Week 8

Ch 11: Entrepreneurship and

Small Business Ownership

FM10211 – Retail Operations

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Term Project• Pick a store or department

– Customer profile

– Retail structure

– Goal setting

– Sales incentives

– Shrinkage controls (Loss Prevention)

– Customer service

– Management style

– Merchandising methods

– Technology

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Project Presentations• Present your project to the class• 5-10 minute presentations• PowerPoint• Why do it?

– 10% boost to class participation

– 10% boost to lower exam grade

• Up to 8 people• Must tell me by next week

– First come, first served

– 5% class participation penalty if change your mind

Chapter 11

Entrepreneurship and Small Business Ownership

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The Realities of Entrepreneurship• Dream job?

• Majority of new businesses fail in first year

• Many successful entrepreneurs fail first– Sam Walton– R.H. Macy

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Characteristics• Ability to make their own decisions

• Ability to organize

• Ability to lead

• Ability to get along with people

• Acceptance of responsibility

• Willpower, self-discipline, self-confidence

• Time management skills

• Originality & flexibility

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More Characteristics• Hard work, long hours, physical stamina

• Enjoyment of competition

• Task-result oriented

• Future-oriented

• Desire for independence and success

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Knowledge/Information Needed• Products/services sold

• Target market, selling techniques, promotion

• Personnel management, record keeping, inventory controls

• Experience and/or formal training

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Entrepreneurial Options• New product or better quality

• New method of production

• Open a new market

• New source of supply

• New organization of an industry

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Entrepreneurial Advice• Avoid oversaturated businesses

• Originality isn’t always necessary

• Concentrate on filling a need or niche

• Be cautious

• Start with sufficient capital

• Don’t expect to get rich overnight

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The Owner as Leader• Leadership is essential for an entrepreneur

– Usually cannot fully compensate in the present– Must “sell” vision of the future

• Must have– Clear, realistic vision of a goal– Means to accomplish it– Ability to communicate the vision

• Not necessarily the best manager• Not necessarily the best at doing the work

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Start small and grow• Most big businesses started out small• Advantages:

– Freedom– Direct responsibility for decisions, people

• Disadvantages:– Limited skill set– Limited funds– Limited time and energy– Direct responsibility for decisions, people

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Another option: Franchise• Predictable• Instant recognition

– Quicker to profitable

• Easier and cheaper to purchase– Supplies, equipment, inventory,

services…

• Advertising• Operational improvements

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Disadvantages of Franchising• Restrictions

– Little room to innovate– Why?

• Costs– Original outlay– Share of profits– Ongoing fees

• Termination• Unrealistic Expectations

– No guarantee!

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Find a Franchise• Appare retailers• Specialty retailers

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Help You Might Need• Legal

• Accounting

• Buying

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Business Plan• Includes

– Marketing plan• Analysis of market• Definition of target market

– Merchandise Plan(?)• See Chapter 4, previous classes

– Financial plan• Estimate of startup costs• Projected sales, costs, cash flow• Amount of financing required

– Legal considerations• Permits, licenses, regulations, business type

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Access to Capital• Personal/Friends/Family

– May be only option

• Small Business Association (SBA) loan– Through local bank, guarantees portion of loan– You guarantee (at least) the rest!– Special programs for minorities/disadvantaged

• Venture Capitalists– Usually want to invest at least $10 million– Take significant portion of company– Want “liquidity” in short term (3-5 years)

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Resources• Small Business Development Centers (SBDCs)

– http://sbdcnet.utsa.edu/

• Business Statistics– Find out what is reasonable in your industry– http://www.bizstats.com/scorpretail1.htm

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Rest of Quarter

• May 30– Ethical and Legal Behavior in Retail Management

• June 6– Projects Due– Project Presentations– Review for Final

• June 13– Final Exam