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Small Business Management. How to Obtain the Right Financing for Your Business. Capital Requirements. Fixed Assets Building, machines, and equipment Working Capital. Types Of Financing. Debt Lender’s Income Does Not Vary With Business Success Equity
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Capital Requirements • Fixed Assets Building, machines, and equipment • Working Capital
Types Of Financing • Debt Lender’s Income Does Not Vary With Business Success • Equity Stockholder’s Income Does Vary With Business Success
Cash Budgets • EstimateWorking Capital Needs • Reflects When • Revenue Collected • Expenses Paid • Considers Seasonal Revenue Fluctuations For Obtaining Working Capital (Line Of Credit) Loans
Equity Financing • Equity is the Owner’s Share Of the Firm’s Assets • Proprietorship/Partnership Equals Owner’s Personal Assets • Corporation = Stock, 1 Share = 1 Vote • Common • Preferred • Investment Liquidity Depends On Market
Common Stockholders • Real Owners Of Corporation • Financial Claim Is After All Others • Right To Vote • Control Management Royalty-Free/CORBIS
Preferred Stockholders • Claim To Profits • Before Common Stock Dividends • Not Legally Enforceable • No Voting Rights • Fixed Par Value & Dividend • Cumulative Dividend
Sources ofEquity Financing • Self • Small Business Investment Companies (SBICs) • Venture Capitalists • Angel Capitalists • Other • Business Incubators • Employee Stock Ownership • Customers
Debt Financing • Comes From Lenders • Must Be Repaid • At Specified Interest Rate • Within Agreed-Upon Time Span • Legal Claim On Assets Before Stockholders • Equity = Safety Net For Lenders
Debt Securities • Bond • Publicly Issued • Large Companies • Loan • Commercial Banks • Insurance Companies • Finance Companies
Bonds • Standard Denomination • Method Of Interest Payment • Method Of Principal Payment
Lenders Want To Know • Startup • Can You Live Without Income From Business? • Loan Repayment? • Collateral? • Existing • Track Record • Future Difference?
Superior Marketing • Moves Quickly • Pricing Differential • Attention to Packaging • Build Customer Loyalty • Samples/Demonstrations • Educate Customers
Marketing Concept “…Giving Special Consideration To The Needs, Desires, And Wishes Of Present And Prospective Customers.”
E-Commerce “…Technology-Mediated Exchanges Between Parties As Well As The Electronically Based Intra- Or Interorganizational Activities That Facilitate Such Exchanges.”
MarketingResearch Areas • Identify Customers • Determine Needs • Evaluate Sales Potential • Select Appropriate Channel Of Distribution • Evaluate Advertising & Promotion • Sources of Information
Marketing Mix (4 Ps) Product Place Promotion Price
Packaging • Product • Promotes • Protects • Identification • Improves Product Convenience • Promotes Brand Recognition • Influences Buying Decision
Pricing (4 Cs) Customer Company Competition Constraints
SmallBusiness Price Setting • Service Firms • Retailers • Customary Price • Unit Price • Loss Leader • Wholesalers • Producers • Building Contractors = Cost-Plus
Advertising “…informs customers of the availability, desirability, and uses of products.”
DevelopingAdvertising Program • Budget • Media • What/How To Say It • Agency • Expected Results
Advertising Budget • Percentage Of Sales/Profits • Units Of Sales • Objective- Immediate Response • Executive Decision
Media Selection • Newspaper • Signage • Direct Mail • Circulars/Handbills • Yellow Pages • Radio • Television • Online
Why PeopleDon’t Shop Online • Isn’t secure • Jeopardize Privacy • Must Pay Shipping Charges • Not Enough Selection • Can’t Touch/Try First • No Satisfaction Guarantee • Returns A Hassle • Won’t Arrive On Time • Hard To Find Things • Enjoy Shopping Out Of House
Infomercial “…long, usually half-hour TV ads hosted by a hyper ‘sellevangelist’ selling a relatively new product or service.”
Distribution “…involves the effective movement of a product from the production line to the final consumer.”
Intermediaries • Brokers • Agents • Wholesalers • Retailers
Quality “…product characteristics and/or the probability of meeting established standards.” Standards = Customer Expectations
Quality Involves Total Quality Management • Strength • Color • Taste • Smell • Content • Weight • Tone • Look • Capacity • Accomplishment • Creativity • Reliability • Etc.
Improving &Controlling Quality • Quality Circles • Design • Good Process
Quality Control Steps • Set Standards • Measure Performance • Compare Performance • Make Corrections
Types Of Risk • Pure- Unpredictable • Speculative- Voluntary
Coping With Risk • Avoidance • Prevention/Control • Transfer • Assumption- Self-Insurance
Determine Insurance Need What Will Happen If: • I Die • Fire • Theft/Embezzlement • Robbery • Settlement • Unauthorized Information
Types Of Insurance • Fire • Business Interruption • Casualty • Product/Service Liability • Workers’ Compensation • Group Health/Life • Business Owner • Fidelity/Surety Bonds
Actions To Improve Safety • Involve Employees • Establish Communications • Companywide Participation • Safety Awards • Exciting Program • Be Watchful
Criteria ForInsurer Comparison • Financial Stability & Safety • Specialization • Tailor Policy • Cost Of Protection
CrimePrevention For Protection • Zero-Tolerance Policy • Screen • Train • Defuse Disputes • Check Security • Terminate With Care