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					MGMT 3277 Entrepreneurship!




           Full Time Entrepreneurship

                                Chapter 6
                               T. A. Sgritta
                              UNC Charlotte
MGMT 3277 Entrepreneurship!



      Opening Case – Mother’s Work
   • What caused Rebecca to develop her
     business?
MGMT 3277 Entrepreneurship!



               Five Paths to Ownership
   •   Start-up
   •   Purchase
   •   Franchise
   •   Inheritance
   •   Employee

   • Earn-out…
MGMT 3277 Entrepreneurship!



              Start-ups - Considerations
   • Me too? What is your advantage?
   • Start with nothing – name, customers,
     products, cash flow…
   • The value of prior business experience
        – Basic business skills
        – ideas
   • Consider incubators
MGMT 3277 Entrepreneurship!



              Start-ups - Considerations
   •   Get help
   •   Budgets!
   •   Identify demand (Schrello, others)
   •   Have experience
   •   Margins
   •   Customer base
   •   Other – cash flow, employees, location
MGMT 3277 Entrepreneurship!



                       Buying a Business
   • Criteria
   • Sources
        – Business brokers
        – Suppliers, customers
        – Banks
MGMT 3277 Entrepreneurship!



        Buying a Business - Procedure
   • Screening
        – Phase 1 – criteria
        – Phase 2 – financials
        – Phase 3 – inspection/visit
   • Preliminary offer – letter of intent
   • Due diligence
   • Official offer/agreement
MGMT 3277 Entrepreneurship!



             Buying a Business - Value
   • Asking price vs. offer price
   • Evaluations
        – Earnings multiplier
        – Owners “cash flow” model
   • Value of assets
MGMT 3277 Entrepreneurship!



              Buying a Business - Basis
   • Stock purchases / total purchases
   • Asset purchases
MGMT 3277 Entrepreneurship!



            Buying a Business - Terms
   •   Cash
   •   Time payments
   •   Non-compete clauses
   •   Consulting
   •   Benefits
MGMT 3277 Entrepreneurship!


               Buying a Business – Due
                      Diligence
   • Customers – future potential
        – Listings
        – Contacting
   • Suppliers
        – Material
        – Technology
MGMT 3277 Entrepreneurship!


               Buying a Business – Due
                      Diligence
   • Assets
        – Ownership
        – Encumbrances, problems
   • Employees
        – Key issues….
   • Balance sheet vs. income statement
MGMT 3277 Entrepreneurship!



      Buying a Business – Cash Flow
   • Critical plan
        – Must take into account the new owner’s pro-
          forma situation
   • Overall business plan
MGMT 3277 Entrepreneurship!



                              Franchising
   •   Advantages-
   •   Costs
   •   Risks
   •   Terms
MGMT 3277 Entrepreneurship!



                    Inheriting a Business
   • Family succession
        – Prior management
        – Ownership transfer
   • Professional management

				
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posted:3/21/2012
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