PowerPoint Presentation Section 3.2 Pages 43-49

3.2 Starting Versus Buying a Business What you’ll learn The challenge of entering a family business The benefits and drawbacks of buying a business The responsibilities of starting your own business

3.2 Starting Versus Buying a Business Why it’s important Many people think that being an entrepreneur means starting a business from scratch. Many successful entrepreneurs buy an existing business then make it better.

3.2 Starting Versus Buying a Business Key Terms goodwill franchise franchisee franchiser business broker

3.2 Starting Versus Buying a Business I. SHOULD YOU ENTER AN EXISTING BUSINESS? A. Being opportunistic does not always mean starting a business from scratch.

3.2 Starting Versus Buying a Business B. You can enter a family business or buy an existing business.

3.2 Starting Versus Buying a Business Discussion Starter Make a list of local businesses in the following categories: 1. Family Business 2. New Business 3. Franchise ? Answer: Answers will vary.

3.2 Starting Versus Buying a Business II. ENTERING THE FAMILY BUSINESS A. Family businesses are an important part of the U.S. economy.

3.2 Starting Versus Buying a Business B. Family businesses are not generally high-growth businesses, but some have become very large.

3.2 Starting Versus Buying a Business III. THE UP SIDE – AND THE DOWN OF FAMILY BUSINESSES A. Only about one-third of family-run businesses survive to the second generation.

3.2 Starting Versus Buying a Business B. The trust and togetherness a family shares can be a real asset. C. A disadvantage is that family owners can never get away from the business.

3.2 Starting Versus Buying a Business IV. QUESTIONS TO ASK BEFORE ENTERING A FAMILY BUSINESS A. Do I have the ability to work for a family member?

3.2 Starting Versus Buying a Business B. Do I get along well with these family members? C. Do we share the same business goals? D. Do we share the same general goals for our personal lives?

3.2 Starting Versus Buying a Business Critical Thinking Why are family businesses not always perpetuated by second generations? ? Answer: Answers will vary, but may include different interests or changing markets.

3.2 Starting Versus Buying a Business V. BUYING A BUSINESS A. Buying a business may be less risky than starting one from scratch. B. Buying a business may be attractive to one without business experience.

3.2 Starting Versus Buying a Business VI. KINDS OF BUSINESSES AVAILABLE A. One can buy an existing business or the right to set up a new business patterned on an existing model.

3.2 Starting Versus Buying a Business B. An existing business already has a location and physical plant. C. Customer loyalty to an existing business, or goodwill, is an extremely valuable business asset.

3.2 Starting Versus Buying a Business D. McDonald’s is an example of a franchise. A franchise is a legal agreement to begin a new business in the name of a recognized company.

3.2 Starting Versus Buying a Business E. The purchasers of franchises pay a percentage of the profits annually to the owners of the franchise.

3.2 Starting Versus Buying a Business F. The buyer of a franchise is called the franchisee. G. The seller is the franchiser.

3.2 Starting Versus Buying a Business Critical Thinking What problems might a franchiser have? ? Answer: One problem faced by franchisers is monitoring the quality of its franchisees so that the standards of the company are not compromised.

3.2 Starting Versus Buying a Business VII. A GOOD DEAL OR A BAD ONE? A. Acquiring an existing business has advantages.

3.2 Starting Versus Buying a Business 1. Location 2. Goodwill 3. Staff 4. Plant 5. Inventory 6. Established procedures

3.2 Starting Versus Buying a Business B. There are can be disadvantages to buying a business. 1. Lack of success 2. Poor reputation 3. Dated inventory 4. Poorly maintained facilities

3.2 Starting Versus Buying a Business VIII. WHERE TO FIND A BUSINESS A. Read the newspaper. B. Network with others. C. Hire a business broker, a person who brings buyers and sellers together.

3.2 Starting Versus Buying a Business IX. QUESTIONS TO ASK YOURSELF BEFORE BUYING A BUSINESS A. Is the business interesting? B. Why is the owner selling? C. What is the potential for growth of the business?

3.2 Starting Versus Buying a Business X. STARTING YOUR OWN BUSINESS A. There is more effort involved before even opening the doors to business.

3.2 Starting Versus Buying a Business B. The principal benefit is that you can do things your own way.

3.2 Starting Versus Buying a Business XI. QUESTIONS TO ASK YOURSELF A. Do I have the motivation to start from nothing?

3.2 Starting Versus Buying a Business B. Do I have sufficient knowledge of basic operations to undertake the business? C. Do I have enough financial resources to start from scratch?

3.2 Starting Versus Buying a Business XII. THE CREATIVITY FACTOR A. Think creatively about the business you choose to enter. B. Constantly be on the lookout for opportunity.

3.2 Starting Versus Buying a Business End of Section 3.2