Professional Documents
Culture Documents
Small Business:
• By the Small Business Act of 1953, Small Business defined as “A small business is one
that is independently owned & operated and not dominant in its field of operation.
SBA has established the Upper Limits for Small Firms in the manner (Guidelines):
1. Manufacturing: 250 or fewer employees (1 ~ 250)
2. Wholesaling: 9.5 million to 22 million in annual sales
3. Retailing: 2 millions to 7.5 million in annual sales
4. Service: 1.5 million to 10 million in annual sales
Small Business & Economy: Small Business opportunities exist in all sectors of the economy.
Manufacturing: They convert raw material into a useful end product
E.g Printing shops, Ice Cream Plants, Bakeries, Toy Factories, Furniture
Manufacturing, Machine Shops, and Clothing Manufacturing etc.
Impact on Economy:
• Small firms play an important role in the introduction of new goods & service.
• Specialized intermediate goods that is goods used in the production of other goods.
• This practice reduces the risk & long run costs of entry and expansion for all firms.
• Entry and exit helps ensure mobility of capital resources.
• Here likely to employ less-skilled worked & no prior work experiences. Benefits are:
i) Reducing of unemployment ratios
ii) Giving the on-the-job training and work experience to new employees
• Small business also provide important economic advantages for minorities &
women.
Topic No. 02 Nature of Small Business:
Characteristics:
1. Can implement any new idea immediately /easily
2. Provide jobs for new graduates
3. Directly and indirectly increase life standard of people
4. Bring competition in market
5. Create platform where every lifestyle benefits
6. Major sources of GNP
Nature / More Characterized:
1. Employee Among 10 ~ 99
2. Financial Resources & earning turnover
3. Not dominant in its field operation
Advantages of Small Business / On Going into Business for Oneself:
Independence: Owners enjoy being their one boss, they like the freedom to do
things their way.
Financial Opportunities: Small business owners make more money running their own
company than they would work for someone else.
Community Service: Sometimes an individual will realize that a particular good or
service is not available.
Job Security: The individual can work as long as he or she wants, there is no
mandatory retirement.
Family Employment: Best opportunity for children & relatives, high moral & trust in
family. Owners can provide employment for family members.
1. Competition: May be changes in market depends and this new demand is being
satisfied by large competitors.
2. Increase Responsibilities: Owners not only have to make more decisions on major matters
but have to become knowledge in many different areas.
3. Financial Losses: When all major decisions are made by the owner, it is inevitable
(in-ev-i-ta-bel = unavoidable) that some of them will be wrong.
4. Employee Relations: If the workers are not skilled and business will suffer. B/c
employees are family members.
7. Risk of Failure: The ultimate risk faced by the small business owner managers is
that if failing usually with a loss of most,
Topic No. 04 Getting into Small Business
There are three basic ways of getting into small business
i) Buying an ongoing ii) Purchasing a franchise iii) Starting from Scratch
1. Introductory Page:
This is the title or cover page that provides a brief summary of the business plan’s contents.
2. Executive Summary:
This section of the business plan is prepared after the total plan is written. About two to three
pages in length.
3. Environmental & Industry Analysis:
Assessment of external uncontrollable variables that may impact the business plan.
4. Industry Analysis:
Reviews industry trends & competitive strategies.
5. Description of Venture:
Provides complete overview of products, services & operations of new venture.
6. Production Plan:
Details how products will be manufactured.
7. Operational Plan:
This section goes beyond the manufacturing process and describes the flow of goods and
services from production to the customer.
8. Marketing Plan:
Describes market conditions & strategy related to how products & services will be distributed,
priced & promoted.
9. Organizational Plan:
Describes form of ownership and lines of authority and responsibility of members of new
venture.
10. Assessment of Risk:
Identifies potential hazards and alternative strategies to meet business plan goals and objectives.
11. Financial Plan:
Projections of key financial data that determine economic feasibility and necessary financial
investment commitment.
12. Appendix:
The appendix of the business plan generally contains any backup material that is not necessary in
the text of the document.
Topic No. 05 Buying an Ongoing Business
Introduction:
One of the easiest ways of getting into small business for yourself is to buy an ongoing firm. A
lot of headaches can avoided & this approach. The startup problems will have been taken care of
by the previous owners.
Advantages:
Three of most important advantages are the following:
1) Little or no concern about successful future operation.
2) Time & effort can be reduced
3) Buy at a good price.
Introduction:
Franchisor: Means a person offering the franchise.
