tag:blogger.com,1999:blog-24721693961974800062024-02-07T10:39:53.858+07:00CompziteWe always try our best. even we are not the best.Kinamattohttp://www.blogger.com/profile/14546077064095070172noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-2472169396197480006.post-60297118266056343012019-03-20T19:28:00.000+07:002019-03-20T19:31:38.528+07:00Building a Powerful Bootstrap Marketing Plan & Crafting a Business Plan and Building a Solid Strategic Plan<br />
<div style="margin-bottom: .0001pt; margin: 0in;">
<b><span style="color: black;">Building
a Bootstrap Marketing Plan</span><o:p></o:p></b><span style="color: black;"><o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<u><span style="color: black;">Marketing</span></u><span style="color: black;"> is the process of creating and delivering desired
goods and the services for customers and it will be involves all of the
activities which associated with winning and retaining loyal customers. The
“secret” to successful marketing is to understand what your target customers’
needs, demands, and wants are before your competitors can; to offer them the
products and services that will satisfy those needs, demands, and wants; and to
provide customer service, convenience, and value so that they will keep coming
back.<o:p></o:p></span><o:p></o:p></div>
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<br /></div>
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<span style="color: black;">Successful
entrepreneurs recognize that modern marketing strategies also must include
techniques such as social media and cause marketing that pull customers into
their companies’ sphere of influence. The good news is that many of these
“pull” strategies are relatively inexpensive and, when infused with a healthy
dose of creativity, are extremely effective.<o:p></o:p></span><o:p></o:p></div>
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<br /></div>
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<span style="color: black;">By using
bootstrap marketing strategies—unconventional, low-cost, creative
techniques—small companies can wring as much or more “bang” from their
marketing bucks An effective bootstrap marketing campaign does not require an
entrepreneur to spend large amounts of money, but it does demand creativity,
ingenuity, and an understanding of customers’<o:p></o:p></span><o:p></o:p></div>
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<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="color: black;">A
Seven-Sentence Bootstrap (Guerrilla) Marketing Strategy<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: -.25in;">
<span style="color: black;">1. What is the purpose
of your marketing?<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: -.25in;">
<span style="color: black;">2. What primary benefit
can you offer customers?<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: -.25in;">
<span style="color: black;">3. Who is your target
market?<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: -.25in;">
<span style="color: black;">4. What is the marketing
tools will you use to reach your target market?<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: -.25in;">
<span style="color: black;">5. What is your
company’s niche in the marketplace?<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: -.25in;">
<span style="color: black;">6. What is your
company’s identity in the marketplace?<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: -.25in;">
<span style="color: black;">7. How much your budget
want to spent in marketing??<o:p></o:p></span><o:p></o:p></div>
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<o:p></o:p></span></div>
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<br /></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;"><span style="color: black;">Pinpointing the Target Market</span><o:p></o:p></b><span style="color: black;"><o:p></o:p></span></div>
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<span style="color: black;">One of
the first steps in building a bootstrap marketing plan is to identify a small
company’s target market Smart entrepreneurs know they do not have the luxury of
wasting resources. They must follow a more focused, laserlike approach to
marketing. Entrepreneurs must identify a specific market niche that has a
specific need or “pain point” and tailor a solution, be it a product or a
service, to address this need<o:p></o:p></span><o:p></o:p></div>
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<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="color: black;">Most
successful businesses have well-defined portraits of the customers they are
seeking to attract. From market research, they know their customers’ income
levels, lifestyles, buying patterns, likes and dislikes, and even their
psychological profiles—why they buy. These companies offer prices that are
appropriate to their target customers’ buying power, product lines that appeal
to their tastes, and service they expect. The payoff comes in the form of
higher sales, profits, and customer loyalty. For entrepreneurs, pinpointing
target customers has become more important than ever before as markets in the
United States have become increasingly fragmented and diverse. Mass marketing
techniques no longer reach customers the way they did 30 years ago because of the
splintering of the population and the influence exerted on the nation’s
purchasing patterns by what were once minority groups such as Hispanic, Asian,
and African Americans<o:p></o:p></span><o:p></o:p></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;"><span style="color: black;">Determining Customer Needs and Wants through Market Research</span><o:p></o:p></b><span style="color: black;"><o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="color: black;">Entrepreneurs
who ignore demographic trends and fail to adjust their strategies accordingly
run the risk of becoming competitively obsolete. Entrepreneurs who stay in tune
with demographic, social, and economic trends are able to spot growing and
emerging market opportunities.<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;"><span style="color: black;">The Value of Market Research</span><o:p></o:p></b><span style="color: black;"><o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="color: black;">Market
research is the vehicle for gathering the information that serves as the
foundation for the marketing plan. It involves systematically collecting,
analyzing, and interpreting data pertaining to a company’s<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="color: black;">Small
companies cannot afford to make marketing mistakes because there is little
margin for error when funds are scarce and budgets are tight.<o:p></o:p></span><o:p></o:p></div>
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<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;"><span style="color: black;">How to Conduct Market Research</span><o:p></o:p></b><span style="color: black;"><o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="color: black;">Step 1.
Define the objective.<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="color: black;">Step 2.
Collect the data<o:p></o:p></span><o:p></o:p></div>
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<span style="color: black;">Step 3.
Analyze and interpret the data.<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="color: black;">Step 4.
Draw conclusions and act<o:p></o:p></span><o:p></o:p></div>
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<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="color: black;">Plotting a Bootstrap Marketing Strategy: How to Build a
Competitive Edge</span><o:p></o:p></b><span style="color: black;"><o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="color: black;">To be
successful bootstrap marketers, entrepreneurs must be as innovative in creating
their marketing strategies as they are in developing new product and service
ideas<o:p></o:p></span></div>
<o:p></o:p>
<br />
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;"><span style="color: black;">Bootstrap Marketing Principles</span><o:p></o:p></b><span style="color: black;"><o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="color: black;">The
following 14 principles can help business owners create powerful, effective
bootstrap marketing strategies.<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">BE A NICHE AND USE IT<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">USE THE POWER OF PUBLIC<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">DO NOT JUST SELL BUT
ENTERTAIN TOO!<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">YOU NEED TO STRIVE TO
BE UNIQUE THAN OTHER<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">COMMUNITY WITH
CUSTOMERS IS IMPORTANT<o:p></o:p></span><o:p></o:p></div>
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<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">6.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">CONNECT WITH CUSTOMERS
ON AN EMOTIONAL LEVEL<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">7.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">CREATE AN IDENTITY FOR
YOUR BUSINESS THROUGH BRANDING<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">8.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">EMBRACE SOCIAL
MARKETING<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">9.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">BE DEDICATED TO
SERVICE AND CUSTOMER SATISFACTION<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">10.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">RETAIN EXISTING
CUSTOMERS<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">11.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">BE DEVOTED TO QUALITY<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">12.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">ATTEND TO CONVENIENCE<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">13.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">CONCENTRATE ON
INNOVATION<o:p></o:p></span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: black;"><span style="mso-list: Ignore;">14.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="color: black;">EMPHASIZE SPEED<o:p></o:p></span></div>
<o:p></o:p>
<br />
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<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="color: black;">Conclusion</span><o:p></o:p></b><span style="color: black;"><o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="color: black;">Small
companies lack the marketing budgets of their larger rivals, but that does not
condemn them to the world of second-class marketers and its resulting
anonymity. By using clever, innovative bootstrap marketing strategies such as
the ones described in this chapter, entrepreneurs can put their companies in
the spotlight and create a special connection with their customers.<o:p></o:p></span></div>
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<br /></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">A business plan is a planning tool that builds on the
foundation of the idea assessment, feasibility analysis, and business model
discussed in Business Plan A business plan provides a more comprehensive and
detailed analysis than the first three steps in the new business planning
process.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Research suggests that, whatever their size, companies
that engage in business planning outperform those that do not. A business plan
offers: <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">a
systematic, realistic evaluation of a venture’s chances for success in the
market. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">a
way to determine the principal risks facing the venture. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">a
“game plan” for managing the business successfully during its start-up. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>a tool for comparing actual results against
targeted performance. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">an
important tool for attracting capital in the challenging hunt for money<o:p></o:p></span></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">The
Benefits of Creating a Business Plan<o:p></o:p></span></b></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">A business plan is a written summary of an
entrepreneur’s proposed business venture, its operational and financial
details, its marketing opportunities and strategy, and its managers’ skills and
abilities. There is no substitute for a well-prepared business plan, and there
are no shortcuts to creating one. The plan serves as an entrepreneur’s road map
on the journey toward building a successful business. A business plan describes
which direction the company is taking, what its goals are, where it wants to
be, and how it intends to get there. The plan is written proof that an
entrepreneur has performed the necessary research, has studied the business
opportunity adequately, and is prepared to capitalize on it with a sound
business model. Crafting a business plan is an entrepreneur’s last insurance
against launching a business destined to fail or mismanaging a potentially
successful company.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">To get external financing, an entrepreneur’s plan must
pass three tests with potential lenders and investors: (1) the reality test,
(2) the competitive test, and (3) the value test. The first two tests have both
an external and internal component:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l5 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">REALITY
TEST<br />
The internal component of the reality test focuses on the product or service
itself, Can the company really build it for the cost estimates in the business
plan The external component of the reality test involves proving that a market
for the product or service really does exist. It focuses on industry
attractiveness, market niches, potential customers, market size, degree of
competition, and similar factors. Entrepreneurs who pass this part of the reality
test prove in the marketing portion of their business plans that there is
strong demand for their business idea. Evidence that is gathered during the
testing of the business model should be an integral part of the marketing plan
to bolster the proof for the idea using real customers<o:p></o:p></span></div>
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<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l5 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">COMPETITIVE
TEST<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">The external part of the competitive
test evaluates the company’s relative position to its key competitors. How do
the company’s strengths and weaknesses match up with those of the competition
Successful entrepreneurs carefully and honestly evaluate the strength of their
product ideas. Do we offer a solution that looks at the problem differently
than competitors, Can we protect our intellectual property<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l5 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">VALUE
TEST<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">The real value in preparing a plan is
not as much in the plan itself as it is in the process the entrepreneur goes
through to create the plan—from the idea assessment, to the feasibility
analysis, through the development and testing of the business model, and
finally with the crafting of the written business plan.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">The Elements of a Business Plan<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">TITLE
PAGE AND TABLE OF CONTENTS<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">THE
EXECUTIVE SUMMARY<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">MISSION
AND VISION STATEMENT<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">DESCRIPTION
OF FIRM’S PRODUCT OR SERVICE<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">BUSINESS
AND INDUSTRY PROFILE<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">6.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">COMPETITOR
ANALYSIS<span style="mso-tab-count: 1;"> </span><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">7.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">MARKET
ENTRY STRATEGY<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">8.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">MARKETING
STRATEGY<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">9.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">ENTREPRENEURS’
AND MANAGERS’ RÉSUMÉS<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">10.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">PLAN
OF OPERATION<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">11.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">PRO
FORMA (PROJECTED) FINANCIAL STATEMENTS<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l1 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">12.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">THE
LOAN OR INVESTMENT PROPOSAL<o:p></o:p></span></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">What
Lenders and Investors Look for in a Business Plan<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l6 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">CAPITAL<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l6 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">CAPACITY<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l6 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">COLLATERAL<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l6 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">CHARACTER<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l6 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">CONDITIONS<o:p></o:p></span></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">The
Pitch: Making the Business Plan Presentation<o:p></o:p></span></b></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Usually, the time for presenting a business
opportunity is short, often no more than just a few minutes. (When presenting a
plan to a venture capital forum, the allotted time is less than 20 minutes and
rarely more than 30.) When the opportunity arises, an entrepreneur must be well
prepared. It is important to rehearse, rehearse, and then rehearse some more.
