1. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ChapterChapter8 Locate and Set Up Your Business 8.1 Choose a Location 8.2 Obtain Space and Design the Physical Layout 8.3 Purchase Equipment, Supplies, and Inventory

2. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 2 Lesson 8.1 Choose a Location Goals Identify options for locating a retail business. Discuss factors to consider when choosing a location for a nonretail business. Identify the benefits of locating a business online. Describe steps to take in selecting a site.

3. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 3 Vocabulary industrial park enterprise zones e-commerce trade area

4. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 4 Locating a Retail Business The right location for your business depends on: the kind of business you plan to operate the type of customer you want to reach Also consider whether you will have inside sales outside sales

5. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 5 Downtown Areas Positive features of a downtown location include: easy accessibility convenient access for downtown workers

6. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 6 higher crime rate traffic jams a lack of free or convenient parking customers in the evening Negative features of a downtown location include:

7. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 7 Neighborhood Shopping Centers consist of 3 to 15 stores good for stores selling goods or services that people need to purchase frequently rent is usually low convenient for local shoppers

8. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 8 Community Shopping Centers larger than neighborhood centers serve residents from many neighborhoods large anchor stores can increase customer traffic

9. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 9 Regional Shopping Centers designed to attract customers from an entire region have 40 to 100 stores anchored by two or more large department stores focus on apparel rents are high

10. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 10 Super-Regional Shopping Centers largest classification of shopping centers more than 100 stores anchored by three or more department stores very high rents not recommended for new businesses

11. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 11 Stand-Alone Stores may be located just outside of shopping centers or far from other businesses depend on drive-by traffic less expensive rent advertising is often necessary

12. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 12 Warehouses among the cheapest rent few frills often charge customers lower prices heavy advertising required

13. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 13 What are the main options for locating a retail business?

14. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 14 Locating a Nonretail Business Service Businesses If offering an inside service, location is very important as customers will visit the business. restaurants or hair salons If offering an outside service, location is less important as customers will not visit the business. plumbing or carpet cleaning

15. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 15 Manufacturing and wholesale companies ship their products directly to customers. do not rely on customer traffic industrial park a section of land that is zoned exclusively for industrial businesses space is less expensive Industrial Businesses

16. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 16 areas that suffer from lack of employment opportunities businesses can qualify for favorable tax treatment depending on the number of jobs they create enterprise zones

17. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 17 Benefits of home-based businesses include: cost savings more freedom convenience Challenging aspects of home-based businesses include: lack of space can limit expansion it can be hard to separate business and family life a feeling of isolation can arise Home-Based Businesses

18. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 18 What are some of the factors to consider when selecting a location for a nonretail business?

19. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Starting a Virtual or Online Business e-commerce buying and selling products or services over the Internet Chapter 1 Slide 19

20. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Benefits of Virtual or Online Businesses an immediate presence business costs are less a global customer base is possible time restrictions are not a problem can electronically manage information about customer behavior Chapter 1 Slide 20

21. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Virtual or Online Business Precautions Buy your own domain (web address). Use a creative website design that appeals to customers. Be sure your website has a fast loading speed. Keep your website current. Chapter 1 Slide 21

22. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 22 What are some benefits of having a virtual or online business?

23. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 23 Selecting Your Site trade area the area from which you expect to attract customers identify the location of competitors businesses that would attract a similar customer base but that would not compete directly with you

24. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 24 Location Type and Availability Determine which type of location is best for your business. Determine what spaces of this type are available in your trade area.

25. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 25 Evaluate the Location Factors to consider when picking a location include: safety attractiveness Does the location attract your target market? Is parking adequate? Are surrounding businesses thriving?

26. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 26 What are some of the factors you should consider when selecting a site for your business?

27. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 27 Lesson 8.2 Obtain Space and Design the Physical Layout Goals Compare purchase and lease options. Describe layout considerations for different types of businesses.

28. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 28 Vocabulary tenant landlord gross lease net lease percentage lease visual merchandising

29. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 29 Lease or Buy Space Buying advantages include: You can receive a tax deduction on the loan interest for the building. The loan payment may be no larger than a lease payment.

30. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 30 Most entrepreneurs lack the money to purchase property for their business. You are locked into a specific location. You are responsible for building maintenance costs. Disadvantages of buying include:

31. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 31 Commercial Leases tenant the person who pays rent to occupy the space owned by someone else landlord the person who owns and rents out the building or space

32. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 32 gross lease tenant pays monthly rent landlord pays property expenses net lease landlord pays building insurance tenant pays rent, taxes, and other expenses There are three types of commercial leases.

33. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 33 the tenant pays a base monthly rent the tenant also pays a percentage of monthly revenue as rent most common for prime retail locations percentage lease

34. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 34 You should always consult with an attorney before signing a commercial lease.

35. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 35 Compare Costs of Doing Business When deciding where to locate your business you should calculate how much rent you will pay per customer. Rent per customer = Rent per month ÷ customers per month

36. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 36

37. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 37 Name three kinds of commercial leases.

38. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 38 Design the Layout of Your Business Your layout needs to include space for: employees customers merchandise equipment restrooms stockroom/storage offices

39. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 39 Create the Floor Plan

40. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 40 Layout of a Retail Business visual merchandising the process of combining products, environments, and spaces into an appealing display to encourage the sale of products or services

41. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 41 It should attract customers to your store and keep them coming back. It should meet the needs of your business. The goal of your layout should be twofold:

42. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 42 Layout of a Service Business For businesses where customers visit the site, the layout should be considered as carefully as a retail business. As customers do not visit on-site service businesses, organization of supplies should be the focus of the layout.

43. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 43 Layout of a Wholesale Business focus on price and quality Layout should be efficient and well- organized to facilitate shipping and receiving.

44. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 44 Layout of a Manufacturing Business The layout should facilitate the production process. Work teams should be close together. Supervisors should be in close proximity to the people they supervise.

45. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 45 Hazardous materials should be safely stored. Equipment and machinery should be positioned in a way that minimizes the potential for accidents. Exits should be clearly marked and easily accessible.

46. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 46 What are the major considerations for choosing a layout for a business?

47. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 47 Lesson 8.3 Purchase Equipment, Supplies, and Inventory Goals Explain how to find and choose vendors for your business. List factors that determine the needed level of inventory.

48. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 48 Vocabulary inventory vendors quote reorder point

49. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 49 Obtain Equipment and Supplies inventory the products and the materials needed to make the products that a business sells to its customers When starting a business, order the minimum quantity you need right now.

50. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 50

51. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 51 Identify Suppliers vendors companies that sell products and services to businesses

52. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 52 Evaluate Proposals quote an estimate for how much you will pay for the merchandise or service Other information to seek when obtaining quotes includes: quality of merchandise financing terms quantity discounts shipping and handling charges

53. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 53 What should you consider when selecting vendors for your business?

54. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 54 Purchase Inventory For retailing and wholesaling: Inventory is a finished product purchased with the intent of reselling it to customers. For manufacturing: Inventory includes: raw materials finished goods

55. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 55 Purchase Inventory for a Startup Business As it is difficult to forecast actual sales, a startup business should order just enough stock to fill its shelves.

56. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 56 Purchase Inventory for an Ongoing Business reorder point a predetermined level of inventory that signals when new stock should be ordered Factors to consider when setting a reorder point include: how long it takes suppliers to get merchandise to you monthly sales of the item how important it is for you not to be out of stock

57. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 57 How do you determine the amount of inventory to keep in stock?

58. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 58 PERFORMANCE INDICATORS Identify product opportunities Describe the use of technology in the selling function Explain the nature and scope of the product/service management function

59. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 59 Develop strategies to position the product/business Explain factors affecting pricing decisions Explain the nature of a promotional plan Identify the impact of product life cycles on marketing decisions

60. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 60 THINK CRITICALLY 1.Why must the clothing at the bookstore be unique from clothing carried in department stores and other retail outlets? 2.Why are scheduled merchandise markdowns important for retailers?

61. Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8 Slide 61 4.Why should the bookstore consider Internet merchandise sales? 3.What types of special promotions could increase sales from fans and alumni attending football and baseball games?