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_4_ Small business_ New venture _ Franchise

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					    Small Business,
New Ventures & Franchise


      Chapter 5
The World of Small Business
    The world of small business can be distinguished by three
     characteristics These being:-

1)   Independently owned and operated


2)   It is not dominant in its field and starts as a follower or support
     company.

3)   It has potential for growth and gradually increases employees
     & customers.
Small Business
    These kinds of business are of two distinct kind and
     they being:-

1)   Lifestyle Business: These are small businesses intended
     to provide the owner with a comfortable livelihood.

2)   High Growth ventures: These are small businesses that
     are intended to achieve rapid growth and high profit on
     investment.
Small Business
   A few concepts:-

   Economies of Scale: The more you produce lower the
    production cost will be.
    In other words we can say: Savings from manufacturing,
    marketing or buying large quantities.

   Start up Companies: Those companies that start from a
    scratch or start fresh are called “Start up companies”.

   Purchase a running business.
Economic role of Small Businesses
   Providing Jobs


   Introducing New Products & Services



   Supplying the needs of Large Corporations



   Providing Specialized goods & services
Building a Business
1)   Finding an opportunity


2)   Deciding on form of Ownership




3)   Developing a Business Plan
Finding an opportunity

Market Penetration .


Product Development .


Market Development.


Product & Market Development.
Deciding on form of Ownership

   Sole Proprietorship




   Partnership
Developing a Business Plan
   Summary
   Company & Industry
   Products or Services
   Market

   Marketing Strategy
   Design and Development plan
   Operations plan (Overall Schedule )

   Critical Risks & Expected Problems
   Financial Information.
Obtaining Financing
   Personal Savings

   Bank Loans

   Credit from Suppliers

   Loans from financing
    companies

   Private Investors

.
Important Managerial Activities
   Planning the activities of Business


   Marketing


   Monitoring and controlling operations


   Facing the red tape


   Adjusting to growth
Franchise Alternative
   A franchise is a business arrangement in which an individual obtains
    rights from a large company to sell a well known product or service.




   Franchisee: A person or a group to whom corporation gives right to
    use the company name in a certain area. In exchange of an initial fee
    and monthly royalty payments.

   Franchiser: It is the corporation or company that gives the rights of a
    franchisee.
Advantages of a Franchise
   The Franchiser is at advantage as he earns on the reputation
    and foundation that he has built.




   The Franchisee is at advantage because he uses the proven
    successful system of the franchiser.



   The general public is at advantage as they benefit by quality
    and consistency of the product or service.
Advantages of a Franchise
   Wide name Recognition

   Mass Advertising

   Financial Help

   Training and support

   Proven wining formula
Disadvantages of a Franchise
   It might be safest way to start a business but not the
    cheapest.




   Monthly payment or Royalty is to be paid regularly.




   Business independence is virtually not there.

				
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