It is a mistake to begin by leading the audience into a long-winded explanation
about the technology on which the product or service is based. Within minutes
most of the audience will be lost, and so is any chance the entrepreneur has of
obtaining the necessary financing for the new venture. A business plan
presentation should cover five basic areas:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Your company and its products and
services.</span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"> The presentation should answer in simple terms the
first question that every potential lender and investor has: <i style="mso-bidi-font-style: normal;">What does your company do?</i> <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">The problem to be solved,</span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">
preferably told in a personal way through a compelling story. Is it eliminating
the time, expense, and anxiety of waiting for the results of medical tests with
a device that instantly reads blood samples? Or making hearing aids more
effective at filtering out <i style="mso-bidi-font-style: normal;">background
noise while enhancing the dominant sound for the user?</i> <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">A description (again in simple terms)</span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">
of your company’s solution to the problem. Ideally, the <i style="mso-bidi-font-style: normal;">solution your company has developed is unique and serves</i> as the
foundation of your company’s competitive edge in the marketplace. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Your company’s business model.</span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">
This part of the presentation explains how your company makes money and
includes figures such as revenue per sale, expected gross profit and net profit
margins, and other relevant statistics. This is your opportunity to show
lenders and investors how your company will produce an attractive payback or
payoff.<br style="mso-special-character: line-break;" />
<!--[if !supportLineBreakNewLine]--><br style="mso-special-character: line-break;" />
<!--[endif]--><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Your
company’s competitive edge</span></i></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">. Your presentation
should identify clearly the factors that set your company apart from the
competition<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpLast">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">The
Strategic Management Process</span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"> <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Strategic management is a continuous process that
consists of nine steps: <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Step 1. Develop a clear vision and translate it into a
meaningful mission statement. <o:p></o:p></span></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Step
2. Assess the company’s strengths and weaknesses. <o:p></o:p></span></i></b></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Identifying strengths and weaknesses helps owners
understand their businesses as they exist (or that, for start-ups, will exist).
An organization’s strengths should originate in the core competencies that are
essential to gaining an edge in each of the market segments in which the firm
competes. The key to building a successful strategy is using the company’s
underlying strengths as its foundation and matching those strengths against
competitors’ weaknesses<o:p></o:p></span></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Step
3. Scan the environment for significant opportunities and threats facing the
business. <o:p></o:p></span></i></b></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">When identifying opportunities, an entrepreneur must
pay close attention to new potential markets and product offerings. Are
competitors overlooking a niche in the market we could easily exploit? Is there
a better way to reach our customers, such as a greater focus on online sales?
Are there new markets we can expand into with our existing business? Can we
develop new products that offer customers better value? What opportunities are
trends in the industry creating?<o:p></o:p></span></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Step
4. Identify the key factors for success in the business. <o:p></o:p></span></i></b></div>
<div class="MsoNormal">
<i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">KEY
SUCCESS FACTORS </span></i><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Every business is characterized by
controllable variables that determine the relative success of market
participants. By focusing efforts to maximize their companies’ performance on
these key success factors, entrepreneurs can achieve dramatic market advantages
over their competitors. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Companies that understand these key success factors
tend to be leaders of the pack, whereas those that fail to recognize them
become also-rans. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Key success factors (KSFs, also called key performance
indicators) come in a variety of patterns, depending on the industry. Simply
stated, these factors determine a company’s ability to compete successfully in
an industry. Every company in an industry must understand the KSFs that drive the
industry; otherwise, they are likely to become industry also-rans like the
horses trailing the pack in the Kentucky Derby. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Experience
in the industry<span style="mso-spacerun: yes;"> </span><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Sufficient
start-up capital<span style="mso-spacerun: yes;"> </span><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Tight
cost control (labor costs, 15 to 18 percent of sales, and food costs, 35 to 40
percent of sales)<span style="mso-spacerun: yes;"> </span><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Accurate
sales forecasting, which minimizes wasted food <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Proper
inventory control <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">6.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Meticulous
cash management <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">7.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Choosing
locations that maximize customer convenience <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">8.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Cleanliness
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">9.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">High
food quality <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">10.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Friendly
and attentive service from a well-trained wait staff <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">11.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Consistency
in quality and service over time <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">12.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Speed,
particularly at lunch, when the restaurant attracts businesspeople who must
dine quickly and get back to work <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l4 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">13.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">A
clear definition of the restaurant’s distinctive concept—its food, decor,
service, and ambiance<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Step 5. Analyze the competition. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Step 6. Create company goals and objectives. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Step 7. Formulate strategic options and select the
appropriate strategies.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>Step 8.
Translate strategic plans into action plans. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Step 9. Establish accurate controls.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></span></div>
<div class="MsoListParagraph">
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<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">Conclusion</span></b><span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;"> <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 107%;">A solid business plan is essential to raising the
capital needed to start a business; lenders and investors demand it. “There may
be no easier way for an entrepreneur to sabotage his or her request for capital
than by failing to produce a comprehensive, well-researched, and, above all,
credible business plan,” says one small business expert.70 Creating a
successful business requires entrepreneurs to put the plan into action and then
manage the company’s growth with a sound strategic plan.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></span></div>
<br />Kinamattohttp://www.blogger.com/profile/14546077064095070172noreply@blogger.com0tag:blogger.com,1999:blog-2472169396197480006.post-30015752113462108412019-03-13T20:50:00.002+07:002019-03-13T20:50:34.985+07:00Conducting a Feasibility Analysis & Business Model<div class="separator" style="clear: both; text-align: center;">
<br /></div>
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<br /></div>
<div class="separator" style="clear: both; text-align: center;">
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<div class="MsoNormal" style="line-height: normal;">
Melakukan Cek Analisa Kelayakan bisnis,
dapat melihat dari beberapa sisi yaitu diantaranya adalah</div>
<div class="MsoNormal" style="line-height: normal;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in; mso-list: l0 level1 lfo1; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">•<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Idea
Assessment / Penilaian Ide<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Successful
entrepreneurs understand that the process of going from ideas to the launch of
a new business venture is like a funnel. When the entrepreneur observes a need
in the market, using the creative process generates many business ideas that
might address this need. Each step in the new business planning process narrows
down the number of ideas until the entrepreneur is ready to launch a business
that he or she has carefully researched and tested. An idea assessment helps
the entrepreneur efficiently evaluate the numerous ideas that come out of the
creative process before committing the time and effort to craft a business
plan, design a business model, or even conduct a feasibility analysis. One
effective tool used to help assess ideas is the idea sketch pad.</span><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "MS PGothic";"><o:p></o:p></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsqM838soFmjWBnayFhuKg_vzfLoBKDrluYuvu_45ZzMntXs93N76YU5RFyZA9EakHeXoprL8jwRg1e7bWYtzG_KODYa8mRKNy9fOH-qF_NuO3fF3JYYMbHmToNf0YncqQOv8jdZlLvvJV/s1600/1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="479" data-original-width="277" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsqM838soFmjWBnayFhuKg_vzfLoBKDrluYuvu_45ZzMntXs93N76YU5RFyZA9EakHeXoprL8jwRg1e7bWYtzG_KODYa8mRKNy9fOH-qF_NuO3fF3JYYMbHmToNf0YncqQOv8jdZlLvvJV/s320/1.png" width="185" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
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<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
The idea
sketch pad helps an entrepreneur assess ideas in a relatively short period of
time.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
When using
the sketch pad, the entrepreneur asks a series of key questions addressing five
key parameters.</div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<b>Sketch
Pad<o:p></o:p></b></div>
<br /><div class="MsoNormal" style="line-height: normal; text-align: center;">
<o:p> </o:p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLOpzsJzh1H0eL8od43jxlXB4kq5AHr1L8AZAYKsXn_kKN2aD0RaprLQTeR0OMuFoF9LTfkVtAOhceD1y8M4YJyZB0WDNe2lYtDBoqJiJ7JkxFeQaJl3P9idSCmnD1KwybjA4C3BhH1mzz/s1600/2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="379" data-original-width="570" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLOpzsJzh1H0eL8od43jxlXB4kq5AHr1L8AZAYKsXn_kKN2aD0RaprLQTeR0OMuFoF9LTfkVtAOhceD1y8M4YJyZB0WDNe2lYtDBoqJiJ7JkxFeQaJl3P9idSCmnD1KwybjA4C3BhH1mzz/s320/2.png" width="320" /></a></div>
<div class="MsoNormal" style="line-height: normal;">
<b>Use
an idea sketch pad to ask key questions addressing: <o:p></o:p></b></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in; mso-list: l0 level2 lfo1; tab-stops: list 1.0in; text-indent: -.25in;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->Customers.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
Start with
a group of customers who have a clear need that is not being addressed. This
may be a need that no business is currently addressing, or it may be a need
that no business is fully or adequately meeting for these customers. The
entrepreneur assesses the customers by answering basic questions about the
potential users of the product or service and the potential buyers if they are
different than the users. For instance, for sugary cereals, children are the
users and their parents are the buyers. Specifically who would be the users of
the offering? </div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
How would they use the offering? </div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
How many potential customers are
there?<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in; mso-list: l0 level2 lfo1; tab-stops: list 1.0in; text-indent: -.25in;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->Offering<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
Describe
your idea for a product or service to offer the customers. </div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
Are you offering a
product, a service, an experience, or a combination of one or more of these? </div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
What are its key features? </div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
Describe it in detail and sketch out an image of it
if you can.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in; mso-list: l0 level2 lfo1; tab-stops: list 1.0in; text-indent: -.25in;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->Value Proposition<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
Explain
why your product or service will be important to the customers. </div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
Why would your
offering be valuable to the user and/or buyer? </div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
How does it address the need
these customers currently have that is not being met?<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in; mso-list: l0 level2 lfo1; tab-stops: list 1.0in; text-indent: -.25in;">
<!--[if !supportLists]-->4.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->Core competencies<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
Does your
offering include any technologies or unique features that will help
differentiate it from competitors? </div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
Is it based on intellectual property that
you can protect?<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in; mso-list: l0 level2 lfo1; tab-stops: list 1.0in; text-indent: -.25in;">
<!--[if !supportLists]-->5.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->People<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
</div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
Identify
the key people on the team who will launch this business<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<b>Feasibility
Analysis<o:p></o:p></b></div>
<div class="MsoNormal" style="line-height: normal;">
After conducting the idea assessment,
an entrepreneur scrutinizes the idea further through a feasibility analysis. A
feasibility analysis consists of four interrelated components: an industry and
market feasibility analysis, a product or service feasibility analysis, a
