1. To start a new business, buy an existing business, or buy a Franchise
Entrepreneurship
To start a new business,
buy an existing business, or buy a Franchise

2. Start a new Business Define the nature of the business
Create preferred type of physical facilities
Obtain fresh inventory
Make all initial personnel decisions
Latest technology & materials available
Select a competitive environment

3. Not to start a new business
Problems finding the right business
Assembling the resources; Location, building, equipment, materials, employees
Lack of established product line
Production problems; start up
Lack of established market & distribution
Risk of failure higher then Buying existing business or Franchise

4. Buy an existing business
Personnel are already working
Facilities are already available
A product is already reaching a market
The location may be desirable
Relations with banks and trade creditors
Revenues and profits are being generated
Goodwill already exists

5. Not to buy existing business
Physical facilities may be old or obsolete
Employees may have poor attitude
Accounts receivable may be uncollectible
Location may be bad
May have poor financial standing
Inventory may be obsolete or in poor quality

6. Questions to ask before Buying an existing business
Why is it for sale
Are facilities suitable for future operations
Is the business operating efficiently
Financial condition
Is the price fair
Do you have necessary ability

7. Steps in Purchasing a Business
Write specific objectives about the kind of business you want to buy.
Identify businesses for sale that meet the objectives.
Meet with business sellers or brokers to identify specific opportunities.

8. Visit during business hours to observe the business in action.
Obtain accounting records for the prior three years.
Get important information in writing.
reviewed by a lawyer
reviewed by an accountant

9. Determine how you would finance the business.
Get expert help to determine the price to offer for the business.

10. Franchise Ownership franchise franchisee franchisor
a legal agreement that gives an individual the right to market a company’s products or services in a particular area
franchisee
the person who purchases a franchise
franchisor
the company that offers the franchise for purchase

11. Operating Costs of a Franchise
initial franchise fee
the amount the local franchise owner pays in return for the right to run the franchise
startup costs
the costs associated with running a business

12. royalty fees advertising fees
weekly or monthly payments made by the local owner to the franchise company
advertising fees
paid to the franchise company to support television, magazine, or other advertising of the franchise as a whole

13. Investigate the Franchise Opportunity
The FTC requires franchise sellers to provide detailed disclosure information at least 10 business days before finalizing a purchase.
The disclosure document should include the following:
contact information for at least ten previous purchaser who live nearest to you

14. the fully audited financial records of the seller
background and experience of the business’s key executives
cost of starting and maintaining the business
the responsibilities you and the seller will have once you have invested in the opportunity

15. Evaluate a Franchise
Study the disclosure document and proposed contract carefully.
All costs and royalty fees should be provided.
Interview current owners.
shills
business references who are paid to give favorable reports

16. Research the franchisor’s history and profitability.
Investigate claims about your potential earnings.
Does projected local demand match potential earnings?
Have the seller provide, in writing, the number and percentage of owners who have done as well as they claim you will.

17. Listen carefully to sales presentations.
Do not sign up immediately.
Do not fall for a promise of easy money.
Shop around.
Compare services offered by similar franchisors.

18. Get the seller’s promises in writing.
Determine what will happen if you want to cancel the franchise agreement.
Ask for advice from professionals.

19. Advantages of Owning a Franchise
An entrepreneur is provided with an established product or service.
Franchisors offer management, technical, and other assistance.
Equipment and supplies can be less expensive.
A guarantee of consistency attracts customers.

20. Disadvantages of Owning a Franchise
Franchise fees can be costly and cut down on profits.
Owners of franchises have less freedom to make decisions than other entrepreneurs.

21. Franchisees are dependent on the performance of other franchises in the chain.
The franchisor can terminate the franchise agreement.

22. The End