Chapter 8

Locate and Set Up Your
Business
8.1 Choose a Location
8.2 Obtain Space and Design the
Physical Layout
8.3 Purch...
Lesson 8.1

Choose a Location
Goals
 Identify options for locating a retail business.
 Discuss factors to consider when ...
Vocabulary





Chapter 8
Slide 3

industrial park
enterprise zones
e-commerce
trade area

Entrepreneurship: Ideas in ...
Locating a Retail Business
 The right location for your business
depends on:
 the kind of business you plan to operate
...
Downtown Areas
 Positive features of a downtown
location include:
 easy accessibility
 convenient access for downtown w...
 Negative features of a downtown
location include:
 higher crime rate
 traffic jams
 a lack of
 free or convenient pa...
Neighborhood Shopping
Centers
 consist of 3 to 15 stores
 good for stores selling goods or
services that people need to ...
Community Shopping Centers
 larger than neighborhood centers
 serve residents from many
neighborhoods
 large anchor sto...
Regional Shopping Centers
 designed to attract customers from an
entire region
 have 40 to 100 stores
 anchored by two ...
Super-Regional Shopping
Centers
 largest classification of shopping centers
 more than 100 stores
 anchored by three or...
Stand-Alone Stores
 may be located just outside of shopping
centers or far from other businesses
 depend on drive-by tra...
Warehouses





among the cheapest rent
few frills
often charge customers lower prices
heavy advertising required

Cha...
What are the main options for locating
a retail business?

Chapter 1
Slide 13

Entrepreneurship: Ideas in Action 5e
© 2011...
Starting a Virtual or Online
Business
 e-commerce
 buying and selling products or services
over the Internet

Chapter 1
...
Benefits of Virtual or Online
Businesses
 an immediate presence
 business costs are less
 a global customer base is pos...
Virtual or Online Business
Precautions
 Buy your own domain (web address).
 Use a creative website design that
appeals t...
What are some benefits of having a
virtual or online business?

Chapter 1
Slide 17

Entrepreneurship: Ideas in Action 5e
©...
Selecting Your Site
 trade area
 the area from which you expect to attract
customers
 identify the location of
 compet...
Location Type and Availability
 Determine which type of location is best
for your business.
 Determine what spaces of th...
Evaluate the Location
 Factors to consider when picking a
location include:
 safety
 attractiveness
 Does the location...
What are some of the factors you
should consider when selecting a site
for your business?

Chapter 1
Slide 21

Entrepreneu...
Lesson 8.2

Obtain Space and Design the
Physical Layout
Goals
 Compare purchase and lease options.
 Describe layout cons...
Vocabulary







Chapter 8
Slide 23

tenant
landlord
gross lease
net lease
percentage lease
visual merchandising
En...
Lease or Buy Space
 Buying advantages include:
 You can receive a tax deduction on the
loan interest for the building.
...
 Disadvantages of buying include:
 Most entrepreneurs lack the money to
purchase property for their business.
 You are ...
Commercial Leases
 tenant
 the person who pays rent to occupy the
space owned by someone else

 landlord
 the person w...
 There are three types of commercial
leases.
 gross lease
 tenant pays monthly rent
 landlord pays property expenses

...
 percentage lease
 the tenant pays a base monthly rent
 the tenant also pays a percentage of monthly
revenue as rent
 ...
 You should always consult with an
attorney before signing a commercial
lease.

Chapter 8
Slide 29

Entrepreneurship: Ide...
Compare Costs of Doing
Business
 When deciding where to locate your
business you should calculate how
much rent you will ...
Chapter 8
Slide 31

Entrepreneurship: Ideas in Action 5e
© 2011 Cengage Learning. All rights reserved. May not be scanned,...
Name three kinds of commercial
leases.

Chapter 1
Slide 32

Entrepreneurship: Ideas in Action 5e
© 2011 Cengage Learning. ...
Design the Layout of Your
Business
 Your layout needs to include space for:







Chapter 8
Slide 33

employees
c...
Create the Floor Plan

Chapter 8
Slide 34

Entrepreneurship: Ideas in Action 5e
© 2011 Cengage Learning. All rights reserv...
Layout of a Retail Business
 visual merchandising
 the process of combining products,
environments, and spaces into an
a...
 The goal of your layout should be
twofold:
 It should attract customers to your store
and keep them coming back.
 It s...
 Exits should be clearly marked and easily
accessible.
 Hazardous materials should be safely
stored.
 Equipment and mac...
What are the major considerations for
choosing a layout for a business?