financial feasibility analysis, and an entrepreneur feasibility analysis Look
at this picture.</div>
<div class="MsoNormal" style="line-height: normal;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEij7ae4FtFPDSyqJjWEdGF5YyYfE5Zd5W6PTHJXBnGWoRICP1xzW37HAigVbkABg9EjyKL745FhVibJPjeg5GuTV6UOeVOk8MwBu03j3YcKtfVQU_j5ssSHshgdxi4lDM_skzqEa1eYYg2O/s1600/3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="398" data-original-width="457" height="278" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEij7ae4FtFPDSyqJjWEdGF5YyYfE5Zd5W6PTHJXBnGWoRICP1xzW37HAigVbkABg9EjyKL745FhVibJPjeg5GuTV6UOeVOk8MwBu03j3YcKtfVQU_j5ssSHshgdxi4lDM_skzqEa1eYYg2O/s320/3.png" width="320" /></a></div>
<div class="MsoNormal" style="line-height: normal;">
</div>
<br /><div class="MsoNormal" style="line-height: normal;">
<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<b><span lang="IN">Product Feasibility Analysis<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in; mso-list: l1 level1 lfo2; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Determines the degree to which a product or
service idea appeals to potential customers and identifies the resources
necessary to produce it. <o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in; mso-list: l1 level1 lfo2; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Two questions:<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in; mso-list: l1 level2 lfo2; tab-stops: list 1.0in; text-indent: -.25in;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->Are customers willing to purchase our product
or service?<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in; mso-list: l1 level2 lfo2; tab-stops: list 1.0in; text-indent: -.25in;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->Can we provide the product or <br />
service to customers at a profit? <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<b><span lang="IN">Financial Feasibility Analysis<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in; mso-list: l3 level1 lfo7; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Capital requirements: an estimate of how much
start-up capital is required to launch the business.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in; mso-list: l3 level1 lfo7; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Estimated earnings: forecasted income
statements.<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Time out of cash: the total cash it will take
to sustain the business until the business achieves break-even cash flow. <o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in; mso-list: l3 level1 lfo7; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Return on investment: combining the previous
two estimates to determine how much investors can expect their investments to
return. <o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in; mso-list: l3 level1 lfo7; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Is this idea right for me?<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">–<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Assess entrepreneurial readiness: knowledge,
experience, and skills necessary for entrepreneurs to be successful.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: 1.0in; mso-list: l4 level2 lfo8; tab-stops: list 1.0in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">–<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Assess whether the business will be able to
generate enough profit to support everyone’s income needs.<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Entrepreneur Feasibility<o:p></o:p></div>
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<br /></div>
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<br /></div>
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<b><o:p> </o:p><span style="text-indent: -0.25in;">Research:</span></b></div>
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<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">–<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b>Primary
research: <br />
</b>Collect
data firsthand and analyze it.<br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><b><o:p></o:p></b></div>
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<span lang="IN">Primary Research Techniques</span> :<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Customer surveys and questionnaires<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Focus groups<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Prototypes<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->In-home trials<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->“Windshield” research<br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">–<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b>Secondary
research:</b> <br />
Gather data that already has been compiled and analyze it. <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in; text-indent: .5in;">
<span lang="IN">Secondary Research Techniques</span>:<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Trade associations and business directories<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Industry databases<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Demographic data<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Forecasts<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Articles<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Local data<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Internet<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal;">
Rhonda Abrams, nationally syndicated
columnist, author, and successful entrepreneur, says that feasibility analysis
is an opportunity to take a hard look at your idea to see whether it needs
minor or major pivots, or if warranted, to be completely abandoned so you can
move on to another idea<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal;">
When evaluating the feasibility of a
business idea, an analysis of the industry and targeted market segments serves
as the starting point for the remaining three components of a feasibility
analysis. The focus in this phase is two-fold: <o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal;">
(1) To determine how attractive an
industry is overall as a “home” for a new business and <o:p></o:p></div>
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(2) to evaluate possible niches a
small business can occupy profitably.<o:p></o:p></div>
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</div>
<div class="MsoNormal" style="line-height: normal;">
<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<o:p><br /></o:p></div>
<div class="MsoNormal" style="line-height: normal;">
<b>Industry
and Market Feasibility<o:p></o:p></b></div>
<div class="MsoNormal" style="line-height: normal;">
The first step in assessing industry
attractiveness is to paint a picture of the industry in broad strokes,
assessing it from a “macro” level. Most opportunities for new businesses within
an industry are due to changes taking place in that industry.<o:p></o:p></div>
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<o:p>
</o:p></div>
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If the entrepreneur does not adapt the
business to meet the changes these macro forces create in the industry and
market, even the most innovative new business may become outdated and left
behind in the competitive landscape.<br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></div>
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<b>Environtment
Forces and New Venture<o:p></o:p></b></div>
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<b><br /></b></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi2aNCjJdOeImEojL9h-fzb_ui3-OSSgpheei181uoH5gT3KCJsHcgLGuJLrEF4_0qxWwZZhAswmilGRkE1SUADt3mvWjTvIARsv9aML07fw59y7V4ykzfY7X97Eind1_ViC4cXHk5t02L-/s1600/4.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="436" data-original-width="468" height="297" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi2aNCjJdOeImEojL9h-fzb_ui3-OSSgpheei181uoH5gT3KCJsHcgLGuJLrEF4_0qxWwZZhAswmilGRkE1SUADt3mvWjTvIARsv9aML07fw59y7V4ykzfY7X97Eind1_ViC4cXHk5t02L-/s320/4.png" width="320" /></a></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<b><span lang="IN">Industry and Market Feasibility
Analysis<o:p></o:p></span></b></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->Assess industry attractiveness using six macro
forces:<o:p></o:p></div>
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<!--[if !supportLists]-->1.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->Sociocultural<o:p></o:p></div>
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This
cultural change led to the birth of the daycare industry. It also resulted in a
new segment within the women’s fashion industry for women’s business attire. It
led to rapid growth in the restaurant industry as families began eating in
restaurants much more frequently than previous generations and to a growth
period for the auto industry as the percentage of families with two cars
doubled from 1960 to 2011<o:p></o:p></div>
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<br /></div>
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<!--[if !supportLists]-->2.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->Technological<o:p></o:p></div>
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Technological
breakthroughs lead to the development of new products and entirely new
industries The Internet also changed how people consume information. As the
news became available online, there was a dramatic decrease in the number of
people reading print newspapers. As result, advertising revenues have plummeted
for print newspapers, while online newspapers have experienced steady growth in
advertising. <o:p></o:p></div>
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<br /></div>
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<!--[if !supportLists]-->3.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->Demographic<o:p></o:p></div>
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Changing
demographics create opportunities for entrepreneurs, e in Generation Z will
seek products and services that offer value. In a survey of members of
Generation Z conducted by the Intelligence Group, 57 percent said they would
rather save money than spend it!<o:p></o:p></div>
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<br /></div>
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<!--[if !supportLists]-->4.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->Economic<o:p></o:p></div>
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Although
many companies struggle during economic downturns, some businesses are able to
grow, Companies that provide high quality Web-based e-learning at a fraction of
the cost of traditional university-based education filled this gap in the
market.<o:p></o:p></div>
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<br /></div>
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<!--[if !supportLists]-->5.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->Political and legal <o:p></o:p></div>
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The
enactment of new legislation creates opportunities for entrepreneurs, Because
pay-for-performance is new to healthcare, savvy entrepreneurs are creating new
companies that help healthcare providers and hospitals to track and report
performancerelated metrics based on the value of the healthcare they provide,
measure and improve quality of healthcare outcomes, and enhance efficiency in
their healthcare delivery systems<o:p></o:p></div>
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<br /></div>
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<!--[if !supportLists]-->6.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->Global<o:p></o:p></div>
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Global
trends create opportunities for even the smallest of companies. More open
global markets allow businesses to seek customers and suppliers from all
corners of the world<o:p></o:p></div>
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<br /></div>
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<o:p><br /></o:p></div>
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<b><span lang="IN">Porter’s Five Forces Model</span></b><b><o:p></o:p></b></div>
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Five forces interact with one another
to determine the setting in which companies compete and, hence, the
attractiveness of the industry:<o:p></o:p></div>
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<br /></div>
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<div class="MsoNormal" style="line-height: normal;">
<br /></div>
<div align="center" class="MsoNormal" style="line-height: normal; text-align: center;">
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<ol start="1" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level1 lfo1; tab-stops: list .5in;">Rivalry among companies in the industry<o:p></o:p></li>
</ol>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Strongest
of the five forces<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Industry
is more attractive when:<o:p></o:p></div>
<ol start="1" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Number of competitors is large, or, at
the other extreme, quite small<o:p></o:p></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Competitors are not similar in size or
capacity<o:p></o:p></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Industry is growing fast<o:p></o:p></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Opportunity to sell a differentiated
product or service exists<o:p></o:p></li>
</ol>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
<br /></div>
<ol start="2" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level1 lfo1; tab-stops: list .5in;">Bargaining power of suppliers<o:p></o:p></li>
</ol>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
The
greater the leverage of suppliers, the less attractive the industry.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Industry
is more attractive when:<o:p></o:p></div>
<ol start="2" style="margin-top: 0in;" type="1">
<ol start="1" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Many suppliers sell a commodity product<o:p></o:p></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Substitutes are available<o:p></o:p></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Switching costs are low<o:p></o:p></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Items account for a small portion of the
cost of finished products<o:p></o:p></li>
</ol>
</ol>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
<br /></div>
<ol start="3" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level1 lfo1; tab-stops: list .5in;">Bargaining power of buyers<o:p></o:p></li>
</ol>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Buyers’
influence is high when number of customers is small and cost of switching to a
competitor’s product is low. <o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Industry
is more attractive when:<o:p></o:p></div>
<ol start="3" style="margin-top: 0in;" type="1">
<ol start="1" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Customers’ switching costs are high<o:p></o:p></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Number of buyers is large<o:p></o:p></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Customers want differentiated products<o:p></o:p></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Customers find it difficult to collect
information for comparing suppliers<o:p></o:p></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Items account for a small portion of
customers’ finished products <o:p></o:p></li>
</ol>
</ol>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
<br /></div>
<ol start="4" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level1 lfo1; tab-stops: list .5in;">Threat of new entrants<o:p></o:p></li>
</ol>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
The larger
the pool of potential new entrants, the less attractive an industry is.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Industry
