MT209 Small Business Management Unit 2 – Getting Started: From Idea to Business Venture

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Idea + Vision + Planning = Venture In Unit 2, we will explore the initial steps in the formation of the new venture and how these work to shape the future of the business. It begins with the entrepreneur asking “why” the new business? We will examine the critical role of the entrepreneur’s vision as a precursor to the planning process and the significance of the mission statement to the new business.

Unit 2 Outcomes Discuss the role of vision as a precursor to the planning process. Identify different entry options. Identify how the entrepreneur’s interpersonal factors influence the new business. Discuss the role of the mission statement. Describe the potential of small firms as global enterprises.

Unit 2 To Do List Start the Unit: Review the key terms Carefully consider the business idea or concept for your project Study: Read Chapter 3, Chapter 4 and Chapter 5 in your text Prepare: Review the MT209 Project Instructions and the MT209 Project Template. Review the Fortune 500 Mission Statements for the Discussion. Graded Assignments: Respond to the Unit 2 Discussion Board Complete the Unit 2 Assignment Complete the Unit 2 Quiz Attend the Unit 2 Class Seminar or complete the Alternative Assignment Ungraded Activity: Complete the ungraded Competitive Factors and SWOT Analysis Activity.

Unit 2 Class Discussion Unit 2 Discussion: After reviewing the descriptions and mission statements for some of the Fortune 500 businesses you are familiar with listed on missionstatements.com at: Discuss the following for one of the businesses: Does the mission statement accurately represent this business? Why or why not? Does the description of the business adequately define this business? Why or why not? Why are mission statements so important for businesses?

Unit 2 Assignment Using the MT209 Project Template and MT209 Project Instructions, complete the Cover Page, Business Description, Vision Statement, and Mission Statement sections of the Descriptive Business Plan for your proposed business venture. If you have elected to use one of the two business scenarios for your plan, complete the above areas using one of those scenarios. Assignment Checklist: The Assignment should include the following elements: A completed Cover Page with your name, name of business and date. A General Business Description: This should include what the business will do, what products or services it will produce or deliver to the customer. This should be specific. Vision Statement: A statement of what you visualize the business to be at some definite point in the future based on present realities. Mission Statement: A succinct statement detailing the reason(s) for the business’ existence and the guiding principles of the business. Personal Motivation: A personal reflective discussion of why you want to own and manage a small business in at least 100 words. State what skills, experiences, and passion you would bring to the new venture. NOTE: There are 5 separate sections to this assignment!

Unit 2: Owning a Business There are 4 basic ways to start one’s ownership of a business: 1.Start a new venture as a sole proprietorship, partnership, or corporation from scratch 2.Purchase a franchise 3.Purchase an existing business (buyout) 4.Assume control and management of one’s family business Each of these approaches has its own unique advantages and disadvantages!

Starting A Business Using Your Own Ideas Opportunity Recognition Identification of potential new products or services that may lead to promising businesses Entrepreneurial Alertness Readiness to act on existing, but unnoticed, business opportunities Good Investment Qualities Products that serve clear and important needs Products that customers know about Products that customers can afford A good idea is not the same as a good opportunity.

Sources of Venture Ideas Source: Data developed and provided by the National Federation of Independent Business and sponsored by the American Express Travel Related Services Company, Inc. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Advantages to Starting Your Own Venture Personal satisfaction in seeing the success of one’s own good ideas and hard work Potential to reap financial rewards of venture’s success Satisfaction of being one’s own boss  Question: Can you think of other advantages?

Disadvantages to Starting Your Own Venture Lack of sufficient start-up capital Increased financial liability Hard work and long hours required Lack of specific required managerial skills to successfully operate the business  Question: Can you think of other disadvantages?

Franchising Basics Franchising -A marketing system involving a legal agreement, whereby the franchisee conducts business according to the terms specified by the franchisor. Franchisor -Party in franchise contract that specifies methods to be followed and terms to be met by the other party. Franchisee -An entrepreneur whose power is limited by a contractual agreement with a franchisor.

Advantages to Franchises An Operational Plan (Road Map) provided: Training Financial assistance Operating Support -Location site selection -Co op Advertising A proven idea and business model  Question: Can you list other advantages?

Disadvantages to Franchises Franchise costs -Initial franchise fee -Investment costs -Royalty payments -Advertising costs Less Control -Franchisor often has strict guidelines  Question: Can you list other disadvantages?

Buying An Existing Business Advantages: -Initial start-up work already done -Established customer base -Established performance record to see  Question: Can you list other advantages? Disadvantages: - Business culture already formed - Business may not be worth asking price  Question: Can you list other disadvantages?

Family Businesses Advantages: -Initial start-up work already done -Established customer base -Satisfaction of maintaining family legacy  Question: Can you list other advantages? Disadvantages: - Culture already formed that may not be optimal - Power sharing with relatives  Question: Can you list other disadvantages?

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Cover Page The plan Cover Page should contain: Business Plan Name Student Name Kaplan University MT209: Small Business Management Instructor Name Month Date, Year Use This Form for Our Class Project

Cover Page (Continued) An actual Business Plan Cover Page would contain: The word “Business Plan” centered on the cover page The names of the founders listed under a heading “Owners” The Business Name Address City, State, ZIP Code Telephone Fax

Business Description What business will the new venture engage in? What will the business do? Briefly, to whom will the new business market its products or services? (This will be more fully developed in the Marketing Plan section.) Briefly, describe the industry it will seek to enter. Describe the most important core competencies you believe the new business will possess.

Vision Statement Vision must go before goals-setting and planning! Vision is the future possibility you see for the new business based on present realities! Many new businesses are limited by the lack of vision of their founders! The Vision Statement can be described as what you, as founder, visualize the new business to be at some point in the future. Remember, as founder, you cannot realize that which you cannot visualize!

Mission Statement A brief statement detailing the reasons for the business’ existence and the guiding principles of the new business Mission Statements are far more than merely advertising slogans! Every activity of the business should reflect the fundamental mission of the business organization as stated in its mission statement.

Personal Motivation Although not normally a part of a business plan, this section asks you to articulate your motivation for seeking entrepreneurship and business ownership. There are no prescribed answers here! The reasons for entrepreneurship are as varied as those who pursue it! What are your reasons for wanting to own your own business? Entrepreneurship and business ownership are hard and stressful work! It is important that those who seek this are sufficiently motivated to be successful.

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See you next week! Remember, our Class Seminars will always be held at the same hour and the same day each week! After this seminar has concluded, there will be a recording in the archives located in the seminar room. It may be selected by date.

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