Chapter 1
Slide 38

Entrepreneurship: Ideas in Ac...
Lesson 8.3

Purchase Equipment,
Supplies, and Inventory
Goals
 Explain how to find and choose
vendors for your business.
...
Vocabulary





Chapter 8
Slide 40

inventory
vendors
quote
reorder point

Entrepreneurship: Ideas in Action 5e
© 2011...
Obtain Equipment and
Supplies
 inventory
 the products and the materials needed to
make the products that a business sel...
Chapter 8
Slide 42

Entrepreneurship: Ideas in Action 5e
© 2011 Cengage Learning. All rights reserved. May not be scanned,...
Identify Suppliers
 vendors
 companies that sell products and services
to businesses

Chapter 8
Slide 43

Entrepreneursh...
Evaluate Proposals
 quote
 an estimate for how much you will pay for the
merchandise or service

 Other information to ...
What should you consider when
selecting vendors for your business?

Chapter 1
Slide 45

Entrepreneurship: Ideas in Action ...
Purchase Inventory
 For retailing and wholesaling:
 Inventory is a finished product purchased
with the intent of reselli...
Purchase Inventory for a
Startup Business
 As it is difficult to forecast actual sales,
a startup business should order j...
Purchase Inventory for an
Ongoing Business
 reorder point
 a predetermined level of inventory that signals
when new stoc...
How do you determine the amount of
inventory to keep in stock?

Chapter 1
Slide 49

Entrepreneurship: Ideas in Action 5e
©...
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Apparel 2 chap 08