is more attractive to new entrants when:<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Advantages
of economies of scale are absent<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Capital
requirements to enter are low<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Cost
advantages are not related to company size<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Buyers are
not loyal to existing brands<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Government
does not restrict the entrance of new companies <o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
<br /></div>
<ol start="5" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level1 lfo1; tab-stops: list .5in;">Threat of substitute products or services<o:p></o:p></li>
</ol>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Substitute
products or services can turn an industry on its head.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
Industry
is more attractive to new entrants when:<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
<o:p>
</o:p></div>
<ol start="5" style="margin-top: 0in;" type="1">
<ol start="1" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Quality substitutes are not readily
available<o:p></o:p></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Prices of substitute products are not
significantly lower than those of the industry’s products<o:p></o:p></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l0 level2 lfo1; tab-stops: list 1.0in;">Buyers’ switching costs are high</li>
</ol>
</ol>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRG6jIqEH-gb7E_-Zsyv5YHa1eDyxGXCITf6wSFfvyE654FIVsAsENVJwm7t6APqEZ9l5TxQSDUwr0btrTnk08Hx7AJ3W8-Kro1agd46T0UT9ZTurCCBSbNePUfq8MydprjUvQvCrS-T9J/s1600/6.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="367" data-original-width="767" height="305" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRG6jIqEH-gb7E_-Zsyv5YHa1eDyxGXCITf6wSFfvyE654FIVsAsENVJwm7t6APqEZ9l5TxQSDUwr0btrTnk08Hx7AJ3W8-Kro1agd46T0UT9ZTurCCBSbNePUfq8MydprjUvQvCrS-T9J/s640/6.png" width="640" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .25in;">
<b><span lang="IN">Conclusion<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in; mso-list: l0 level1 lfo1; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->The best business ideas start with a common
problem or need.<o:p></o:p></div>
<div class="separator" style="clear: both;">
</div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in; mso-list: l0 level1 lfo1; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->The ideas assessment process helps an
entrepreneur more efficiently and effectively examine multiple ideas to
identify the solution with the most potential.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in; mso-list: l0 level1 lfo1; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">•<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]-->A feasibility analysis helps the entrepreneur
determine whether an idea can be transformed into a viable business.<o:p></o:p></div>
<div>
</div>
<div class="MsoNormal" style="line-height: normal;">
<b><br /></b></div>
<div class="MsoNormal" style="line-height: normal;">
<b>BUSINESS MODEL</b></div>
<div class="MsoNormal" style="line-height: normal;">
<b><br /></b></div>
<div class="MsoNormal" style="line-height: normal;">
<b>Developing
and Testing a Business Model<o:p></o:p></b></div>
<div class="MsoNormal" style="line-height: normal;">
When building a business model, the
entrepreneur addresses a series of key questions that<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal;">
will explain how a business will
become successful. </div>
<div class="MsoNormal" style="line-height: normal;">
<br /></div>
<div class="MsoNormal" style="line-height: normal;">
In their study, Osterwalder and
Pigneur found a pattern of how entrepreneurs use a visual<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal;">
representation of their business model
to answer these questions. They used these findings to<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal;">
develop a Business Model Canvas that
provides entrepreneurs with a dynamic framework to<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal;">
guide them through the process of
developing, testing, and refining their business models<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal;">
</div>
<div class="MsoNormal" style="line-height: normal;">
The canvas is comprised of nine
elements:<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-left: .5in;">
<o:p></o:p></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIhrwr-z56wyIb3k87On9MPJkelMTRMQwrd-x2wc8XIspdOALva5iNHHNpiTuB1wSqwKdDeR97N4ht_Nyq88sbuvcgTgd7cOBLsDD2ezPGF2sAtb9alxoF-yDWvw_D54VBwXnMX3M7Aki2/s1600/7.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="383" data-original-width="610" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjIhrwr-z56wyIb3k87On9MPJkelMTRMQwrd-x2wc8XIspdOALva5iNHHNpiTuB1wSqwKdDeR97N4ht_Nyq88sbuvcgTgd7cOBLsDD2ezPGF2sAtb9alxoF-yDWvw_D54VBwXnMX3M7Aki2/s640/7.png" width="640" /></a></div>
1.Customer segments<br />
A good business model always starts with the customer. The entrepreneur’s first step is to identify a segment of customers who have a clearly defined need. In the previous steps outlined in this chapter, the entrepreneur begins to define the market for the new business. For most entrepreneurs, the initial market is defined much too broadly<br />
Who is it, specifically, that has the needs the new business will be addressing with its products and/or services? It may be a market niche. It may be a mass market. Or it may be a segmented market based on age, gender, geography, or socioeconomic grouping.<br />
<br />
2.Value proposition<br />
The value proposition is the collection of products and/or services the business will offer to meet the needs of the customers. It is all the things that will set the business apart from its competitors, such as pricing, quality, features, product availability, and other features.<br />
<br />
3.Customer relationships<br />
This is what defines the customer relationship in the business model. For example, several effective business models provide meals to consumers. Customers may choose to buy food from a vending machine, a fast-food restaurant, a fast casual sit-down restaurant, or an exclusive fine dining establishment.<br />
There is no one best approach to customer relationship for all businesses, but there usually is one best approach for each particular business model.<br />
<br />
4.Channels<br />
Communication channels define how the customers seek out information about this type of product. Where do potential customers go to when they want to get information about products and services? It could be Web sites, social networks, blogs, advertisements, experts, and so forth<br />
<br />
5.Key activities.<br />
What important things must the entrepreneur do to ensure a successful launch and to sustain the growth of the business? In the business model, the goal is to build a basic checklist of what needs to be done to open the business and what activities are necessary to ensure its long-term success. The development of the business plan will then take this list and expand on it in much greater detail<br />
<br />
6.Key resources<br />
serve as an initial checklist to ensure that the entrepreneur has identified all key resources necessary to support a successful launch and to sustain the business as it grows. The business plan provides the opportunity to explain these in much greater detail and develop all necessary cost estimates for the financial forecasts<br />
<br />
7.Key partners<br />
This segment of the business model includes key suppliers, key outsourcing partners, investors, industry partners, advisers, and all other external businesses or entities that are critical to make the business model work. Entrepreneurs cannot expect to become successful all by themselves. They must build a network of relationships when launching and growing their businesses.<br />
<br />
8.Revenue streams.<br />
The revenue streams information serves as the framework for the more detailed revenue forecasts developed for the business plan.<br />
<div>
<br /></div>
<div>
<br /></div>
<div>
<div class="MsoNormal" style="line-height: normal;">
The third phase is to test the
solution to the problem in the market. One technique to test the solution
offered by the business model involves business prototyping, in which
entrepreneurs test their business models on a small scale before committing
significant resources to launch a business that might not work. Business
prototyping recognizes that every business idea is a hypothesis that must be
tested before an entrepreneur takes it to full scale. If the test supports the
hypothesis and its accompanying assumptions, the entrepreneur takes the next
step of building a business plan. If the prototype flops, the entrepreneur
scraps the business idea with only minimal losses and turns to the next idea.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal;">
<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<b>Conclusion
<o:p></o:p></b></div>
<div class="MsoNormal" style="line-height: normal;">
Entrepreneurs can follow five steps to
guide the process of turning a great new idea into a successful business. This
chapter examines the first three steps in this process. The best business ideas
start with a group of customers with a common problem or need. Once
entrepreneurs develop ideas for new businesses, the first step is to assess
these ideas by examining a need in the market, developing a solution for that
need, and determining the entrepreneur’s ability to successfully turn the idea
into a business. The idea assessment process helps an entrepreneur more
efficiently and effectively examine multiple ideas to identify the solution
with the most potential. The second step is to conduct a feasibility analysis
to determine whether the entrepreneur can transform the idea into a viable
business. The role of a feasibility analysis is to serve as a filter, screening
out ideas that lack the potential for building a successful business, before an
entrepreneur commits the necessary resources to develop and test a business
model or to build a business plan.<o:p></o:p></div>
</div>
Kinamattohttp://www.blogger.com/profile/14546077064095070172noreply@blogger.com0tag:blogger.com,1999:blog-2472169396197480006.post-30828523673606697582019-02-27T18:47:00.004+07:002019-02-27T19:02:37.348+07:00Launching The Business & Putting The Business<div class="separator" style="clear: both; text-align: center;">
<a href="https://s3.amazonaws.com/influencive.com/wp-content/uploads/2016/11/08185308/Depositphotos_22928632_m-2015.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="507" data-original-width="768" height="211" src="https://s3.amazonaws.com/influencive.com/wp-content/uploads/2016/11/08185308/Depositphotos_22928632_m-2015.jpg" width="320" /></a></div>
Nama : Jibril Muhammad Irvan<br />
<br />
<br />
<div class="MsoNormal">
SECTION III Launching the Business <o:p></o:p></div>
<div class="MsoListParagraph" style="mso-list: l6 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-size: 12.0pt; line-height: 107%;">Chapter 8 Building a Powerful Bootstrap Marketing Plan<o:p></o:p></span></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Building a Bootstrap
Marketing Plan<o:p></o:p></b></div>
<div class="MsoNormal">
<u>Marketing</u> is the process of creating and delivering
desired goods and the services for customers and it will be involves all of the
activities which associated with winning and retaining loyal customers. The
“secret” to successful marketing is to understand what your target customers’
needs, demands, and wants are before your competitors can; to offer them the
products and services that will satisfy those needs, demands, and wants; and to
provide customer service, convenience, and value so that they will keep coming
back.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Successful entrepreneurs recognize that modern marketing
strategies also must include techniques such as social media and cause
marketing that pull customers into their companies’ sphere of influence. The
good news is that many of these “pull” strategies are relatively inexpensive
and, when infused with a healthy dose of creativity, are extremely effective. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
By using bootstrap marketing strategies—unconventional,
low-cost, creative techniques—small companies can wring as much or more “bang”
from their marketing bucks An effective bootstrap marketing campaign does not
require an entrepreneur to spend large amounts of money, but it does demand
creativity, ingenuity, and an understanding of customers’<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
A Seven-Sentence Bootstrap (Guerrilla) Marketing Strategy<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->What is the purpose of your marketing?<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->What primary benefit can you offer customers?<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Who is your target market?<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->What is the marketing tools will you use to
reach your target market?<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->What is your company’s niche in the marketplace?<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">6.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->What is your company’s identity in the
marketplace?<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo2; text-indent: -.25in;">
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</span></span></span><!--[endif]-->How much your budget want to spent in
marketing??<o:p></o:p></div>
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<b style="mso-bidi-font-weight: normal;">Pinpointing the
Target Market<o:p></o:p></b></div>
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One of the first steps in building a bootstrap marketing
plan is to identify a small company’s target market Smart entrepreneurs know
they do not have the luxury of wasting resources. They must follow a more
focused, laserlike approach to marketing. Entrepreneurs must identify a
specific market niche that has a specific need or “pain point” and tailor a
solution, be it a product or a service, to address this need<o:p></o:p></div>
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Most successful businesses have well-defined portraits of
the customers they are seeking to attract. From market research, they know
their customers’ income levels, lifestyles, buying patterns, likes and
dislikes, and even their psychological profiles—why they buy. These companies
offer prices that are appropriate to their target customers’ buying power,
product lines that appeal to their tastes, and service they expect. The payoff
comes in the form of higher sales, profits, and customer loyalty. For
entrepreneurs, pinpointing target customers has become more important than ever
before as markets in the United States have become increasingly fragmented and
diverse. Mass marketing techniques no longer reach customers the way they did
30 years ago because of the splintering of the population and the influence
exerted on the nation’s purchasing patterns by what were once minority groups
such as Hispanic, Asian, and African Americans<o:p></o:p></div>
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<b style="mso-bidi-font-weight: normal;">Determining Customer
Needs and Wants through Market Research <o:p></o:p></b></div>
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Entrepreneurs who ignore demographic trends and fail to
adjust their strategies accordingly run the risk of becoming competitively
obsolete. Entrepreneurs who stay in tune with demographic, social, and economic
trends are able to spot growing and emerging market opportunities.<o:p></o:p></div>
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<b style="mso-bidi-font-weight: normal;">The Value of Market Research <o:p></o:p></b></div>
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Market research is the vehicle for
gathering the information that serves as the foundation for the marketing plan.
