Description
The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.Assignments submitted through email will not be accepted.Students are advised to make their work clear and well presented; marks may be reduced for poor presentation. This includes filling your information on the cover page.Students must mention question number clearly in their answer.Late submission will NOT be accepted.Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. Weight 10 Marks All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).Submissions without this cover page will NOT be acceptedStart-up Business Plan
Assume yourself as an entrepreneur of a small
startup business in Saudi ArabiaNote: Use APA style of referencing
Unformatted Attachment Preview
المملكة العربية السعودية
وزارة التعليم
الجامعة السعودية اإللكترونية
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment-1
MGT 402-Entrepreneurship and small business
Due Date: 09/03/2024 (End of Week-7) @ 23:59
Course Name: Entrepreneurship and small
business
Student’s Name:
Course Code: MGT402
Student’s ID Number:
Semester: First
CRN:
Academic Year: 2023-24
For Instructor’s Use only
Instructor’s Name:
Students’ Grade: Marks Obtained/Out of
10
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
•
The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
•
Assignments submitted through email will not be accepted.
•
Students are advised to make their work clear and well presented; marks may be reduced for poor
presentation. This includes filling your information on the cover page.
•
Students must mention question number clearly in their answer.
•
Late submission will NOT be accepted.
•
Avoid plagiarism, the work should be in your own words, copying from students or other resources
without proper referencing will result in ZERO marks. No exceptions.
•
All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures
containing text will be accepted and will be considered plagiarism).
•
Submissions without this cover page will NOT be accepted
•
Weight 10 Marks
Learning Outcomes:
1. Describe the place of small business in history and explore the strengths and weaknesses of
small business.
2. Design a solid projected financial plan and conduct a breakeven analysis for a small company.
3. Demonstrate the ability to deliver and communicate marketing massages in coherent and
professional manner.
4. Illustrate the ability to think independently and systematically on developing a viable business
model.
Assignment Workload:
This assignment is an individual assignment.
Start-up Business Plan
Assume yourself as an entrepreneur of a small startup business in Saudi Arabia.
Write brief notes on the following objectives:
1. Owners, capital structure and company profile (2 Marks)
a. Your Business Name, Address, E‐Mail
b. Form of ownership: What is the legal structure? Sole proprietor, Partnership,
Corporation….
C. Investment capital
2. Company Business Description (300 – 400 words)
A. Scope and type of business (4 Marks)
What business will you be in? What will you do? What market segment will you
choose?
• Business idea: what is your big idea? Is it a product or a service? What makes your
idea different?
• Mission Statement
• Company’s short-term and long-term goals and objectives.
• Target market and demographics: Who will your customers be? Where do they live?
What is your target market passionate about?
B. Business Philosophy (4 Marks)
What is important to you in your business?
• Describe your Industry: Is it a growth industry? What long-term or short-term changes
do you foresee in the industry? How will your company take advantage of it?
• Describe your most important company strengths and core competencies: What factors
will make the company succeed? What do you think your major competitive strengths
will be? What background experience, skills, and strengths do you personally bring to this
new venture?
• Risk Assessment: Evaluate the strengths and weaknesses of your business using SWOT.
•Who is your competition and how do you beat them?
Note: Use APA style of referencing
Answers:
1.
2.