  1. 1. Chapter 8 Locate and Set Up Your Business 8.1 Choose a Location 8.2 Obtain Space and Design the Physical Layout 8.3 Purchase Equipment, Supplies, and Inventory Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  2. 2. Lesson 8.1 Choose a Location Goals  Identify options for locating a retail business.  Discuss factors to consider when choosing a location for a nonretail business.  Identify the benefits of locating a business online.  Describe steps to take in selecting a site. Chapter 8 Slide 2 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  3. 3. Vocabulary     Chapter 8 Slide 3 industrial park enterprise zones e-commerce trade area Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  4. 4. Locating a Retail Business  The right location for your business depends on:  the kind of business you plan to operate  the type of customer you want to reach  Also consider whether you will have  inside sales  outside sales Chapter 8 Slide 4 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  5. 5. Downtown Areas  Positive features of a downtown location include:  easy accessibility  convenient access for downtown workers Chapter 8 Slide 5 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  6. 6.  Negative features of a downtown location include:  higher crime rate  traffic jams  a lack of  free or convenient parking  customers in the evening Chapter 8 Slide 6 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  7. 7. Neighborhood Shopping Centers  consist of 3 to 15 stores  good for stores selling goods or services that people need to purchase frequently  rent is usually low  convenient for local shoppers Chapter 8 Slide 7 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  8. 8. Community Shopping Centers  larger than neighborhood centers  serve residents from many neighborhoods  large anchor stores can increase customer traffic Chapter 8 Slide 8 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  9. 9. Regional Shopping Centers  designed to attract customers from an entire region  have 40 to 100 stores  anchored by two or more large department stores  focus on apparel  rents are high Chapter 8 Slide 9 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  10. 10. Super-Regional Shopping Centers  largest classification of shopping centers  more than 100 stores  anchored by three or more department stores  very high rents  not recommended for new businesses Chapter 8 Slide 10 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  11. 11. Stand-Alone Stores  may be located just outside of shopping centers or far from other businesses  depend on drive-by traffic  less expensive rent  advertising is often necessary Chapter 8 Slide 11 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  12. 12. Warehouses     among the cheapest rent few frills often charge customers lower prices heavy advertising required Chapter 8 Slide 12 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  13. 13. What are the main options for locating a retail business? Chapter 1 Slide 13 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  14. 14. Starting a Virtual or Online Business  e-commerce  buying and selling products or services over the Internet Chapter 1 Slide 14 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  15. 15. Benefits of Virtual or Online Businesses  an immediate presence  business costs are less  a global customer base is possible  time restrictions are not a problem  can electronically manage information about customer behavior Chapter 1 Slide 15 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  16. 16. Virtual or Online Business Precautions  Buy your own domain (web address).  Use a creative website design that appeals to customers.  Be sure your website has a fast loading speed.  Keep your website current. Chapter 1 Slide 16 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  17. 17. What are some benefits of having a virtual or online business? Chapter 1 Slide 17 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  18. 18. Selecting Your Site  trade area  the area from which you expect to attract customers  identify the location of  competitors  businesses that would attract a similar customer base but that would not compete directly with you Chapter 8 Slide 18 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  19. 19. Location Type and Availability  Determine which type of location is best for your business.  Determine what spaces of this type are available in your trade area. Chapter 8 Slide 19 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  20. 20. Evaluate the Location  Factors to consider when picking a location include:  safety  attractiveness  Does the location attract your target market?  Is parking adequate?  Are surrounding businesses thriving? Chapter 8 Slide 20 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  21. 21. What are some of the factors you should consider when selecting a site for your business? Chapter 1 Slide 21 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  22. 22. Lesson 8.2 Obtain Space and Design the Physical Layout Goals  Compare purchase and lease options.  Describe layout considerations for different types of businesses. Chapter 8 Slide 22 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  23. 23. Vocabulary       Chapter 8 Slide 23 tenant landlord gross lease net lease percentage lease visual merchandising Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  24. 24. Lease or Buy Space  Buying advantages include:  You can receive a tax deduction on the loan interest for the building.  The loan payment may be no larger than a lease payment. Chapter 8 Slide 24 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  25. 25.  Disadvantages of buying include:  Most entrepreneurs lack the money to purchase property for their business.  You are locked into a specific location.  You are responsible for building maintenance costs. Chapter 8 Slide 25 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  26. 26. Commercial Leases  tenant  the person who pays rent to occupy the space owned by someone else  landlord  the person who owns and rents out the building or space Chapter 8 Slide 26 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  27. 27.  There are three types of commercial leases.  gross lease  tenant pays monthly rent  landlord pays property expenses  net lease  landlord pays building insurance  tenant pays rent, taxes, and other expenses Chapter 8 Slide 27 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  28. 28.  percentage lease  the tenant pays a base monthly rent  the tenant also pays a percentage of monthly revenue as rent  most common for prime retail locations Chapter 8 Slide 28 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  29. 29.  You should always consult with an attorney before signing a commercial lease. Chapter 8 Slide 29 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  30. 30. Compare Costs of Doing Business  When deciding where to locate your business you should calculate how much rent you will pay per customer.  Rent per customer = Rent per month ÷ customers per month Chapter 8 Slide 30 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  31. 31. Chapter 8 Slide 31 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  32. 32. Name three kinds of commercial leases. Chapter 1 Slide 32 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  33. 33. Design the Layout of Your Business  Your layout needs to include space for:        Chapter 8 Slide 33 employees customers merchandise equipment restrooms stockroom/storage offices Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  34. 34. Create the Floor Plan Chapter 8 Slide 34 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  35. 35. Layout of a Retail Business  visual merchandising  the process of combining products, environments, and spaces into an appealing display to encourage the sale of products or services Chapter 8 Slide 35 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  36. 36.  The goal of your layout should be twofold:  It should attract customers to your store and keep them coming back.  It should meet the needs of your business. Chapter 1 Slide 36 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  37. 37.  Exits should be clearly marked and easily accessible.  Hazardous materials should be safely stored.  Equipment and machinery should be positioned in a way that minimizes the potential for accidents. Chapter 8 Slide 37 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  38. 38. What are the major considerations for choosing a layout for a business? Chapter 1 Slide 38 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  39. 39. Lesson 8.3 Purchase Equipment, Supplies, and Inventory Goals  Explain how to find and choose vendors for your business.  List factors that determine the needed level of inventory. Chapter 8 Slide 39 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  40. 40. Vocabulary     Chapter 8 Slide 40 inventory vendors quote reorder point Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  41. 41. Obtain Equipment and Supplies  inventory  the products and the materials needed to make the products that a business sells to its customers  When starting a business, order the minimum quantity you need right now. Chapter 8 Slide 41 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  42. 42. Chapter 8 Slide 42 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  43. 43. Identify Suppliers  vendors  companies that sell products and services to businesses Chapter 8 Slide 43 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  44. 44. Evaluate Proposals  quote  an estimate for how much you will pay for the merchandise or service  Other information to seek when obtaining quotes includes:     Chapter 8 Slide 44 quality of merchandise financing terms quantity discounts shipping and handling charges Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  45. 45. What should you consider when selecting vendors for your business? Chapter 1 Slide 45 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  46. 46. Purchase Inventory  For retailing and wholesaling:  Inventory is a finished product purchased with the intent of reselling it to customers.  For manufacturing:  Inventory includes:  raw materials  finished goods Chapter 8 Slide 46 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  47. 47. Purchase Inventory for a Startup Business  As it is difficult to forecast actual sales, a startup business should order just enough stock to fill its shelves. Chapter 8 Slide 47 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  48. 48. Purchase Inventory for an Ongoing Business  reorder point  a predetermined level of inventory that signals when new stock should be ordered  Factors to consider when setting a reorder point include:  how long it takes suppliers to get merchandise to you  monthly sales of the item  how important it is for you not to be out of stock Chapter 8 Slide 48 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  49. 49. How do you determine the amount of inventory to keep in stock? Chapter 1 Slide 49 Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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