It involves systematically collecting, analyzing, and interpreting data
pertaining to a company’s<o:p></o:p></div>
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Small companies cannot afford to
make marketing mistakes because there is little margin for error when funds are
scarce and budgets are tight.<o:p></o:p></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;">How to Conduct Market Research<o:p></o:p></b></div>
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Step 1. Define the objective.<o:p></o:p></div>
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Step 2. Collect the data<o:p></o:p></div>
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Step 3. Analyze and interpret the
data.<o:p></o:p></div>
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Step 4. Draw conclusions and act<o:p></o:p></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;">Plotting a Bootstrap
Marketing Strategy: How to Build a Competitive Edge<o:p></o:p></b></div>
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To be successful bootstrap marketers, entrepreneurs must be
as innovative in creating their marketing strategies as they are in developing
new product and service ideas<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
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<b style="mso-bidi-font-weight: normal;">Bootstrap Marketing Principles<o:p></o:p></b></div>
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The following 14 principles can
help business owners create powerful, effective bootstrap marketing strategies.<o:p></o:p></div>
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BE A NICHE AND USE IT<o:p></o:p></div>
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USE THE POWER OF PUBLIC<o:p></o:p></div>
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DO NOT JUST SELL BUT ENTERTAIN
TOO!<o:p></o:p></div>
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YOU NEED TO STRIVE TO BE UNIQUE
THAN OTHER<o:p></o:p></div>
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COMMUNITY WITH
CUSTOMERS IS IMPORTANT<o:p></o:p></div>
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CONNECT WITH CUSTOMERS ON AN
EMOTIONAL LEVEL<o:p></o:p></div>
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CREATE AN IDENTITY FOR YOUR
BUSINESS THROUGH BRANDING<o:p></o:p></div>
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EMBRACE SOCIAL MARKETING<o:p></o:p></div>
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BE DEDICATED TO SERVICE AND
CUSTOMER SATISFACTION<o:p></o:p></div>
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RETAIN EXISTING CUSTOMERS<o:p></o:p></div>
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BE DEVOTED TO QUALITY<o:p></o:p></div>
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ATTEND TO CONVENIENCE<o:p></o:p></div>
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CONCENTRATE ON INNOVATION<o:p></o:p></div>
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EMPHASIZE SPEED<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
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<b style="mso-bidi-font-weight: normal;">Conclusion<o:p></o:p></b></div>
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Small companies lack the marketing budgets of their larger
rivals, but that does not condemn them to the world of second-class marketers
and its resulting anonymity. By using clever, innovative bootstrap marketing
strategies such as the ones described in this chapter, entrepreneurs can put
their companies in the spotlight and create a special connection with their
customers.<o:p></o:p></div>
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E-commerce has created a new way of doing business, one that
is connecting producers, sellers, and customers via technology in ways that
have never been possible before. The characteristic of successful companies are
they are embracing the Internet not merely as another advertising medium or
marketing tool but as a mechanism for transforming their companies and changing
everything about the way they do business. The winners are discovering new
business opportunities, improved ways of designing work, and better ways of
organizing and operating their businesses.<o:p></o:p></div>
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The connection between online and offline business runs both
ways. As a result of offline exposure to a company’s ads, shoppers are likely
to conduct online Web searches of the products and services they see
advertised. In addition, customers value other shoppers’ opinions about the
products they purchase and their shopping experiences with companies<o:p></o:p></div>
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<b style="mso-bidi-font-weight: normal;">Factors to Consider
before Launching into E-Commerce <o:p></o:p></b></div>
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Before launching an e-commerce effort, entrepreneurs should
consider the following important strategic issues: <o:p></o:p></div>
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● The way in which a company exploits the Internet’s
interconnectivity and the opportunities it creates to transform relationships
with its suppliers and vendors, its customers, and other external stakeholders
are crucial to its success. <o:p></o:p></div>
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● Success requires a company to develop a plan for
integrating the Internet into its overall business strategy. The plan should
address issues such as Web site design and maintenance, creating and managing a
brand name, marketing and promotional strategies, sales, and customer service. <o:p></o:p></div>
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● Developing deep, lasting relationships with customers
takes on even greater importance on the Internet. Attracting online customers
costs money, and companies must be able to retain their online customers to
make their Web sites profitable. That means that online companies must give
their customers good reasons to keep coming back. <o:p></o:p></div>
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● Creating a meaningful presence on the Internet requires an
ongoing investment of resources—time, money, energy, and talent. Establishing
an attractive Web site brimming with catchy photographs and descriptions of
products is only the beginning. <o:p></o:p></div>
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● Measuring the success of its Internet-based sales effort
is essential if a company is to remain relevant to customers whose tastes,
needs, and preferences are always changing. Using Web analytics to continuously
improve a Web site is essential. <o:p></o:p></div>
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Doing business on the Internet takes more time and energy
than many entrepreneurs expect. The following six factors are essential to
achieving e-commerce success: <o:p></o:p></div>
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● Acquiring customers. The first e-commerce skill that
entrepreneurs must master is acquiring customers, which requires them to drive
traffic to their Web sites. Entrepreneurs must LO1 Understand the factors an
entrepreneur should consider before launching into e-commerce. <o:p></o:p></div>
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develop a strategy for using the many available tools, which
range from display ads and Google Adwords to social media and search marketing.
<o:p></o:p></div>
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● Optimizing conversions. Every online entrepreneur’s goal
is to convert Web site visitors into paying customers. The efficiency with
which an online company achieves this goal plays a significant role in
determining its profitability. Unfortunately, more than 97 percent of visitors
to the typical retail Web site do not purchase anything. <o:p></o:p></div>
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● Maximizing Web site performance. Once shoppers find a
company’s Web site, they should encounter a site that downloads quickly, is
easy to navigate, and contains meaningful content they can find quickly and
efficiently. A fast, simple checkout process also is essential. Otherwise,
shoppers will abandon the site, never to return. <o:p></o:p></div>
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● Ensuring a positive user experience. Achieving customer
satisfaction online is just as important as it is offline. Visitors who are
satisfied with a site are 71 percent more likely to purchase from the site (and
67 percent more likely to purchase in the future) than visitors who are
dissatisfied.15 An above-average bounce rate (the percentage of singlepage
visits to a Web site) and shopping cart abandonment rate and a conversion rate
that is below average are signs that a company’s Web site is not providing a
positive customer experience. <o:p></o:p></div>
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● Retaining customers. Just as in offline stores, customer
retention is essential to the success of online businesses. One study reports
that increasing customer retention by 2 percent produces the same financial
impact as reducing costs by 10 percent.16 Entrepreneurs must create an online
shopping experience that engages customers, offers them value, and provides
them with convenience. <o:p></o:p></div>
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● Use Web analytics as part of a cycle of continuous
improvement. Entrepreneurs have a multitude of Web analytics tools (many of
them free) that they can use to analyze the performance and effectiveness of
their Web sites. A Web site is never really “finished”; it is always a work in
progress, and analytics tools provide the data for driving continuous
improvement. Unfortunately, a survey conducted by The Incyte Group and SiteApps
reports that 75 percent of small business owners do not use analytics tools to
measure their Web sites’ performance. “Small businesses know how important
their web presence is for presenting a desirable online identity and attracting
new customers, yet don’t fully understand how to achieve those goals, implement
new technologies, or adapt to new trends as deftly as larger companies,” says
Phillip Klien, CEO of SiteApps.<o:p></o:p></div>
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<b style="mso-bidi-font-weight: normal;">Ten Myths of
E-Commerce <o:p></o:p></b></div>
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<b style="mso-bidi-font-weight: normal;">Myth 1. If I Launch a Site, Customers Will Flock to It <o:p></o:p></b></div>
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Some entrepreneurs think that once
they set up their Web sites, their expenses end there. Not true! Without
promotional support, no Web site will draw enough traffic to support a
business. With more than 785 million Web sites in existence and 51 million
added each year, getting a site noticed in the crowd has become increasingly
difficult<o:p></o:p></div>
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<b style="mso-bidi-font-weight: normal;">Myth 2. Online Customers Are Easy to Please<o:p></o:p></b></div>
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Customers who shop online today
tend to be experienced Internet users whose expectations of their online
shopping experiences are high and continue to rise. Experienced online shoppers
tend to be unforgiving, quickly clicking to another site if their shopping
experience is subpar or they cannot find the products and information they
want. Because Web shoppers are increasingly more discriminating, companies are
finding that they must improve their Web sites constantly to attract and keep
their customers.<o:p></o:p></div>
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<b style="mso-bidi-font-weight: normal;">Myth 3. Making Money on the Web Is Easy <o:p></o:p></b></div>
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Promoters who hawk “get-rich-quick”
schemes on the Internet lure many entrepreneurs with the promise that making
money online is easy. It isn’t. Doing business online can be very profitable,
but making money online requires an up-front investment of time, money, and
energy. Success online also requires a sound business strategy that is aimed at
the appropriate target audience and that an entrepreneur must implement
effectively and efficiently—in other words, the same elements that are required
for success offline. Many entrepreneurs are earning healthy profits from their
Web-based businesses, but doing so requires hard work!<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
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<b style="mso-bidi-font-weight: normal;">Myth 4. Privacy Is Not an Important Issue on the Web <o:p></o:p></b></div>
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The Internet allows companies to
gain access to almost unbelievable amounts of information about their
customers’ online behavior. Tracking tools monitor customers’ behavior while
they are on a site, giving Internet-based businesses the information they need
to make their Web sites more customer friendly. Many sites also offer visitors
“freebies” in exchange for information about themselves. Companies then use
this information to learn more about their target customers and how to market
to them more effectively. Concern over privacy and the proper use of this
information has become the topic of debate by many interested parties,
including government agencies, consumer watchdog groups, and customers
themselves<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
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<b style="mso-bidi-font-weight: normal;">Myth 5. “Strategy? I Don’t Need a Strategy to Sell on the Web! Just
Give Me a Web Site, and the Rest Will Take Care of Itself” <o:p></o:p></b></div>
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Building a successful e-business is
no different than building a successful brick-and-mortar business. It requires
a well-thought-out strategy. Building a strategy means an entrepreneur must
first develop a clear definition of the company’s target audience and a
thorough understanding of those customers’ needs, wants, likes, and dislikes.
To be successful, a Web site must be appealing to the customers it seeks to
attract just as a traditional store’s design and decor must draw foot traffic.