Entrepreneurship and Effective Small
Business Management, 11/E
Cases
Case #
1
Entrepreneur
& Company Name
Michael Volpatt, Kate
Larkin, and Crista Leudtke
Big Bottom Market
2
Peter Justen
MyBizHomepage
3
4
5
6
Chapter
Reference
Related Topics
Industry: Restaurant, specialty food, and wine
●
Bootstrap marketing and social media marketing
9
●
Managing cash flow
15
Industry: Web-based financial services for small business
owners
1
●
Entrepreneurship
●
Buying/Selling a business
7
●
E-commerce
13
●
Sources of financing
●
Human resources management: staffing
16 and 17
21
Jacqui Rosshandler
Industry: All-natural breath-freshener
Jacquii LLC
●
Managing cash flow
15
●
Sources of equity financing
16
●
Sources of debt financing
17
Lucy Cardenas and Bill Coker
Industry: Restaurant
Red Iguana
●
Buying/Selling a business
7
●
Sources of debt financing
17
●
Management succession
18
●
Choosing a location
22
Rachel Shein and Steve Pilarski
Industry: Wholesale bakery
Baked in the Sun
●
Angela Crawford and Martin
Rodriguez
Industry: Pharmacy
●
Healthcare insurance and the Affordable Care Act
Financial analysis
22
14
Bluffton Pharmacy
7
Angela Crawford and Martin
Rodriguez
Industry: Pharmacy
●
Managing cash flow
15
Bluffton Pharmacy – Part 2
8
9
10
Brian Linton
Industry: Apparel
United By Blue
●
Ethics and social responsibility
●
Strategic management
4
●
Pricing
11
2
Aseem Badshah and Kevin Yu
Industry: Social media services
Socedo
●
Entrepreneurship
1
●
Sources of equity financing
16
Kelly Lester
Industry: Lunchboxes
EasyLunchboxes
●
Bootstrap marketing and social media marketing
9
●
E-commerce
13
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Eleventh Edition
Entrepreneurship and Effective
Small Business Management
Norman M. Scarborough
Presbyterian College
Jeffrey R. Cornwall
Belmont University
Boston Columbus Indianapolis New York San Francisco Upper Saddle River
Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto
Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
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Library of Congress Cataloging-in-Publication Data
Scarborough, Norman M.
Entrepreneurship and effective small business management/Norman Scarborough, Jeff Cornwall.—Eleventh Edition.
pages cm
Includes bibliographical references and index.
ISBN-13: 978-0-13-350632-7
ISBN-10: 0-13-350632-0
1. Small business—Management. 2. New business enterprises—Management. 3. Small business—United States—Management. 4. New business
enterprises—United States—Management. I. Cornwall, Jeffrey. II. Title.
HD62.7.S27 2013
657’.9042—dc23
2013039406
10 9 8 7 6 5 4 3 2 1
ISBN-10:
0-13-350632-0
ISBN-13: 978-0-13-350632-7
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Brief Contents
SECTION I
The Rewards and Challenges
of Entrepreneurship 1
Chapter 1
Chapter 2
Chapter 3
Chapter 4
SECTION II
Entrepreneurs: The Driving Force Behind Small Business 1
Ethics and Social Responsibility: Doing the Right Thing 37
Creativity and Innovation: Keys to Entrepreneurial Success 71
Strategic Management and the Entrepreneur 105
Launching a Venture: Entry Strategies
Chapter 5
Chapter 6
Chapter 7
Chapter 8
SECTION III
Choosing a Form of Ownership 137
Franchising and the Entrepreneur 165
Buying an Existing Business 201
New Business Planning Process: Feasibility Analysis, Business
Modeling, and Crafting a Winning Business Plan 235
Building a Marketing Plan
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
SECTION IV
SECTION V
273
Building a Bootstrap Marketing Plan 273
Creative Use of Advertising and Promotion
Pricing and Credit Strategies 343
Global Marketing Strategies 375
E-Commerce and Entrepreneurship 413
Building a Financial Plan
Chapter 14
Chapter 15
Chapter 16
Chapter 17
305
453
Creating a Solid Financial Plan 453
