Starting a new venture

An entrepreneur have several options to start his entrepreneurial activities.

1. Entrepreneurship Development Starting a new Venture

2. An entrepreneur have several options to start his entrepreneurial activities He/She may buy an existing business Starting a new business Franchising

3. Buying an existing business Reasons for buying an existing firm: To reduce some of the uncertainties and unknowns that must be faced in starting a business from the ground up . To acquire a business with ongoing operations and established relationships with customers and suppliers. To obtain an established business at a price below what it would cost to start a new business . To own a successful establishment with goodwill. To avail the facility of good location. To avoid the difficulties of capital formation and market development.

4. Pros and Cons of Buying an Existing Business Pros High chance of success Less planning Existing customers/ suppliers Necessary equipment Experienced employees Existing business records Existing problems Poor quality of current employees Poor business image Modernization required Purchase price based on inaccurate data Poor business location

5. Factors to be considered before buying History of the business and its related industry. Business profit, sales, cash flows, market condition and expense figures(Past and projected). Business Profile(Image and goodwill). Cost of purchasing the firm. Reasons for sale. Other areas of concern: Assets and Liabilities . Location. Licenses. Employees. Merchandise. Machineries and equipments .

6. Finding Out Why the Business Is For Sale Owner’s reasons for selling the business: Old age or illness. Interest for another business High rate of taxes and other levies. Desire to relocate in a different section of the country Decision to accept a position with another company Unprofitability of the business Discontinuance of an sales Maturation of the industry and lack of growth potential

7. Setting price of an existing firm

8. Non-quantitative Factors in Valuing a Business Competition Market Future Community Development Legal Commitments Union Contracts Buildings Product Prices

9. Negotiating and Closing the Deal Terms of Purchase - Assets purchase or total entity – Indemnification clause – Payment in full or partial payments over time Closing the sale – Best handled by a third party -Bill of sale -Tax certifications -Payment-to-seller agreements and guarantees

10. Reasons for starting a new business Environmental factors( geographical location, easy access to market, abundance of resources, density of population) Motivational factors( liberty, Self-satisfaction, goodwill, self-esteem, risk reference group) Technical factors( personal skill, advancement of technology) Financial factors( family income, credit facility)

11. Reasons against starting a new business Risk Operational complexity Managerial complexity (Planning, organizing, controlling) Lack of proper education, skill and experience, Finance issue Bureaucracy Environmental issue Market condition Uncertainty

12. Essentials of starting a new business

13. Factors affecting the decision of starting new business Process

14. Steps to be followed to start a new business

15. Decision to start Innovation Motivations behind starting new business Drawbacks of other options( Franchising, buying existing firms) Financing Issues( Capital Sources-personal/bank/other sources)

16. Selecting an industry Trading Business Export-Import Manufacturing Service

17. Forms of Ownership Sole proprietorship Partnership Co-operative Company

18. Name Selection Name Selection Clearance Trade License

19. Location Decision (factors) Market and customers Transportation Labor supply Raw material supply Tax rate Community attitude Land climate

20. Legal clearance Necessary documents for an entrepreneur Trade license Certificate of incorporation TIN Vat registration no. Cert. from dept. of environment Fire license, etc.

21. Bank Account Separate bank Account is also important for a business. For this entrepreneur have to open a bank account in a specific bank with a specific name.

22. Franchising Franchising is a system used by a company (franchisor) that grants others(franchisees ) the right and license (franchise) to market a product or service under the franchisor’s trade names, trademarks, service marks, know-how and method of doing business. It is a system for distributing products or services through independent resellers. It is a format of mutual dependence which allows both the franchisor and the franchisee realize profits and benefits.

23. Some Terms Regarding Franchising Franchisor : The licensing company in the franchise agreement. Franchisee: The independent owner of a franchise outlet who enters into an agreement with a franchisor. Franchise: The right to use a specific business name and sell its goods or services in a specific city, region or country.

24. ADVANTAGES & DISADVANTAGES OF FRANCHISING (To the Franchisee) ADVANTAGES Established Concept Tools for Success Technical & Managerial Help Standards & Quality Control Minimum Risk Less Operating Capital Access to Credit Research & Development Advertisement & Promotion Other Opportunities DISADVANTAGES Unfulfilled Expectations Lack of Freedom Advertisement & Promotion Practices Cost of Services Over Dependence Monotony & Lack of Challenge Termination and Renewal Other problems

25. ADVANTAGES & DISADVANTAGES OF FRANCHISING(To the Franchisor) ADVANTAGES Business Expansion Buying Power Operational Convenience Franchisee’s Contribution Motivation & Cooperation DISADVANTAGES Lack of Freedom Franchisee’s Financial Situation Franchisee Recruitment, Selection and Retention Communication

26. Purposes of Franchising Getting the Brand Recognition Taking advantage of Growth Opportunities Achieving Management and Technical Experience. Maintaining Quality and Consistency To compete with big business. To allow consumers to buy good quality items or services at the right price . To provide entrepreneurs a means to enter business with a low capital investment and risk.

27. TWO MAIN TYPES OF FRANCHISING PRODUCT DISTRIBUTION FRANCHISE BUSINESS FORMAT FRANCHISE

28. PRODUCT DISTRIBUTION FRANCHISE Franchise that simply sells the products of the franchisor and have supplier-dealer relationships. The franchisor licenses its trademarks and logo to the franchisee but does not necessarily provide them with an ENTIRE system for running their business. BUSINESS FORMAT FRANCHISE This type of franchise includes not only the a product , service and trademark but also the complete method to conduct the business itself, such as the marketing plan and operations manual. examples: fast food, service, restaurants