If a Web site is to become the foundation for a successful e-business, an
entrepreneur must create it with the target audience in mind<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Myth 6. The Most Important Part of Any E-Commerce Effort Is Technology <o:p></o:p></b></div>
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Technology advances have reduced
significantly the cost of launching an e-commerce business. Brian Walker, an
e-commerce expert at Forrester Research, says that a just decade ago, the cost
to launch an online retail business was three to five times higher than it is
today. “The technology to run the site, the physical warehouse, site hosting,
and staff required a significant investment before the site even went live,”
says Walker. 27 Modern e-commerce entrepreneurs can build a Web site for next
to nothing, outsource the tasks of storing and shipping products, lease space
on a server, and rent cloud-computing software to operate their online
businesses—all of which lower the cost and the complexity of starting an online
company.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Myth 7. Customer Service Is Not as Important Online as It Is in a
Traditional Retail Store <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
The Internet offers the ultimate in
shopping convenience. Numerous studies report that convenience and low prices
are the primary drivers of online shopping. In fact, customers say convenience
is more important than getting the lowest prices when shopping online. 30 With
just a few mouse clicks or taps on the screen of a smart phone or tablet,
people can shop for practically anything anywhere in the world and have it
delivered to their doorsteps within days. As convenient as online shopping is,
customers still expect high levels of service. Unfortunately, some e-commerce
companies treat customer service as an afterthought, an attitude that costs
businesses in many ways, including lost customers and a diminished public
image. The fact is that customer service is just as important (if not more so) on
the Web as it is in traditional brick-andmortar stores.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Myth 8. Flashy Web Sites Are Better Than Simple Ones <o:p></o:p></b></div>
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Businesses that fall into this trap
pour significant amounts of money into designing flashy Web sites with all of
the “bells and whistles.” The logic is that to stand out online, a site really
has to sparkle. That logic leads to a “more-is-better” mentality when designing
a site. On the Internet, however, “more” does not necessarily equate to
“better.” A Web site that includes a simple design, easy navigation, clear
calls to action on every page, and consistent color schemes show that a company
is putting its customers first. A site that performs efficiently and loads
quickly is a far better selling tool than one that is filled with “cornea
gumbo,” slow to download, and confusing to shoppers<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Myth 9. It’s What’s Up Front That Counts <o:p></o:p></b></div>
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Designing an attractive, efficient
Web site and driving traffic to it are important to building a successful
e-business. However, designing the back office, the systems that take over once
customers place their orders on a Web site, is just as important as designing
the site itself. If the behind-thescenes support is not in place or cannot
handle the traffic from the Web site, a company’s entire e-commerce effort will
come crashing down. The potentially large number of orders that a Web site can
generate can overwhelm a small company that has failed to establish the
infrastructure needed to support the site. Although e-commerce can lower many
costs of doing business, it still requires a basic infrastructure in the
channel of distribution to process orders, maintain inventory, fill orders, and
handle customer service.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Myth 10. My Business Doesn’t Need a Web Site <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
Nearly one in five small businesses
does not have a Web site, and many of those that do have sites that lack the
ability to make sales online. To online shoppers, especially, these businesses
might as well be invisible because doing business online and offline are
inextricably connected. Today’s shoppers prefer to purchase from companies that
offer a multichannel approach, particularly those that offer in-store pick-up
for online orders and in-store returns for online purchases. 48 A multichannel
approach pays big dividends even for small businesses that consider themselves
completely “local.”<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Strategies for
E-Success <o:p></o:p></b></div>
<div class="MsoNormal">
People now spend more time online than ever before. Today,
the average American spends more time with digital media than he or she does
watching television. 52 However, converting these digital users into online
customers requires a business to do more than merely set up a Web site and wait
for the hits to start rolling up. Building sufficient volume for a site takes
energy, time, money, creativity, and, perhaps most important, a well-defined
strategy.<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->FOCUS ON A NICHE IN THE MARKET<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l6 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->DEVELOP A COMMUNITY<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l6 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->LISTEN TO YOUR CUSTOMERS AND ACT ON WHAT YOU
HEAR<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->ATTRACT VISITORS BY GIVING AWAY “FREEBIES”<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->SELL THE “EXPERIENCE”<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->MAKE CREATIVE USE OF E-MAIL BUT AVOID BECOMING A
“SPAMMER”<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->MAKE SURE YOUR WEB SITE SAYS “CREDIBILITY”<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l6 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->MAKE THE MOST OF THE WEB’S GLOBAL REACH<o:p></o:p></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Designing a Killer
Web Site <o:p></o:p></b></div>
<div class="MsoNormal">
Setting up a shop online has never been easier, but creating
a Web site that drives sales requires time and commitment. To be successful,
entrepreneurs must pay careful attention to the look, feel, efficiency, and
navigability of their Web sites and the impression their sites create with
shoppers. A site’s look and design determine a visitor’s first impression of
the company. “Your Web site isn’t ‘about’ your company,” says one writer. “It’s
an extension of your company.<o:p></o:p></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Tracking Web Results <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
Web sites offer entrepreneurs a
treasure trove of valuable information about how well their sites are
performing—if they take the time to analyze it. Web analytics, tools that
measure a Web site’s ability to attract customers, generate sales, and keep
customers coming back, help entrepreneurs to know what works—and what
doesn’t—on their sites. Online companies that use Web analytics have an
advantage over those that do not.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri" , sans-serif; font-size: 11.0pt; line-height: 107%;"><br clear="all" style="mso-special-character: line-break; page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Ensuring Web Privacy and Security <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Privacy<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
The Web’s ability to track
customers’ every move naturally raises concerns over the privacy of the
information companies collect. Concerns about privacy and security are two of
the greatest obstacles to the growth of e-commerce. E-commerce gives businesses
access to tremendous volumes of information about their customers, creating a
responsibility to protect that information and to use it wisely. To make sure
they are using the information they collect from visitors to their Web sites
legally and ethically, companies should take the following steps:<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l7 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Develop a company privacy policy for the
information you collect. A privacy policy<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l7 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Post your company’s privacy policy prominently
on your Web site and follow it<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l7 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Take an inventory of the customer data collected<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Security<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Security For online merchants,
shoppers’ concerns over privacy and security translate into lost sales. One
recent survey reports that half of online shoppers are concerned about their
privacy, security, and safety when they make online purchases. 125 Ninety-eight
percent of the data that cybercriminals target involves customer records stolen
from companies for the purpose of identity theft, which affects 12.6 million
people annually. 126 Every company with a Web site, no matter how small, is a
potential target for hackers and other cybercriminals. Cybercrime has become a
big business, costing U.S. companies an estimated $100 billion per year<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l6 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-size: 12.0pt; line-height: 107%;">Chapter 10 Pricing and Credit Strategies <o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle">
Setting prices is a business decision governed
by both art and science—with a touch of instinct thrown in for good measure.
Setting prices for their products and services requires entrepreneurs to
balance a multitude of complex forces, many of them working in opposite
directions. Entrepreneurs must determine prices for their goods and services
that will draw customers and produce a profit. Unfortunately, many small
business owners set prices without enough information about their cost of
operations and their customers. Price is an important factor in building
long-term relationships with customers<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Three Potent Forces: Image, Competition, and Value <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Price Conveys Image <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
A company’s pricing policies
communicate important information about its overall image to customers. Pricing
sends an important signal to customers about a company, its brand, its position
in the market, the quality of its products and services, the image it wants to
create, and other important concepts<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Competition and Prices <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Competitors’ prices can have a
dramatic impact on a small company’s sales. Today, small companies face
competition from local businesses as well as from online businesses that may be
many time zones away. Price transparency due to the Internet, the ease of
mobile shopping, and customers’ persistent post-recession price sensitivity
impose constraints on companies’ ability to raise prices<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Focus on Value <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Ultimately, the “right” price for
a product or service depends on one factor: the value it provides for a
customer. There are two aspects of value, however. Entrepreneurs may recognize
the objective value of their products and services, which is the price
customers would be willing to pay if they understood perfectly the benefits
that a product or service delivers for them. Unfortunately, few if any
customers can see a product’s or a service’s true objective value; instead,
they see only its perceived value, which determines the price they are willing
to pay for it<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Pricing Strategies and Tactics <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Introducing a New Product <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
When pricing any new product, the
owner should try to satisfy three objectives:<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l8 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]-->Get
the product accepted<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l8 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]-->Maintain
market share as competition grows<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l8 level1 lfo4; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]-->Earn
a profit<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Pricing Established Goods and Services <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Each of the following pricing
tactics or techniques are part of the toolbox of pricing tactics entrepreneurs
can use to set prices of established goods and services.<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l6 level3 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->ODD PRICING<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l6 level3 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->PRICE LINING<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l6 level3 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->FREEMIUM PRICING<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->DYNAMIC PRICING<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l6 level3 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->LEADER PRICING<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l6 level3 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->GEOGRAPHIC PRICING<span style="mso-tab-count: 1;"> </span><o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l6 level3 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->DISCOUNTS<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l6 level3 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->OPTIONAL-PRODUCT PRICING<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l6 level3 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->BUNDLING<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Pricing Strategies and Methods for Retailers <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
As customers have become more price
conscious, retailers have changed their pricing strategies to emphasize value.
This value–price relationship allows for a wide variety of highly creative
pricing and marketing practices. As discussed previously, delivering high
levels of recognized value in products and services is one key to retail
customer loyalty.<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Pricing Concepts for Manufacturers <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
For manufacturers, the pricing
decision requires the support of accurate, timely accounting records. The most
commonly used pricing technique for manufacturers is cost-plus pricing. Using
this method, a manufacturer establishes a price that is composed of direct
materials, directPricing Strategies and Methods for Service Firms labor,
factory overhead, selling and administrative costs, plus a desired profit
margin. Figure 10.5 illustrates the cost-plus pricing components<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">The Impact of Credit on Pricing <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Credit Cards <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Companies that accept credit cards
incur additional expenses for offering this convenience, however. Businesses
must pay to use the system At Marcia and Dean Harris’s Itzy Bitzy Ritzy Shop, a
store in Norwalk, Connecticut, that sells furniture designed for small spaces,
shoppers with mobile devices use Square Wallet to make their furniture
purchases quickly and easily, and the money shows up in the store’s bank
account the next day.<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Installment Credit <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Small companies that sell
big-ticket consumer durables—such as major appliances, cars, and
boats—frequently rely on installment credit to support their sales efforts. For
some businesses, such as furniture stores and used car dealerships, this
traditionally has been a major source of income<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Trade Credit <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Companies that sell small-ticket
items frequently offer their customers trade credit—that is, they create
customer charge accounts. Before deciding to use trade credit as a competitive
weapon, business owners must make sure that their companies’ cash position is
strong enough to support the additional pressure credit sales create.<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
<br /></div>
<div class="MsoListParagraph" style="mso-list: l6 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-size: 12.0pt; line-height: 107%;">Chapter 11 Creating a Successful Financial Plan <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-indent: .5in;">
Basic Financial Statements <o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">The Balance Sheet <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Like a digital camera, the balance
sheet takes a “snapshot” of a business’s financial position, providing owners
with an estimate of its worth on a given date. Its two major sections show the
assets the business owns and the claims creditors and owners have against those
assets. The balance sheet is usually prepared on the last day of the month.<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
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<br /></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">The Income Statement <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
The income statement (also called
the profit-and-loss statement) compares expenses against revenue over a certain
period of time to show the firm’s net income (or loss). Like a digital video
recorder, the income statement is a “moving picture” of a company’s
profitability over time. The annual income statement reports the bottom
line of the business over the fiscal or calendar year.<o:p></o:p></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri" , sans-serif; font-size: 11.0pt; line-height: 107%;"><br clear="all" style="page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">The Statement of Cash Flows <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
The statement of cash flows show
the changes in a company’s working capital from the beginning of the accounting
period by listing both the sources of funds and the uses of those funds. Many
small businesses never need to prepare such a statement; instead, they rely on
a cash budget, a less formal managerial tool you will learn about in Chapter 12
that tracks the flow of cash into and out of a company over time. Sometimes, however,
creditors, lenders, investors, or business buyers may require this information.<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Creating Projected Financial Statements <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Projected Financial Statements for a Small
Business <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
One of the most important tasks
confronting the entrepreneur launching a new enterprise is to determine the
amount of funding required to begin operation as well as the amount required to
keep the company going until it begins to generate positive cash flow.<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l6 level3 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->THE PROJECTED INCOME STATEMENT<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l6 level3 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->THE PROJECTED BALANCE SHEET<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l6 level3 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->LIABILITIES<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Break-Even Analysis <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
Another key component of every
sound financial plan is a break-even (or cost-volume-profit) analysis. A small
company’s break-even point is the level of operation (typically expressed as
sales dollars or production quantity) at which it neither earns a profit nor
incurs a loss. At this level of activity, sales revenue equals expenses—that
is, the firm “breaks even.<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Calculating the Break-Even Point <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]-->Forecast
the expenses the business can expect to incur.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]-->Categorize
the expenses estimated in step 1 into fixed expenses and variable expenses.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]-->Calculate
the ratio of variable expenses to net sales.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l2 level1 lfo5; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]-->Compute
the break-even point by inserting this information into the following formula: <b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 1.5in; mso-add-space: auto;">
Break
even sales ($) = Total fixed cost / Contribution margin expressed as a
percentage of sales<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "calibri" , sans-serif; font-size: 12.0pt; line-height: 107%;"><br clear="all" style="mso-special-character: line-break; page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoListParagraphCxSpFirst">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l6 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-size: 12.0pt; line-height: 107%;">Chapter 12 Managing Cash Flow <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Cash Management <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
A survey by American Express OPEN
Small Business Monitor reports that 52 percent of small business owners say
they experience problems managing cash flow. 4 Managing cash flow is a
universal problem for entrepreneurs; a recent survey of Britain’s small and
medium-sized businesses reports that 46 percent of owners say they had suffered
at least one disruption to their companies’ cash flow, most often caused by
customers paying their bills late or not at all.5 Although cash flow is a
common concern for almost every business owner, the sluggish recovery from the
Great Recession has put excess strain on many companies’ cash flow<o:p></o:p></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">The “Big Three” of Cash Management <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
It is unrealistic for business
owners to expect to trace the flow of every dollar through their businesses.
