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Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
Franchise m 001
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Franchise m 001

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  • 1. FRANCHISE MANAGEMENTSMALL BUSINESSES
  • 2. Small Businesses- Companies that are independently owned and operated and are not dominant in their field- Concentrated in the service sectorTypes:1. Lifestyle businesses - intended to provide the owners with a comfortable life2. High-growth ventures - intended to achieve rapid growth and high profits on investments
  • 3. Economic Role of Small Businesses1. Providing jobs2. Bringing out new products and services3. Supplying the needs of big firms4. Providing specialized goods and servicesBuilding a Business1. Finding an opportunitya. Establish your ownb. Buy an existing operationc. Obtain a franchise
  • 4. 2. Deciding on a Form of Ownershipa. Sole proprietorshipb. Partnership:partnership agreement – spells out the basic outlines of your arrangementBuy/sell agreement - defines what will happen in case of the demise of one partnerc. corporation:Stock redemption planCorporate by-lawsDeterminants: circumstances, financial situation, type of business, number of employees, risks involved, tax position
  • 5. 3. Developing a Business Plan- A comprehensive written statement about what you are going to do: basic idea, specific goals & objectives, personnel, marketing, facilities, suppliers, distribution, financial [ budget, projections, cash flow for the first two years]4. Obtaining FinancingSources of funds:a. Debt - to be repaid with interest out of earningsb. Equity - not to be repaid but entitles the investor to a piece of the company and a share of the profit
  • 6. Funding the lifestyle business:a. Own savings or loans from relatives/friendsb. Bank loansc. Credit from suppliers [Funding the high-growth venturea. Private investors – wealthy individuals interested in an ownership positionb. Venture capitalists – firms that operate investment pools of capital to finance new businesses; specialize in certain types of business; prefer companies that has the potential for going public, plays an active role in managing the business
  • 7. c. Corporate sources – venture capital pools funded by large corporations that take minority positions: acquire new technology, financing & other types of assistanced. Public stock offerings - selling shares in a company5. Managing the Businessa. Planning the activities of the business- Ensure that a market exists- Plans to cope with problems
  • 8. b. Marketing for the new business- Price- Advertising- Become innovative & responsive to the marketc. Monitoring and controlling operations- Effective record-keeping system: customer files, billing, production, inventory data, employee information, accounting functiond. Coping with red tape- Businesses are subject to the pressures and requirements of our society’s legal system
  • 9. e. Adjusting to growth – the idea person assumes the role of a managerFACTORS that Breed Success1. Finding a solid business opportunity based on a product that meets a clear need2. Building effective management skills3. Having adequate capital and credit to finance the business4. Employing modern business methods for planning & controlling operations
  • 10. FACTORS that Lead to Failure1. Borrowing money without planning how and when to pay it back2. Attempting to do too much business with too little capital3. Not allowing for setbacks and unexpected expenses4. Buying too much on credit5. Extending credit too freely6. Expanding credit too rapidly7. Failing to keep complete, accurate records8. Carrying habits of extravagance into the business9. Mistaking the freedom of being independent for liberty to work
  • 11. Common MISTAKES Small Businesses Make1. Mistaking a hobby for a business- Lacks the critical business experiencea. Go to work for someone in the same ventureb. Go directly into business with a partner strong in management experience2. Trying to make the business appeal to everyonea. Creates a company that is weak in several areasb. Identify a specific market segment
  • 12. 3. Starting out with too little cash- Must sustain losses- Create a worst-case scenario projecting the minimum revenue and maximum expensesa. Arrange a line of credit at a bank4. Failing to detect bad credit risks earlya. Implement early-warning detection plan5. Setting the wrong price- There should be a balance between the company’s need to make a profit and the cons- umer’s search for value
  • 13. 6. Bleeding the business- Generous remunerationsa. Establish a percentage of total earnings7. The fortress complex- Making all key decisions without going an elaborate approval processa. Bring in outside opinionsBusiness Plans: What Turns Investors On
  • 14. 1. Evidence of customer acceptance- The company’s new product is already being used2. Appreciation of Investor needs- Recouping of investments within 3 to 7 years- Proceeds of investment is commensurate with the investment risk3. Evidence of Focus- Knowing which one or two things the firm does best & concentrate on it4. A propriety position- Exclusive rights to a product or service [patents, copyright, trademark] has an advantage over its competitors
  • 15. What Turns Investors Off1. A Product Orientation- More details on the product rather than the market and how it will be sold2. Projections that deviate excessively from industry norms- Unduly optimistic about company growth against industry accepted financial results3. Unrealistic growth projections- Exaggerated long-term growth4. Reliance on custom or application work- Basic product needs to be altered or designed for each customer because of high costs
  • 16. TYPES of a Small Business1. Small manufacturing businessEx. Printing press, furniture shops, garments manufacturing2. Small service businessa. Business services – provide service to other businessesEx. Accounting firm, janitorial services, security servicesb. Personal services – provide service to the personEx. Tutorial services, voice lessons, massage parlorsc. Repair services – provide repair servicesEx. Auto repair, plumbing, watch repaird. Entertainment & recreationEx. Movie houses, resorts
  • 17. e. hotels/ motelsf. Education services – correspondence schools, nursery school3. Wholesaling - activities of persons or establishments which sell to retailers, industrial, institutional and commercial users in big volumes4. Retailing - activities involved in the sale of goods and services to the final consumers5. General construction firms - performs subcontracting jobs for the bigger contractorsEx. Installation of electrical facilities, sewerage
  • 18. CHARACTERISTICS of Small Business1. Independent management- owner/ manager2. Small capital requirements3. Mostly local operationsBENEFITS of Small Business Owners1. Control over own destiny2. Reach full potential3. Reap unlimited profits4. Make contribution to society & receive recognition for the effort
  • 19. DISADVANTAGES of Operating a Small Business1. Uncertainty of income2. Risk of losing the entire invested capital3. Lower quality of life until the business gets established4. Complete responsibility5. Service to undesirable customers6. Paper work & other chores7. Long hours & demanding work conditions
  • 20. The ENTREPRENEURIAL PersonalityCharacteristics:1. Drive - willing to accept responsibility, with vigor, initiative, persistence & health2. Thinking ability - skills in abstract thinking and the use of creative means to handle difficulties3. Human relations ability - ability to deal with employees and customers effectively4. Communications ability -5. Technical knowledge - knowledge of processes, methods, procedures

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