Franchisee: Means a person obtaining the franchise.
Franchise: or Franchising is a process of offering & obtaining Franchise.
Operate: Franchise operated by franchise & paid the fees to franchisor.
Definition:
“A arrangement where by the manufacturer or sale distribution (franchisor) of a trade market
product or service given exclusive rights under certain mutually agreed conditions”.
1) Product / Service Franchise: When a product is franchised, the franchisor receives the
goods from the franchisor & sells them through a
wholesaler or retailer outlet.
e.g. Auto Dealership, Home Appliances Dealership,
Telecom Accessories.
When a service is franchised, the franchisor receives a
license for a trade name and the particular services to be
sold. The franchisee do direct daily activities. Like as
hiring & firing, business decisions etc. e.g School, College.
2) Business Franchise: When the word franchise is used, however it often refers to
the franchising of an entire business enterprise. The
franchisor maintains a strong formalized system of control
over the business are performed are contract.
e.g. McDonalds, Pizza Hut & Burger King etc.
2) Broad Name Appeal: It’s release to the product acceptance. The franchisee does not have
to spend resources trying to establish the credibility of business.
Franchisee enter into a business with accepted name, product or
service.
3) Proven Track Record: The franchisor has already proved that the operation can be
successful. Franchisor has history of self operated units as well as
other franchises. It’s calculates by spearing periods (means no
units are many franchises are operated from 1 to 10 years that
means success).
4) Financial Assistance: Another strong reasons for franchising. The franchisor may be help
to the needed to new owner for operation assistance which is
needed to run the operation e.g. Capital for purchase of equipment,
financial requirement during operation etc.
Disadvantage of Franchisor:
1) Franchise Fees: In business, no one gets something for nothing. The franchisor
charged the fee against, franchising. This fee paid by franchisor on
that ratio, which is denied by contracts.
2) Franchisor Control: The franchisor generally exercise a control over the operations of
franchise business. The franchisor keeps a very close eye on the
units operation. If franchisee does not follows the franchisor
directions then may be cancelled the franchise license. Directions
for Location, Layout, Interior & exterior decoration, labour’s
uniform etc.
3) Unfulfilled Promises: Some times then franchisor are not fulfilled the all promises which
are made by contract. Franchisee have not received that assistance
which is promised by franchisor.
Topic No. 7 Starting a New Small Business
Uniqueness is the key:
The most effective way to approach a new small business by creating a product or service that is
unique. It’s has two approaches which are;
2) Organizing of the Fact: After all the factor have been gathered they must be organized in a
logical sequence
3) Analysis of the Facts: In this stage the prospective owner analyzed the facts for checking
of validity of facts. Different analysis are given different view, as:
3) Other Factors:
Here prospective owner examined the startup activities. Some of the major considerations are;
i) The Building: ii) Merchandise & iii) Record Keeping: iv) Insurance &
Topic No. 8 Startup Problem
Introduction: It’s mean those problems which are faced by a new small business.
Introduction:
First of all prospective owner ask a question “where is money for starting a new business”. Then
follow up question “how mush”. In service type 90 days perform 90 days without any inflow.
Some recommend to six month perform without any inflow.
i) Short Term Loans: A short loan is that type of loan which is repaid within a period of
one year.
ii) Intermediate Term Loans: This type of loan provide the capital for period from one to ten
years.
iii) Long Term Loans: It’s available on collateral basis and use for expansion of business
(and avoid to bankrupt).
iv) Equity Capital: Equity capital is not a loan, because it is an investment in the
business & there is no promise to reply this capital.
Sources of Capital:
Choosing a source of capital is not an easy decision. There are numerous alternatives depend on
how much fund is needed, credit rating of firm, prior sales record etc. some major sources are
discussed in below.
Introduction:
Both of these requirements are heavily influenced by the type of operation (Retail, wholesale,
service, manufacturing etc).
i) Personal Factor: One of the most important factors in choosing a small business location is
the personal values of the owner.
ii) Economics: This determines the purchasing power of the community, (customers ability
to buy goods & services) as total family income, No. of homes etc.
iii) Competition: Competitive environment needs, the more hard work, but competitors
already makes the market.
iv) Geographic Determine the geographical problems. It’s means every location is not
Consideration: suitable for every business, b/c many business are restricted by geographical
v) Sate & Local New owner needs, to analyze those business & activities which are
restricted by state or local government.