However, by concentrating on the three primary causes of cash flow problems,
they can dramatically lower the likelihood of experiencing a devastating cash
crisis. The “big three” of cash management are accounts receivable, accounts
payable, and inventory. These three variables are leading indicators of a company’s
cash flow.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Accounts Receivable <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Selling merchandise and services
on credit is a necessary evil for most small businesses. Many customers expect
to buy on credit, and business owners extend it to avoid losing customers to
competitors. However, selling to customers on credit is expensive; it requires
more paperwork,<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Accounts Payable <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Entrepreneurs should strive to
stretch out payables as long as possible without damaging their companies’
credit rating. Otherwise, suppliers may begin demanding prepayment or
cash-on-delivery (C.O.D.) terms, which severely impair a company’s cash flow,
or they may stop doing business with it altogether<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Inventory <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Offering customers a wider variety
of products is one way a business can outshine its competitors, but product
proliferation increases the need for tight inventory control to avoid a cash crisis.
The typical grocery store now stocks about 42,700 items, three times as many as
it did 20 years ago, and many other types of businesses are following this
pattern.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Conclusion <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
Successful owners run their
businesses “lean and mean.” Trimming wasteful expenditures, investing surplus
funds, and carefully planning and managing the company’s cash flow enable them
to compete effectively. The simple but effective techniques covered in this
chapter can improve<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<span style="font-family: "calibri" , sans-serif; font-size: 11.0pt; line-height: 107%;"><br clear="all" style="page-break-before: always;" />
</span>
<br />
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">SECTION IV Putting
the Business </b>Plan to Work: Sources<b style="mso-bidi-font-weight: normal;"> </b>of
Funds<o:p></o:p></div>
<div class="MsoListParagraph" style="mso-list: l6 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-size: 12.0pt; line-height: 107%;">Chapter 13 Sources of Financing: Equity and Debt <o:p></o:p></span></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
<b style="mso-bidi-font-weight: normal;">Equity Capital versus Debt Capital <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
<i style="mso-bidi-font-style: normal;">Equity
capital</i> represents the personal investment of the owner (or owners) in a
business and is sometimes called risk capital because these investors assume
the primary risk of losing their funds if the business fails. If a venture
succeeds, however, founders and investors share in the benefits, which can be quite
substantial<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in;">
<i style="mso-bidi-font-style: normal;">Debt
capital</i> is the financing an entrepreneur borrows and must repay with
interest. Very few entrepreneurs have adequate personal savings to finance the
total start-up costs of a small business; many of them must rely on some form
of debt capital to launch their companies.<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in;">
<b style="mso-bidi-font-weight: normal;">Sources of Equity Financing <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l1 level1 lfo8; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">Personal Savings <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 1.5in; mso-add-space: auto;">
The
first place entrepreneurs should look for start-up money is in their own
pockets. It’s the least expensive source of funds available! A start-up has
very little if any financial history, and investors view investments in
early-stage companies as high risk. Therefore, the earlier in the life of the
company that an entrepreneur must raise capital, the more he or she will likely
have to give up in ownership to secure that financing.<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 1.25in;">
<span style="mso-no-proof: yes;"><!--[if gte vml 1]><v:shape
id="Picture_x0020_3" o:spid="_x0000_i1025" type="#_x0000_t75" style='width:202.2pt;
height:169.8pt;visibility:visible;mso-wrap-style:square'>
<v:imagedata src="file:///C:/Users/ASUSPC~1/AppData/Local/Temp/msohtmlclip1/01/clip_image005.png"
o:title=""/>
</v:shape><![endif]--><!--[if !vml]--><img height="226" src="file:///C:/Users/ASUSPC~1/AppData/Local/Temp/msohtmlclip1/01/clip_image006.jpg" v:shapes="Picture_x0020_3" width="270" /><!--[endif]--></span><o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l1 level1 lfo8; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">Friends and Family Members <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
Although most entrepreneurs look to their own bank accounts first to
finance a business, few have sufficient resources to launch their businesses
alone. After emptying their own pockets, where should entrepreneurs turn for
capital? The second place most entrepreneurs look is to friends and family
members who might be willing to invest in (or lend to) a business venture.
Because of their relationships with the founder, these people are most likely
to invest. Often they are more patient than other outside investors and are
less meddlesome in a business’s affairs (but not always!) than many other types
of investors.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l1 level1 lfo8; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">Crowd Funding<o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
Investing in entrepreneurial businesses has been the realm of those with
the knowledge and financial ability to assume the risks that come with such
investments. Known as accredited investors, these people must have a sustained
net worth (excluding their primary residence) of at least $1 million or annual
income of at least $200,000. There are between 5 million and 7.2 million
accredited investors in the United States; however, only about 756,000 of these
accredited investors have made direct investments in entrepreneurial businesses.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l1 level1 lfo8; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">Angels <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
After dipping into their own pockets and convincing friends and relatives
to invest in their business ventures, many entrepreneurs still find themselves
short of the seed capital they need. Frequently, the next stop on the road to
business financing is private investors. These private investors (angels) are
wealthy individuals, often entrepreneurs themselves, who are accredited
investors and choose to invest their own money in business start-ups in
exchange for equity stakes in the companies<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l1 level1 lfo8; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">Venture Capital Companies<o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
Venture capital companies are private, for-profit organizations that
assemble pools of capital and then use them to purchase equity positions in
young businesses they believe have highgrowth and high-profit potential,
producing annual returns of 300 to 500 percent within five to seven years. More
than 400 venture capital firms operate across the United States today,
investing billions of dollars (see Figure 13.3) in promising small companies in
a wide variety of industries. <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l1 level1 lfo8; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">6.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">Corporate Venture Capital <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 1.5in; mso-add-space: auto;">
Large
corporations have gotten into the business of financing small companies and
invest in businesses for both strategic and financial reasons. More than 300
large corporations across the globe, including Google, BMW, Comcast, Amazon,
Qualcomm, Intel, General Electric, Dow Chemical, Cisco Systems, UPS, Wal-Mart,
Unilever, and Johnson & Johnson, invest in small companies, usually
companies that are in the later stage of growth and because of their maturity
are less risky.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Sources of Debt Financing <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l6 level2 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "courier new"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Commercial Banks <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l6 level2 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "courier new"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Short-Term Loans <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l6 level2 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "courier new"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Intermediate- and Long-Term Loans <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpLast">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Other Methods of Financing <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l4 level1 lfo9; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">Factoring Accounts Receivable <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
Instead of carrying credit sales on its own books (some of which may
never be collected), a small business can sell outright its accounts receivable
to a factor. A factor buys a company’s accounts receivable and pays for them in
two parts. The first payment, which the factor makes immediately, is for 50 to
80 percent of the accounts’ agreed-on (and usually discounted) value. The
factor makes the second payment of 15 to 18 percent, which makes up the balance
less the factor’s service fees, when the original customer pays the invoice.
High interest rates (often 36 percent or more) make factoring a more expensive
type of financing than loans from either banks or commercial finance companies,
but for businesses that cannot qualify for those loans, it may be the only
choice. Factoring volume totals more than $101 billion per year.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l4 level1 lfo9; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">Leasing<o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
Leasing is another common bootstrap financing technique. Today, small
businesses can lease virtually any kind of asset, including office space,
telephones, computers, and heavy equipment. By leasing expensive assets, the
small business owner is able to use them without locking in valuable capital
for an extended period of time. In other words, entrepreneurs can reduce the
long-term capital requirements of their businesses by leasing equipment and
facilities and are not investing their capital in depreciating assets. In
addition, because no down payment is required and because the cost of the asset
is spread over a longer time (lowering monthly payments), a company’s cash flow
improves.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l4 level1 lfo9; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">ROBS <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
Thousands of aspiring entrepreneurs, particularly Baby Boomers, are
tapping into their retirement accounts to fund business start-ups or
acquisitions of existing small businesses. Many of them are turning to
Rollovers as Business Startups (ROBS) as a means of using their retirement savings
to fund their businesses. By using a 401(k) rollover, entrepreneurs are able to
move existing retirement funds into a start-up. The tax laws governing ROBS are
complex, and if not set up properly, this form of funding can lead to
significant penalties by the IRS. Recent IRS cases show increased scrutiny of
these funding plans, so entrepreneurs should exercise extreme care when using a
retirement account rollover to fund a business. Once established, ROBS require
entrepreneurs to meet certain reporting and fiduciary responsibilities<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l4 level1 lfo9; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">Merchant Cash Advance<o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
A merchant cash advance is used by small businesses to help finance
working capital needs. The provider of the merchant cash advance prepurchases
credit and debit card receivables at a discount. Each time a sale is made, a
percentage of the card receivable is forwarded to the cash advance provider or
purchaser until all of the purchased receivables are paid off. Merchant cash
advances are most often used for the purchase of new equipment, purchasing
inventory, expansion or remodeling, payoff of debt, and emergency funding. Like
factoring accounts receivable, merchant cash advances are an expensive source
of funding.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l4 level1 lfo9; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">Peer-to-peer Lending <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
New online funding options are emerging to help small businesses with
credit. Peer-to-peer loans are Web-based vetting platforms, such as Lending
Club, Prosper, and Fundation, that create an online community of lenders who
provide funding to creditworthy small businesses. Lending Club reports that it
is making more than $120 million in loans to small businesses each month!
