Understanding business 8th by mcchugh nickels chapter 06

* • He was selling baking soda & decided to entice customers by putting in two packages of chewing gum with each sale.. The excitement over the gum started him thinking.. They started

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• He was selling baking soda & decided to entice customers by putting in two packages of

chewing gum with each sale The excitement

over the gum started him thinking.

• Two Seattle teenagers pooled their money &

came up with $100 They started delivering

messages & parcels for local merchants.

• Though he didn’t graduate from college, he

found out college students eat a lot of pizza

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Who Starts New Businesses?

Source: Investor Business Daily, June 24, 2004

Top Ten States Where Businesses Have Started

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• Independently Owned

• Not Dominant in Its Field

• Meet Certain Standards of

Size (Employees, Annual Receipts)

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• 20 Million Full/Part-time Businesses

• Account for More Than 50% of Gross

Domestic Product (GDP)

• Jobs

• Minority-owned Businesses Growing

Rapidly

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Small Business – Major Causes of Failure

• Plunging in without first

• Trying to do too much

with too little

• Buying too much on

credit

• Expanding credit too freely and rapidly

• Incomplete and/or inaccurate records

• Not understanding business cycles

• Forgetting about taxes, insurances, etc.

• Owner working or not, according to whim

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Small Business – Situations for Success

• Personal attention

• Products not easily

made by mass

production

• Sales are not large

enough for a large

firm

• Unattractive neighborhood

• Franchising

• Paying attention to new competitors

• The business is in a growth industry

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Hallmark YMCA room

Williams-Sonoma Abandoned Hardware Store

Estee Lauder Vacant Former Restaurant

Walt Disney Created Mickey in a Garage

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Early Sales of Well-Known Companies

Sold No Reapers 1 st 10 Years

Burton’s

Snowboards

Sold One 1 st Year

Bose Sold 40 Speakers 1 st Year (today #1

in market)

• SBA and SBIC Program

• Lawyers, Loan Officers, Insurance Agents

• SCORE

• Local College/universities

• Know Your Customer

• Manage Human Resources

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Reasons for a Banker To Say “No”

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Small Business Collaborators

• Small Business Administration

• Examine Marketing & ID Areas for Growth

• Profile Best Customers & Market to Similar

Prospects

• Invest in Sales Training & Technology

• Refresh Business Perspective With Outside

Views

• Streamline Business & Eliminate Waste

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Saving a Business In Trouble

By Killer

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International Small Business