Managing Cash Flow 489
Sources of Equity Financing 523
Sources of Debt Financing 551
Building an Operating Plan
Chapter 18
Chapter 19
Chapter 20
Chapter 21
137
581
Location, Layout, and Physical Facilities 581
Supply Chain Management 627
Managing Inventory 667
Staffing and Leading a Growing Company 703
SECTION VI
Legal Aspects of Small Business: Succession,
Ethics, and Government Regulation 741
Chapter 22
Management Succession and Risk Management Strategies
in the Family Business 741
The Legal Environment: Business Law and Government
Regulation 781
Chapter 23
Appendix
Cases
831
Endnotes
Index
The picturebooth co. 817
846
884
iii
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v
•
•
Contents
Preface
xxiii
Acknowledgments xxvi
SECTION I
The Rewards and Challenges
of Entrepreneurship 1
Chapter 1
Entrepreneurs: The Driving Force Behind Small
Business 1
The Role of the Entrepreneur 2
What Is an Entrepreneur? 5
◼ ENTREPRENEURSHIP IN ACTION
Frontier? 9
Space: The Next Entrepreneurial
How to Spot Entrepreneurial Opportunities
10
Monitor Trends and Exploit Them Early On 10
Travel—and Be Inspired 11
Take a Different Approach to an Existing Market
Put a New Twist on an Old Idea
11
11
Look for Creative Ways to Use Existing Resources
12
Realize That Others Have the Same Problem You Do 12
Take Time to Play
12
Notice What Is Missing
12
The Benefits of Owning a Small Business 13
Opportunity to Gain Control over Your Own Destiny 13
Opportunity to Make a Difference 13
Opportunity to Reach Your Full Potential 14
Opportunity to Reap Impressive Profits
14
Opportunity to Contribute to Society and Be Recognized for Your Efforts 14
Opportunity to Do What You Enjoy Doing
15
The Potential Drawbacks of Entrepreneurship
Uncertainty of Income
15
15
Risk of Losing Your Entire Invested Capital 15
Long Hours and Hard Work 16
Lower Quality of Life Until the Business Gets Established
High Levels of Stress
16
16
Complete Responsibility 17
Discouragement 17
Why the Boom: The Fuel Feeding the Entrepreneurial Fire 17
Entrepreneurs as Heroes 17
Entrepreneurial Education 17
Shift to a Service Economy 17
Technology Advancements 17
Outsourcing 18
Independent Lifestyle 18
E-Commerce, the Internet, and Mobile Computing
International Opportunities
18
19
◼ IN THE ENTREPRENEURIAL SPOTLIGHT Collegiate Entrepreneurs
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The Cultural Diversity of Entrepreneurship
20
Young Entrepreneurs 20
Women Entrepreneurs
21
Minority Enterprises 22
Immigrant Entrepreneurs 23
Part-Time Entrepreneurs 24
Home-Based Business Owners 24
Family Business Owners 24
Copreneurs 26
Corporate Castoffs 27
Corporate “Dropouts” 27
Retired Baby Boomers 28
The Contributions of Small Businesses 28
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR
Start-Up 30
Bulletproofing Your
Putting Failure into Perspective 31
How to Avoid the Pitfalls 32
Know Your Business in Depth
32
Prepare a Business Plan 33
Manage Financial Resources 33
Understand Financial Statements
33
Learn to Manage People Effectively 34
Set Your Business Apart from the Competition 34
Maintain a Positive Attitude 34
Conclusion—and a Look Ahead 34
Chapter Review
Chapter 2
35
•
Discussion Questions
36
Ethics and Social Responsibility: Doing the Right
Thing 37
An Ethical Perspective 39
Three Levels of Ethical Standards 40
Immoral, Amoral, and Moral Management 41
The Benefits of Moral Management
42
Establishing an Ethical Framework 43
Why Ethical Lapses Occur 44
An Unethical Employee 45
An Unethical Organizational Culture 45
Moral Blindness 45
Competitive Pressures
45
Opportunity Pressures
45
Globalization of Business
45
Establishing and Maintaining Ethical Standards 46
Establishing Ethical Standards 46
Maintaining Ethical Standards 46
◼ ENTREPRENEURSHIP IN ACTION But Is It Safe?