Interest rates can range from less than 7 percent to more than 25 percent.
Lending Club has a maximum loan limit of $35,000. Lydia Aguinaldo, owner of
Pines Home Health Care Services, in Broward County, Florida, secured a $250,000
loan from Fundation at a 19 percent interest rate payable over three years<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l4 level1 lfo9; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">6.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">Loan Brokers <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
Loan brokers specialize in helping small businesses find loans by tapping
into a wide network of lenders that include SBA lenders, working capital
financing, real estate l<span style="mso-tab-count: 1;"> </span>oans, bridge
financing, franchise financing, merchant cash advances, and asset-based
lending. Most loan brokers do not charge a fee for the initial evaluation and
consulting on financing options for a small business. Loan brokers take a small
percentage of the total loan amount, usually 1 to 2.5 percent, once the
business is successfully financed. MultiFunding, Biz2Credit, and Loan Finder
are a few of the larger companies offering these services to small business
clients.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l4 level1 lfo9; text-indent: -.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">7.<span style="font: 7.0pt "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;">Credit Cards <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
Unable to find financing elsewhere, many entrepreneurs launch their
companies using the fastest and most convenient source of debt capital
available: credit cards. A study by the Kauffman Foundation reports that 7
percent of the capital for start-up companies comes from credit cards. <span style="mso-spacerun: yes;"> </span>Prudent entrepreneurs rely on credit cards
only for making monthly purchases that they are certain can be paid off when
the credit card bill comes due.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l6 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-size: 12.0pt; line-height: 107%;">Chapter 14 Choosing the Right Location and Layout <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-indent: .5in;">
Location: A Source of Competitive Advantage
<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Choosing the Region<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
The first step in selecting the
best location is to focus on selecting the right region. This requires
entrepreneurs to look at the location decision from the “30,000-foot level,” as
if he or she were in an airplane looking down. In fact, in the early days of
their companies, Sam Walton, founder of retail giant Wal-Mart, and Ray Kroc,
who built McDonald’s into a fast-food giant, actually used private planes to
survey the countryside for prime locations for their stores. <o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Choosing the State<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Every state has an economic
development office working to recruit new businesses. Even though the
publications produced by these offices will be biased in favor of locating in
that state, they still are an excellent source of information and can help
entrepreneurs assess the business climate in each state. Some of the key issues
to explore include the laws, regulations, and taxes that govern businesses,
costs of operation, workforce availability, and incentives or investment
credits the state may offer to businesses that locate there.<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Choosing the City <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l6 level3 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->POPULATION TRENDS<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->COMPETITION<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->CLUSTERS<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: "wingdings"; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;"><span style="mso-list: Ignore;">§<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->COMPATIBILITY WITH THE COMMUNITY<o:p></o:p></div>
<div class="MsoNormal" style="text-indent: .5in;">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Location Criteria for Retail and Service Businesses <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.0in; mso-add-space: auto;">
<b style="mso-bidi-font-weight: normal;">Trade Area Size <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto;">
Every retail and service business should determine the extent of its
trading area, the region from which a business can expect to draw customers
over a reasonable time span.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto;">
<b style="mso-bidi-font-weight: normal;">Retail Compatibility<o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto;">
Shoppers tend to be drawn to clusters of related businesses.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto;">
<b style="mso-bidi-font-weight: normal;">Degree of Competition <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto;">
The size, location, and activity of competing businesses also influence
the size of a company’s trading area<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto;">
<b style="mso-bidi-font-weight: normal;">The Index of Retail Saturation <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto;">
One of the best measures of the level of saturation in an area is the
index of retail saturation (IRS), which takes into account both the number of
customers and the intensity of competition in a trading area.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Location Options for Retail and Service Businesses <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Central Business District <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
The central business district
(CBD) is the traditional center of town—the downtown concentration of
businesses established early in the development of most towns and cities<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Neighborhood Locations <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Small businesses that locate near
residential neighborhoods rely heavily on the local trading area for business<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Shopping Centers and Malls <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Until the early twentieth century,
central business districts were the primary shopping venues in the United
States<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">The Location Decision for Manufacturers <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Foreign Trade Zones <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Foreign trade zones can be an
attractive location for small manufacturers that engage in global trade and are
looking to reduce or eliminate the tariffs, duties, and excise taxes they pay
on the materials and the parts they import and the goods they export<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Business Incubators <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
For many start-up companies, a
business incubator may make the ideal initial location. A business incubator is
an organization that combines low-cost, flexible rental space with a multitude
of support services for its small business residents<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Layout and Design Considerations <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
Once an entrepreneur chooses the
best location for his or her business, the next issue to address is designing
the proper layout for the space to maximize sales (retail) or productivity
(manufacturing or service). Layout is the logical arrangement of the physical
facilities in a business that contributes to efficient operations<o:p></o:p></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Layout: Maximizing Revenues, Increasing Efficiency, or Reducing Costs <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
The ideal layout for a building
depends on the type of business it houses and on the entrepreneur’s strategy
for gaining a competitive edge. An effective layout can reinforce a brand and contribute
to a company’s desired image.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Layout for Retailers <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Retail layout is the arrangement
of merchandise and displays in a store. For retailers, layout is all about
understanding a company’s target customers and crafting every element of a
store’s design to appeal to those customers<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Layout for Manufacturers <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
Manufacturing layout decisions
take into consideration the arrangement of departments, work stations,
machines, and stock-holding points within a production facility<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 1.0in;">
<br /></div>
<div class="MsoListParagraph" style="mso-list: l6 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-size: 12.0pt; line-height: 107%;">Chapter 15 Global Aspects of Entrepreneurship<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Why Go Global? <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
Failure to cultivate global markets
can be a lethal mistake for modern businesses, whatever their size. A few
decades ago, small companies had to concern themselves mainly with competitors
who were perhaps six blocks away; today, small companies face fierce
competition from companies that may be six time zones away! As a result,
entrepreneurs find themselves under greater pressure to expand into
international markets and to build businesses without borders.<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in;">
<b style="mso-bidi-font-weight: normal;">Strategies for Going Global<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
Small companies pursuing a global
presence have 10 principal strategies from which to choose: creating a presence
on the Web, relying on trade intermediaries, establishing joint ventures,
engaging in foreign licensing arrangements, franchising, using countertrading
and bartering, exporting products or services, establishing international
locations, importing and outsourcing, and becoming an expat entrepreneur.<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Barriers to International Trade <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l6 level2 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "courier new"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Domestic Barriers <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l6 level2 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "courier new"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "segoe ui emoji" , sans-serif; mso-bidi-font-family: "Segoe UI Emoji";">International Barriers </span><o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l6 level2 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "courier new"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Political Barriers <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l6 level2 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "courier new"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Business Barriers <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l6 level2 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "courier new"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Cultural Barriers <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l6 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 12.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-size: 12.0pt; line-height: 107%;">Chapter 16 Building a New Venture Team and Planning for the Next Generation
<o:p></o:p></span></b></div>
<div class="MsoNormal" style="margin-left: .5in;">
To be successful, an entrepreneur
must assume a wide range of roles, tasks, and responsibilities, but none is
more important than the role of leader. Some entrepreneurs are uncomfortable
assuming this role, but they must learn to be effective leaders if their
companies are to grow and reach their potential. Leadership is the process of
influencing and inspiring others to work to achieve a common goal and then
giving them the power and the freedom to achieve it<o:p></o:p></div>
<div class="MsoNormal" style="text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">Building an Entrepreneurial Team: Hiring the Right Employees <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-indent: .5in;">
<b style="mso-bidi-font-weight: normal;">How to Hire Winners <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l3 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->COMMIT TO HIRING THE BEST TALENT<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l3 level1 lfo6; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->ELEVATE RECRUITING TO A STRATEGIC POSITION IN
THE COMPANY<o:p></o:p></div>
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<b style="mso-bidi-font-weight: normal;">Create Practical Job Descriptions and Job
Specifications <o:p></o:p></b></div>
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Business owners must recognize
that what they do before they interview candidates for a position determines to
a great extent how successful they will be at hiring winners<o:p></o:p></div>
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<b style="mso-bidi-font-weight: normal;">Effective Interview<o:p></o:p></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l5 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Involve others in the interview process<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
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<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Develop a series of core questions and ask them
of every candidate<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l5 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Ask open-ended questions (including on-the-job
“scenarios”) rather than questions calling for “yes or no” answers<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l5 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Create hypothetical situations that candidates
would be likely to encounter on the job and ask (or better yet watch) how they
would handle them.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l5 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Ask candidates to describe a recent success and
a recent failure and how they dealt with them<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l5 level1 lfo7; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Arrange a “noninterview” setting that allows
several employees to observe the candidate in an informal setting.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
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<b style="mso-bidi-font-weight: normal;">Contact References and Conduct a Background<o:p></o:p></b></div>
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Entrepreneurs should take the time
to conduct background checks and contact candidates’ references. Background
checks are inexpensive to perform but can save companies many thousands of
dollars by identifying “red flags” in candidates’ backgrounds, helping them
avoid making expensive hiring mistakes<o:p></o:p></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;">Creating an Organizational Culture That Encourages Employee Motivation
and Retention <o:p></o:p></b></div>
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<b style="mso-bidi-font-weight: normal;">Culture <o:p></o:p></b></div>
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A company’s culture is the
distinctive, unwritten, informal code of conduct that governs its behavior,
attitudes, relationships, and style.<o:p></o:p></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;">Job Design <o:p></o:p></b></div>
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Over the years, managers have
learned that the job itself and the way it is designed is an important factor
in a company’s ability to attract and retain quality workers.<o:p></o:p></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;">Motivating Employees to Higher Levels of Performance:
Rewards and Compensation <o:p></o:p></b></div>
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Another important aspect of
creating a culture that attracts and retains quality workers is establishing a
robust system of rewards and compensation.<o:p></o:p></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;">Management Succession: Passing the Torch of Leadership <o:p></o:p></b></div>
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More than 80 percent of all
companies in the world are family owned, and their contributions to the global
economy are significant. Family-owned businesses account for 70 to 90 percent
of global GDP.<o:p></o:p></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;">Exit Strategies <o:p></o:p></b></div>
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Most family business founders want
their companies to stay within their families, but in some cases, maintaining
family control is not practical.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
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<b style="mso-bidi-font-weight: normal;">Selling to Outsiders <o:p></o:p></b></div>
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selling a business to an outsider
is no simple task. Done properly, it takes time, patience, and preparation to
locate a suitable buyer, strike a deal, and make the transition.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
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<b style="mso-bidi-font-weight: normal;">Selling to Insiders <o:p></o:p></b></div>
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When entrepreneurs have no family
members to whom they can transfer ownership or who want to assume the
responsibilities of running a company, selling the business to employees is
often the preferred option. In most situations, the options available to owners
are a leveraged buyout and an employee stock ownership plan.<b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<br />Kinamattohttp://www.blogger.com/profile/14546077064095070172noreply@blogger.com0