6-3 Starting a Small Business – Flashcards
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Goal 1
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Recognize important factors to be considered when starting a business
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Goal 2
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Describe the elements of a business plan
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Goal 3
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Identify types and sources of financing for a small business
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KEY TERMS
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- Business plan
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A written description of the business idea and how it will be carried out, including all major business activities
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- Start-up financing
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The amount of money needed to open a business
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- Short-term financing
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The money needed to pay for the current operating activities of a business
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- Long-term financing
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Money needed for the main resources of a business (such as land, buildings, and equipment) that will last for many years
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THE BUSINESS DECISION
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- An idea plus experience
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() Business ideas come from many different sources. Hobbies, interests, and business experience often give people ideas for a new businesses
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- Right place and time
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() Most retail businesses need good customer traffic () Manfactureres must be located in an area with access to the raw materials used in manufacturing () Tranportation systems must also be easy to reach for distrubuting finshed products () Timing is another key factor in starting a business
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- Team approach
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() A business is not easy to run without he help of others () Employees must be choosen carefully () Other people with specialized business knowledge may also be needed
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- Preparation and research
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() Entreprenuers should gather information about customers, competitors, important operations, goverment regulations and many other topics
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CHECKPOINT
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- Why is it so important to use a team approach when starting a new business?
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() A team approach allows employees to feel vauled and motivated to take personal responsiblity for the benifit of the business () Owners cannot excpect to be able to do everything alone. Building a team will alow the business to increase productivity, ultimateltly, and profits
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WHAT IS A BUSINESS PLAN
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- A business plan is a written desciption of the busniess idea and how it will be carried out, including all major business actvities
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- Most business plans are developed for one year and then updated for the next year
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- By developing a plan the owner is force to think about important activties, the amount of time they will take, and their cost
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ELEMENTS
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- Desciption of the business
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() The business idea () Major products and services () Ownership structure () Long and short-term goals
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- Description of competition
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() Characteristics of the industry () Condition of the economy () Strengths and weaknesses
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- Operations plan
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() Organization of the company () Description of major operations () Analysis of needed resources () Human resource plan
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- Marketing plan
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() Description of major marketing actvities () Description of needed resources () Schedule of marketing activities
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- Financial plans
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() Start-up cost () Short and long-term finaical needs () Sources of finacing () Budget and financial statements
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STEPS IN DEVELOPING THE BUSINESS PLAN
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- Gather and review information
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- Develop the strategic alternatives
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- Write the plan
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- Ask an expert to review the plan
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CHECKPOINT
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- What are the "strategic alternatives" in a business plan?
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() Strategic alternatives plans for production, staffing, financing, and so on () Even the best plan cannot predict every possible circumstance () An alternative plan allows a business to be prepared for the unforeseeeable
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FINANCING THE SMALL BUSINESS
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- Types of finanacing
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() Start up finanacing () Short term financing () Long term financing
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CHECKPOINT
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- In addition to owner supllied capital, what are several other sources of finanacing for a small business
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() Borrowed money may come from banks, finance company, or other individuals, such as family or friends () Some suppliers may also be willing to extend credit