Social Entrepreneurship
49
49
◼ IN THE ENTREPRENEURIAL SPOTLIGHT Making a Profit and Making
a Difference 50
Social Responsibility 51
Business’s Responsibility to the Environment 52
Business’s Responsibility to Employees 53
Cultural Diversity in the Workplace 54
Drug Testing 57
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HIV/AIDS
58
Sexual Harassment 59
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR How to Avoid Sexual
Harassment Charges 62
Privacy
64
◼ ENTREPRENEURSHIP IN ACTION
on Facebook 64
Think Before You Hit “Post”
Business’s Responsibility to Customers 65
Right to Safety
65
Right to Know
66
Right to Be Heard 66
Right to Education
Right to Choice
66
67
Business’s Responsibility to Investors 67
Business’s Responsibility to the Community 67
Conclusion 68
Chapter Review
Chapter 3
68
•
Discussion Questions
69
Creativity and Innovation: Keys to Entrepreneurial
Success 71
Creativity, Innovation, and Entrepreneurship 72
Creativity—Essential to Survival 76
Can Creativity Be Taught?
78
Creative Thinking 78
◼ IN THE ENTREPRENEURIAL SPOTLIGHT The Ingredients of Creativity
Barriers to Creativity
79
81
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR Questions to Spur
the Imagination 85
How to Enhance Creativity 86
Enhancing Organizational Creativity 86
Enhancing Individual Creativity 91
◼ IN THE ENTREPRENEURIAL SPOTLIGHT How to Create a Culture
of Creativity and Innovation 96
The Creative Process 97
Step 1. Preparation
97
Step 2. Investigation
98
Step 3. Transformation 98
Step 4. Incubation 99
Step 5. Illumination 101
Step 6. Verification 101
Step 7. Implementation
Conclusion
102
Chapter Review
Chapter 4
102
103 •
Discussion Questions
103
Strategic Management and the Entrepreneur 105
Building a Competitive Advantage 108
The Strategic Management Process 110
Step 1. Develop a Clear Vision and Translate It into a Meaningful Mission Statement 111
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR Thriving
on Change 113
Step 2. Assess the Company’s Strengths and Weaknesses 114
Step 3. Scan the Environment for Significant Opportunities and Threats Facing
the Business 115
Step 4. Identify the Key Factors for Success in the Business 116
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Step 5. Analyze the Competition 118
Step 6. Create Company Goals and Objectives 122
◼ ENTREPRENEURSHIP IN ACTION Vizio: Disrupting Another Market 124
Step 7. Formulate Strategic Options and Select the Appropriate Strategies 125
◼ IN THE ENTREPRENEURIAL SPOTLIGHT Strategies for Success
130
Step 8. Translate Strategic Plans into Action Plans 131
Step 9. Establish Accurate Controls 132
Conclusion
134
Chapter Review
135
•
Discussion Questions
136
SECTION II Launching a Venture: Entry Strategies 137
Chapter 5
Choosing a Form of Ownership
The Sole Proprietorship
137
139
Advantages of a Sole Proprietorship 140
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR
Right! 141
Disadvantages of the Sole Proprietorship
142
◼ ENTREPRENEURSHIP IN ACTION What’s in a Name?
