小企业管理第2讲

SmallBusinessManagementProfessorHornadayLecture2SmallBusinessManagementGETTINGTHEIDEANeedaNiche1.IdentifiableMarketSegment2.CanSatisfytheSegmentataProfit3.CanDefendagainstallCompetitorsUsuallySmallFirmsofferSuperiorQuality&Service1.Flexible2.ShortDecisionTime3.ShortProductionRuns4.SmallInventoryBalances5.PersonalContactwithCustomersNew-NeworNew-Old?SmallBusinessManagementTHEBUSINESSOPPORTUNITYOpenNicheCompetitionAvailabilityofMaterialsAvailabilityofPeopleAvailabilityofLocationAvailabilityofFundingSpecificCompetitiveEdgeDesiredGrowthPatternSmallBusinessManagementMarketAnalysis1.BriefDescriptionoftheBusinessOpportunity2.ADetailedDescriptionoftheMarketSegment3.ADetailedDescriptionoftheMarketNiche4.EmphasizePrice,UnitSalesEstimates,andCompetitionSmallBusinessManagementGETTINGINTOBUSINESSStart-up?Purchase?Inherit?Franchise?SmallBusinessManagementSTART-UPPROBLEMSTimingCashFlowEstimatesInitialCapitalRequirementsLocationEquipment&ServicesRequiredLegalFormofOrganizationSmallBusinessManagementMARKETINGNatureoftheMarketWho,What,When,Where,&How?Price,Place,Product,PromotionEstimateVolumeinUnitsDeterminePricingCoverCostsMeetCustomerDemandCurveMeetCompetitionConsiderSeasonalitySpecificCompetitiveEdgeDesiredGrowthPatternSmallBusinessManagementMANAGING&CONTROLLINGOPERATIONSPlanning,Organizing,Staffing,Directing,ControllingSpecificLocationandLayoutWorkFlowAnalysisWhodoesWhatWhen?PayandIncentivesControlofCash,Inventories,andSuppliesInsurance&SecurityRequirementsSmallBusinessManagementFINANCIALPROJECTIONSFinancialProjectionsputthePlanintoNumbersProFormaIncomeStatementsProFormaBalanceSheetsCashFlowProjectionsWhendoInvestorsgettheirMoneyBack?How&WhenareInvestorsRewarded?How&WhenareOwnersRewarded?SmallBusinessManagementAdvantagesofBuying1.ContinuedSuccess?2.GoodLocation3.EmployeesandSuppliersonHand4.EquipmentandCapacityKnown5.InventoriesandCreditEstablished6.HitGroundRunning7.ExperienceofPreviousOwner8.Bargain?SmallBusinessManagementDisadvantagesofBuying1.It'saDog2.IllWillfromPreviousOwner3.UnsuitableEmployees4.PoorLocation5.Obsolete/UnusableEquipment6.DifficulttoChangeandInnovate7.OutdatedInventory8.WorthlessAccountsReceivables9.BusinessOverpriced(GoodWill)SmallBusinessManagementFindingaBusiness1.Advertisements2.Brokers3.Banks,Accountants4.Friends5.LookAroundSmallBusinessManagementQuestionsbeforeBuying1.WhyisOwnerSelling?2.PhysicalConditionoftheBusiness?3.ContinuedMarketforProducts/Services?4.CustomerBase?5.Competition?Overhead52SmallBusinessManagementScreeningtheDealsPreliminary:Visit,inspect,interview.Quicklookatmarketing,finances,andinventory.SecondStage:Examinethevalueoftheinvestment.FacilitiesFinancialRatiosOwnership-Whatareyoubuying?CapitalRequiredPersonnelMarketNicheFinalScreen:Doabusinessplan.SmallBusinessManagementHOWMUCHISITWORTH?1.BookValue2.ReplacementValue3.LiquidationValue4.PastEarnings5.CashFlowSmallBusinessManagementValuingAssetsIntangiblesImageandreputationwithsuppliers,customers,andbankers.Anynegativethingstobeovercome?Importanceofskillsandrelationshipsofownerand/orkeyemployees.PhysicalAssetsTruevalueofequipmentandfixtures.Truevalueofinventory.SmallBusinessManagementLegalProblems1.Legalencumbrances:Mortgages,liens,judgments,zoning,environmental,etc.2.Patent,trademark,orcopyrightproblems?3.Titletolandandbuildings?4.Accessandparking?5.Existingbuyorsellcontracts?6.Licenses?7.Alldebtspaid?SmallBusinessManagementPricingtheBusinessAssetsBook,Cost,Market,Replacement?GoodwillEarningPowerMultipleofRevenueorProfitSmallBusinessManagementDETERMININGTHEPRICEBookValueReplacementValueLiquidationValuePastEarningsCashFlowSmallBusinessManagementASSETPRICINGBuildingInventoryPrepaidExpensesSupplies&EquipmentAccountsReceivableGoodwillSmallBusinessManagementONEWAYTOARRIVEATAPRICENetMarketValueofAssets$100,000EarningPowerat10%$10,000OwnerSalary$15,000$25,000AverageProfit$30,000ExtraEarningPower$5,000ValueofIntangibles$25,000FinalPrice$125,000SmallBusinessManagementPricingExamplesProtectedFranchise:1year'sprofitplusinventory.Bakery(6-dayoperation):10timesweeklygross.Manufacturing:Appraisedvalueofmachineryplusrawmaterials,packingmaterials,andinventoryatcostplus1/2to1year'snetprofit.Restaurant:Replacementvalueofequipmentplusfoodinventoryplusone-halfannualprofit.DryCleaningPickupStore:Pay$3500foreach$100weeklynetupto$250;$5000foreach$100weeklynetover$250.LadiesWear:25-50%costoffixturesplusinventoryat50-100%.Nogoodwill.SmallBusinessManagementTHEBUSINESSPLANPurpose&NeedTheBusinessOpportunityGettingintoBusinessStart-upProblemsMarketingManaging&ControllingOperationsFinancialProjectionsSmallBusinessManagementPartsoftheBusinessPlan1.ExecutiveSummary2.Owner/OfficerResumes3.CompanyHistory4.DescriptionoftheBusiness5.BusinessStrategy6.DescriptionofProduct/Service7.MARKETINGSTRATEGY!8.OperationalPlans9.FinancialProjections10.LoanProposalCaseAnalysisFormatI.Identifythemainissueinthecaseinyourintroductorysentence.II.ExternalSituationofimportancetothisCompanyA.TargetMarketSegmentB.Com