Includes: Start-up ideas; franchising; family business and buyout business

1. BUSINESS
OPTIONSStartup business
Buyout business
Franchising
Family business

2. REFERENCE
Justin G. Longenecker, Carlos W. Moore, J. William Petty,
Leslie E. Palich Small Business Management-An
Entrepreneurial Emphasis 13th
Edition © 2006
Steve Mariotti, Caroline Glackin Entrepreneurship and
Small Business Management ©2012

3. STARTUP
BUSINESS
GETTING STARTED!

4. STARTUP BUSINESS
• I DENTI FYI NG STARTUP IDEAS
Accordi ng t o Amar Bhi de:
“St art up product s t hat do not
serve cl ear and i mport ant needs
cannot expect t o be
“di scovered” by enough
cust omers t o make a
di f f erence. ”

5. • FUNDAMENTAL REQUIREMENTS WHETHER A
BUSINESS IDEA IS A GOOD INVESTMENT
STARTUP BUSINESS (cont.)

6. TYPES OF STARTUP IDEAS

7. SOURCES OF STARTUP
IDEAS

8. BUYOUT
BUSINESS
BUYING AN EXISTING BUSINESS

9. BUYOUT BUSINESS
1. To r educe uncer t ai nt i es t hat must
be f aced i n st ar t i ng a busi ness.
2. To acqui r e a busi ness wi t h ongoi ng
oper at i ons and est abl i shed
r el at i onshi ps wi t h cust omer s and
suppl i er s
3. To obt ai n an est abl i shed busi ness
at a pr i ce bel ow what i t woul d cost
t o st ar t a new busi ness
4. To begi n a busi ness mor e qui ckl y
t hat by st ar t i ng f r om scr at ch.
REASONS FOR BUYING EXISTING BUSINESS

10. SOURCES
A sales representative, a manufacturer, or a
wholesaler may be offered an opportunity to buy a
customer’s business
Suppliers
Distributors
Bankers
Realtors
Specialized brokers, “matchmakers”
FINDING A BUSINESS
TO BUY

11. INVESTIGATING AND
EVALUATING

12. VALUING THE BUSINESS
NUMEROUS TECHNIQUES FOR
VALUING A COMPANY:
1. ASSET- BASED VALUATION
2. MARKET- COMPARABLE VALUATION
3. CASH FLOW- BASED VALUATION

13. NONQUANTITATIVE FACTORS IN
VALUING A BUSINESS

14. BUYER
• You are working to secure the best
possible price.
• The price you pay should be no greater than
you determined in advance.
SELLER
• Working to recoup as much money as
possible through the sale.
NEGOTIATING AND CLOSING
THE DEAL
• When det er mi ni ng t he pr i ce and t er ms of t he sal e, i t i s essent i al t o
cl ear l y est abl i sh what i s bei ng pur chased- ASSET ONLY or THE BUSINESS
AS A WHOLE
• Ter ms of t he sal e wi l l be a maj or f act or .
• Al l t he t er ms and condi t i ons shoul d be agr eed upon.
• Under st and al l l egal agr eement s
• Will the previous owner hold a note payable on all or part of the purchase price?
• Under what repayment terms?
• Is there a noncompete agreement restricting when and where the seller can open the same kind
of business?
• Is the seller remaining with the business for specified amount of time to perform particular
duties?

15. FRANCHISING
ALL ABOUT FRANCHISING!

16. ALL ABOUT FRANCHISING
FRANCHI SE- a busi ness t hat
mar ket s a pr oduct or ser vi ce
devel oped by a f r anchi sor .
FRANCHI SI NG- t he syst em of
oper at i ng a f r anchi se gover ned by
l egal agr eement bet ween
f r anchi sor and f r anchi see.

17. FRANCHISOR
• A per son who
devel ops a
f r anchi se or a
company t hat sel l s
f r anchi ses and
speci f i es t he t er ms
and par t i cul ar s of
t he f r anchi se
agr eement .
FRANCHISEE
• The second par t y t o
t he f r anchi se
agr eement , t he
owner of t he uni t
or t er r i t or y
r i ght s.
FRANCHISOR VS
FRANCHISEE

18. 2 TYPES OF FRANCHISES
PRODUCT AND TRADE- NAME
FRANCHISING
• Fr anchi see usual l y
sel l s pr oduct s t hat
ar e manuf act ur ed by
t he f r anchi sor .
BUSINESS- FORMAT
FRANCHISING
• Fr anchi see secur es
t he pr oduct and
t r ade- name benef i t s
but al so oper at i ng,
qual i t y assur ance,
account i ng,
mar ket i ng met hod,
and suppor t of t he
f r anchi sor .

19. FACTORS TO CONSIDER BEFORE
BECOMING A FRANCHISEE
1. Franchi sor success
2. Franchi sor durabi l i t y
3. Franchi sor f i nanci al heal t h
4. St art up i nvest ment
5. Fi nanci ng support
6. Purchasi ng requi rement s
7. Term of agreement
8. Compet i t i on
9. Management f i t

20. POSITIVE ASPECTS OF
FRANCHISING

21. STARTUP ASSISTANCE
• Tr ai ni ng
• Oper at i ng manual f or t he
f r anchi se
• Ongoi ng suppor t and
assi st ance
• Gui del i nes on audi t s

22. POSITIVE ASPECTS OF
FRANCHISING(cont.)

23. DRAWBACKS OF BUYING A
FRANCHISE

24. DRAWBACKS OF BUYING A
FRANCHISE (cont.)

25. STEPS FOR FRANCHISE
SELECTION

26. FAMILY
BUSINESS
A UNIQUE INSTITUTION

27. WHAT IS A FAMILY
BUSINESS?
• FAMILY BUSINESS
– A company t hat t wo or mor e of t he
same f ami l y own or oper at e
t oget her or i n successi on.
– A f i r m i s r ecogni zed as a f ami l y
busi ness i f i t passes f r om one
gener at i on t o anot her .

28. FAMILY VS BUSINESS
FAMILY
• Primary function is the care and
nurturing of family members.
• Family’s goals are the fullest
possible development of each
member.
• Disciplining an employee is much
more problematic if he/she is also
a family member.
BUSINESS
• Concerned with the production
and distribution of goods and/or
services.
• Business’s goals are profitability
and survival.
• Some choose business over
family.

29. ADVANTAGES
FAMILY BUSINESS ADVANTAGE
Strong motivation of
family members to see
business succeed.
Developing firm-
specific knowledge
among family
members.
Focus on the long run. Reduced cost of
control
Ability to use family
theme promotions
Shared social
networks among
family members.
Preservation of the
firm’s reputation based
on maintenance of high
standards.

30. STAGES IN THE PROCESS OF
SUCCESSION

31. FAMILY ROLES
The man or woman who f ounded t he f i rm and pl ans t o
pass i t on t o a son or daught er. Some f ounders
achi eve a del i cat e bal ance bet ween t hei r busi ness
and f ami l y responsi bi l i t i es.
Thei r rol es vary dependi ng on t hei r backgrounds and
expert i se.
In t he ent repreneuri al f ami l y, t he nat ural t endency
i s t o
t hi nk i n t erms of a f ami l y busi ness career and t o
push
a chi l d, ei t her openl y or subt l y, i n t hat di rect i on.

32. IMPORTANT NOTES
• Fami l y counci l – An or gani zed
gr oup of f ami l y member s who
gat her per i odi cal l y t o di scuss
f ami l y- r el at ed busi ness
i ssues.
• Fami l y busi ness const i t ut i on- a
st at ement of pr i nci pl es
i nt ended t o gui de a f ami l y
t hr ough t i mes of cr i si s and