Week 8 Ch 11: Entrepreneurship and Small Business Ownership FM10211 – Retail Operations

FM Retail Operations2 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

FM Retail Operations3 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

FM Retail Operations5 The Realities of Entrepreneurship Dream job? Majority of new businesses fail in first year Many successful entrepreneurs fail first –Sam Walton –R.H. Macy

FM Retail Operations6 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

FM Retail Operations7 More Characteristics Hard work, long hours, physical stamina Enjoyment of competition Task-result oriented Future-oriented Desire for independence and success

FM Retail Operations8 Knowledge/Information Needed Products/services sold Target market, selling techniques, promotion Personnel management, record keeping, inventory controls Experience and/or formal training

FM Retail Operations9 Entrepreneurial Options New product or better quality New method of production Open a new market New source of supply New organization of an industry

FM Retail Operations10 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

FM Retail Operations11 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

FM Retail Operations12 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

FM Retail Operations13 Another option: Franchise Predictable Instant recognition –Quicker to profitable Easier and cheaper to purchase –Supplies, equipment, inventory, services… Advertising Operational improvements

FM Retail Operations14 Disadvantages of Franchising Restrictions –Little room to innovate –Why? Costs –Original outlay –Share of profits –Ongoing fees Termination Unrealistic Expectations –No guarantee!

FM Retail Operations15 Find a Franchise Appare retailers Specialty retailers

FM Retail Operations16 Help You Might Need Legal Accounting Buying

FM Retail Operations17 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

FM Retail Operations18 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)

FM Retail Operations19 Resources Small Business Development Centers (SBDCs) – Business Statistics –Find out what is reasonable in your industry –

FM Retail Operations20 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