Chapter 4: How to Become the Owner of a Small Business A. How to ...

Chapter 4:How to Become the Owner of a Small BusinessA. How to go into business for yourselfB. Identifying a Needed Product, or Finding Your NicheC. Studying the Market for the ProductD. Deciding Whether toStart a New Business,Buy an Existing One orBuy a FranchiseHow to start a businessYou Need a Plan:A logical, well-thought-out procedure that will be followedText offers eight steps to followSteps in starting a business1. Search for and identify a needed product - Finding Your Niche2. Study the market for the product, using lots of sources of information3. Decide to start a new business, buy an existing one or buy a franchise4. Make a plan, with a mission, objectives and strategy5. Make an operational plan, with policies, budgets, standards, methods….6. Make a financial plan, with income and expense estimates7. Develop these plans into a detailed business plan8. Implement the planFinding Your NicheNiche marketing:is the process of finding a small -but profitable - demand for something and producing a custom made product for thatmarketIdentifying a Needed Product, or Finding Your Niche1. How to Decide on a ProductTalking to large companiesNewspaper Adds2. Choosing a Business to EnterEliminate the least attractiveTalking to friendsSelf help groupsFinding Your NicheSmall Business AdministrationThe National Council on AgingState Economic Development AgenciesChambers of CommerceDirectory Of Trade AssociationsU.S. Department of Commerce

Local CollegesPublic LibrariesStudying the Market for the ProductHow to Decide on a ProductChoosing a Business to EnterStudying the Market1. Methods of Obtaining Information about the Market2. Methods Used to Study the MarketEstimate the size of the marketEstimate the competitionEstimate your share of the marketDeciding to Start a Business or Buy an Existing OneReasons for starting a new businessDefine the nature of the businessCreate the preferred type of physical facilitiesObtain fresh inventoryHave a free hand in selecting and developing personnelDeciding to Start a BusinessReasons for not starting a new businessProblems in finding the right businessProblems assembling the resourcesLack of an established product lineProduction problems associated with starting a new businessBuying An Existing BusinessReasons for Buying an ExistingPersonnel are already workingThe facilities are already availableA product is already being producedThe location may be desirableRelations established with banks and tradeBuying An Existing BusinessReasons for Not Buying an ExistingFacilities may be old or obsoleteEmployees may have a poor production recordAccounts receivable may be past due/uncollectableLocation may be badFinancial condition and relations with lenders could be badThe inventory could be obsoleteWhy is the business for sale?What are the intentions of the present owners?Are they going to open a bigger store across the streetAre economic environmental factors changing?Is the physical plant suitable?To Buy a Franchise?

Franchise is an agreement whereby an independent businessperson is given exclusiverights to sell a specified good or serviceBenefits to Franchisee1. Brand recognition2. Training & assistance3. Economies of scale4. Financial assistance5. Share in local or national programBenefits to Franchiser1. Faster expansion and penetrationhard to open little stores and you may be willing to be in a place they did notknow existed2. Franchisee motivation3. Franchisee attention to detail4. Lower operating coast