

They are employees who are very familiar with the business.

A

Seasoned employees

33
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Are they (seasoned employees) staying? Who will leave once the business is sold?

A

How many employees will remain?

34
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Will it be enough to maintain the service customers are already used to?

A

How many employees will remain?

35
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Review the performance evaluations made before.

A

How many employees will remain?

36
Q

Guide to Evaluating a Selected Venture

How can you easily retain valuable employees?

A

By seeking them out before purchase

37
Q

Guide to Evaluating a Selected Venture

T or F: You can fire regular employees easily.

A

F

Tenure is secured therefore you cannot without great violation.

38
Q

Guide to Evaluating a Selected Venture

What are the two ways you can let go of regular employees?

A
  1. Do not renew the contract.
  2. Offer an early retirement benefit to persuade them to leave the company.
39
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Interview current employees to determine who to keep and who to let go.

A

How many employees will remain?

40
Q

Guide to Evaluating a Selected Venture

T or F: When the number of competitors go down, the cost of fighting them goes down.

A

T

Up = up, therefore down = down

What type of competition does the business face?

41
Q

Guide to Evaluating a Selected Venture

Unless something unique is offered, people buy based on _________________

Three specific answers tapos may etc. sa dulo HAHAHA

A

Convenience, proximity, location, etc.

What type of competition does the business face?

42
Q

Guide to Evaluating a Selected Venture

T or F: Competitors in the immediate area can be a distinct disadvantage

A

F

Direct advantage

What type of competition does the business face?

43
Q

Guide to Evaluating a Selected Venture

____ selections draw in customers

A

Larger

What type of competition does the business face?

44
Q

Guide to Evaluating a Selected Venture

T or F: Businesses near each other can sometimes compliment each other in drawing in customers.

A

T

What type of competition does the business face?

45
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ How cutthroat is the competition?

A

What type of competition does the business face?

46
Q

Guide to Evaluating a Selected Venture

WATCH OUT BESTIE

A

For:
1. Price fixing
2. Kickback to suppliers
3. Stereotyping

and etc.

What type of competition does the business face?

47
Q

Guide to Evaluating a Selected Venture

Refers to unethical competitors in an area that can drag down nearby firms

A

Stereotyping

What type of competition does the business face?

48
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Hire an accountant to examine the books.

A

What is the financial position of the business?

49
Q

Guide to Evaluating a Selected Venture

→ Inquire about bank deposit records for the past ____

A

Two to three years

What is the financial position of the business?

50
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Study sales and profit trends

A

What is the financial position of the business?

51
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Compare the company’s performance with its competitors

A

What is the financial position of the business?

52
Q

Guide to Evaluating a Selected Venture

Which question should be asked regarding:

→ Obtain market research information and study financial ratios

A

What is the financial position of the business?

53
Q

Guide to Evaluating a Selected Venture

What financial ratios should one study?

What is the financial position of the business?

A
  1. Current ratio
  2. Net profit margin (net profit/net sales)
  3. Return on equity

The Entrepreneurial Mind (Coverage-based) (14 decks)

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