Small Business Management week 2 - part B - chapters 5,6,7

* This posting covers chapters 5, 6 & 7 *

Franchising- chapter 5

Further to reading this chapter, we have:

* Established what a franchise is and how it operates. * Articulated the difference between product-distribution franchises and business-format franchises. * Compared the advantages and disadvantages of franchising. * Explained how to evaluate a potential franchise. * Explored franchising in the international marketplace.

Franchising - What did you say it was ??? ....

A Franchise is a contractual license to operate an individually owned business as part of a larger chain.

In simple words - I like Starbucks coffee. Say I want to open a similar coffee shop opposite my house ? why open a "similar" one if you can franchise a Starbuck's branch ?

Franchising allows a franchisor to operate a product that has already been proven, already has regular customers who are loyal to it. Open a franchise omits some of the risks that creating a new business involves. Opening a franchise may also provide a manager with a chance to learn the business without investing too much, obtain quality control standards , efficiency and opportunity to grow.

Where is it going ?

Basically everywhere ! Franchising is all over the place. From food business to entertainment to travel, and all over the world : the Far East, Mexico, Canada - Franchising is getting its blood from the Westernizing trend all over the world. The whole world wants to become America;-)

Some personal thoughts...

Is franchising for me ? do I have what it takes to become a franchisee?

yeah, I like Starbucks, and yeah - it's one of my dreams to run a successful coffee shop opposite my own house... but no - I don't think I'd like to become a franchisee. I want more challenge, I want more flexibility.

Being a franchisee is kinda' like being a condo owner. You are the owner, you are the king of your castle, but you still have to pay a condo fee. and you still have to

ask the condo assn. permission when you want to put new replacement windows instead of the old crapy ones that they put in when they built the place...

Now guess what I am - a happy condo owner or a single family house wanna-be ?!

and check out this link :

http://www.franchising.com/

Taking over an existing business - chapter 6

Further to reading chapter 6, we have -

* Compared the advantages and disadvantages of buying an existing business. * Proposed ways of locating a suitable business for sale. * Identified ways to measure the condition of a business and determine why a business would be sold. * Differentiated tangible and intangible assets, and assess the value of each. * Calculated the price to pay for a business. * Understood factors that are important when finalizing the purchase of a business. * Described what makes a family business different from other types of business.

Checkout this website -

http://www.ehow.com/how_7490_buy-existing-business.html

Some personal thoughts about purchasing an existing business.....

An existing business is already a functioning operation. As I mentioned before, it already has regular clients who are likely going to continue business through it even after ownership changes. If the business has been making money, the new business owner will breakeven sooner than he would if he had started from scratch. Planning for an exisiting business can rely on the history of the business which makes it safer and easier to do. Equipment, suppliers and employees already exist. Financing through previous owner may be available and even bargain purchase are possible to find sometimes.

Is this something I would be interested in doing? possibly yes. I am sure though, that I might make modifications to it. It can be challenging to adjust a business to your own vision and still keep main characteristics the same in order to keep old clientelle.

Hey - check out this link - perhaps you can find here your dream small business for sale...

http://www.franchisegator.com/

Starting a new business - chapter 7

On this chapter we have -

- Discussed the advantages and disadvantages of starting a business from scratch. - Described types of new businesses and discuss the characteristics commonly shared by fast-growth companies. - Evaluated potential startups and suggest sources of business ideas. - Explained the most important points to consider when starting a new business.

If this interests you - check out this website

www.sba.gov - This is the home page of the Small Business Administration, the organization within the federal government dedicated to assisting small businesses

So what is a window of opportunity? what does it mean for the small business owner?

The term window of opportunity means a period of time in which an opportunity is available. Same way as new products go through the states of introduction, growth, maturity and decline, so do windows of opportunities go through several stages. Starting with the creation of an idea, development with no competition at first (that is when the window of opportunity is wide open), onto the stage of increasing competition, growth, and then finishing with decline of profit margins due to expansion of consumer expectations.