1) Retail Location: Retail stores location have different problems than other type of
businesses, for this type of business mostly focused on;
2) Wholesale Location: The wholesalers are suppliers to the retailers, if retailers are in
problem then wholesaler also suffer in business.
3) Service Location: It’s similar to retail location, for further type of business chose that
location which is easily approachable by clients.
General Factors: i) A logical & optimum arrangement of equipment regard to the flow of work.
ii) It’s take full advantage of natural conditions (Building construction)
iii) Allow the maximum efficiency of the machinery.
Specific Factors:
1) Retail Store Layout: Retail store layout should be designed with three things in mind,
for customer satisfaction.
4) Manufacturing Layout: It’s depend on the specific process which is performed in factory.
Here design the assembly line on the basis of product flow, (mean
product close to close for completion).
1) “Location of business is more important than layout of business operation”. Are you agree
with this statement give opinion.
2) Represent the one type of business on the basis of location or layout. With proper example &
proper presentation.
Topic No. Pricing
Meaning of Price:
i) Price facilities the buying & process
ii) Price is affected by the supply & demand
iii) Price is a useful tool in promotion
iv) Price can be manipulated strategically from one stage of the product life cycle to the next.
i) Demand oriented pricing: Management will determine current demand level & the
price that customers appear willing to pay for the product /
service.
ii) Competition Based Pricing: The company reviews the price of it’s major competitions
before making it’s own pricing decision.
iii) Cost Plus Pricing: In which management decides the price on basis of,
(Full Cost Pricing) i) Total variable expenses per unit.
ii) Per unit share of company’s fixed cost.
iii) Desired profit amount (per unit).
B. Sales budget:
1. From sales forecasts, the entrepreneur will determine the cost of these sales.
2. Estimated ending inventory will also be included.
D. Operating Budget.
1. Next the entrepreneur can focus on operating costs.
2. Fixed expenses (incurred regardless of sales volume) include rent, utilities, salaries,
interest, depreciation, and insurance.
3. The entrepreneur will need to calculate variable expenses, which may change from month
to month depending on sales volume, such as advertising and selling expenses.
E. Capital budgets:
1. A capital budget may project expenditures for new equipment, vehicles, or new facilities.
2. These decisions can include the computation of the cost of capital and the anticipated
return on investment using present value methods.
3. The entrepreneur should enlist the assistance of an accountant.
HR Sources:
A process consisting of the inception, development, motivation & maintenance of human
resources.
Staffing:
One of the most important parts of the HR process is that of staffing. Hiring, training and
deploying of employees (Bringing in the right person).
Training Personnel:
Training is learning experience, which makes permanent change in behavior of trainee, that is
improve his or her performance ability.
Process: Step for Training:
i) Establish training need & goals i) Preparation
ii) Choosing the most practical method ii) Demonstration
iii) Evaluating the results iii) Application
iv) Inspection
Method:
On The Job Training: Off the Job Training:
i) Job Rotation i) Seminars & Conferences
ii) Job Enlargement ii) University related courses
iii) Coaching
iv) Pece
Topic No. Pricing & Advertising
Meaning of Price:
i) Price facilities the buying & process
ii) Price is affected by the supply & demand
iii) Price is a useful tool in promotion
iv) Price can be manipulated strategically from one stage of the product life cycle to the next.
Definition:
i) Demand oriented pricing: Management will determine current demand level & the
price that customers appear willing to pay for the product /
service.
ii) Competition Based Pricing: The company reviews the price of it’s major competitions
before making it’s own pricing decision.
iii) Cost Plus Pricing: In which management decides the price on basis of,
(Full Cost Pricing) i) Total variable expenses per unit.
ii) Per unit share of company’s fixed cost.
iii) Desired profit amount (per unit).
i) Cooperative Advertising:
Cost of advertising share by two channels as manufacturing & distributors, wholesaler or retailer.
HR Sources:
A process consisting of the inception, development, motivation & maintenance of human
resources.
Staffing:
One of the most important parts of the HR process is that of staffing. Hiring, training and
deploying of employees (Bringing in the right person).
Training Personnel:
Training is learning experience, which makes permanent change in behavior of trainee, that is
improve his or her performance ability.
Process: Step for Training:
i) Establish training need & goals i) Preparation
ii) Choosing the most practical method ii) Demonstration
iii) Evaluating the results iii) Application
iv) Inspection
Method:
On The Job Training: Off the Job Training:
i) Job Rotation i) Seminars & Conferences
ii) Job Enlargement ii) University related courses
iii) Coaching
iv) Pece