The Partnership
Get That Name
143
144
The Uniform Partnership Act 146
Advantages of the Partnership 146
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR
a Business Divorce 148
How to Avoid
Disadvantages of the Partnership 149
Limited Partnerships 150
Limited Liability Partnerships 151
The Corporation 151
Requirements for Incorporation 151
Advantages of the Corporation 152
Disadvantages of the Corporation
154
Professional Corporations 155
The S Corporation 155
Advantages of an S Corporation
156
Disadvantages of an S Corporation 157
When Is an S Corporation a Wise Choice? 157
The Limited Liability Company
Social Enterprises 160
157
◼ IN THE ENTREPRENEURIAL SPOTLIGHT From the Life on the Street
to Running a Business 160
Chapter 6
Nonprofit Organizations
161
Chapter Review
•
163
Discussion Questions
164
Franchising and the Entrepreneur
What Is a Franchise? 167
Types of Franchising 168
The Benefits of Buying a Franchise
A Business System
165
168
169
Management Training and Support 170
Brand-Name Appeal 171
Standardized Quality of Goods and Services 171
National Advertising Programs
Financial Assistance
171
172
Proven Products and Business Formats
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Contents ix
Centralized Buying Power
173
Site Selection and Territorial Protection 173
Increased Chance for Success
174
Drawbacks of Buying a Franchise 175
Franchise Fees and Ongoing Royalties 175
Strict Adherence to Standardized Operations
176
Restrictions on Purchasing 176
Limited Product Line
Market Saturation
177
177
Limited Freedom 178
No Guarantee of Success
178
Franchising and the Law
178
◼ ENTREPRENEURSHIP IN ACTION
After the Cheering Stops 181
The Right Way to Buy a Franchise 182
Evaluate Yourself 183
Research the Market 183
Consider Your Franchise Options 184
Get a Copy of the FDD and Study It
184
Talk to Existing Franchisees 185
Ask the Franchisor Some Tough Questions 185
Make Your Choice
187
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR Make Sure You Select
the Right Franchise 187
Franchise Contracts 188
Termination 190
Renewal 190
Transfer and Buybacks
190
◼ IN THE ENTREPRENEURIAL SPOTLIGHT The Allure of Franchising
Trends in Franchising
190
191
Changing Face of Franchisees
191
Multiple-Unit Franchising 192
International Opportunities
192
◼ IN THE ENTREPRENEURIAL SPOTLIGHT The Middle East: A Hot Spot
for Franchising 193
Smaller, Nontraditional Locations 195
Conversion Franchising 195
Refranchising
195
Area Development and Master Franchising 195
Cobranding 196
Serving Dual-Career Couples and Aging Baby Boomers 197
Franchising as a Growth Strategy
197
Unique Concept 197
Replicable 197
Expansion Plan 198
Due Diligence
198
Legal Guidance
198
Support for Franchisees 198
Conclusion
198
Chapter Review
Chapter 7
198 •
Discussion Questions
Buying an Existing Business
Buying an Existing Business
199
201
203
Advantages of Buying an Existing Business 203
Disadvantages of Buying an Existing Business
205
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The Search Stage
208
Self-Inventory 208
Develop a List of Criteria 209
Potential Candidates
Investigation
209
210
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR
When You Buy a Business 212
The Deal Stage
Don’t Get Burned
212
Methods for Determining the Value of a Business
213
◼ IN THE ENTREPRENEURIAL SPOTLIGHT Bond Coffee 222
Negotiating the Deal 223
Letter of Intent 226
The Due Diligence Process
227
◼ ENTREPRENEURSHIP IN ACTION What’s the Deal?
The Transition Stage
Chapter Review
Chapter 8
233
231
232
•
Discussion Questions
234
New Business Planning Process: Feasibility Analysis,
Business Modeling, and Crafting a Winning Business
Plan 235
Conducting a Feasibility Analysis 237
Industry and Market Feasibility Analysis 237
Product or Service Feasibility Analysis: Is There a Market?
Financial Feasibility Analysis: Is There Enough Margin?
242
243
Entrepreneur Feasibility: Is This Idea Right for Me? 245
Developing and Testing a Business Model 247
Value Proposition 247
Customer Segments
248
Customer Relationships
Channels
248
248
Key Activities 248
Key Resources 248
Key Partners 248
Revenue Streams
249
Cost Structure 249
◼ ENTREPRENEURSHIP IN ACTION The Evolution of CoolPeopleCare’s
Business Model 250
The Benefits of Creating a Business Plan 251
Three Tests That Every Business Plan Must Pass
Reality Test
252
252
Competitive Test 252
Value Test
252
◼ IN THE ENTREPRENEURIAL SPOTLIGHT The Battle of the Plans 253
The Elements of a Business Plan 254
Title Page and Table of Contents 255
The Executive Summary 255
Mission and Vision Statement 255
Company History 256
◼ IN THE ENTREPRENEURIAL SPOTLIGHT A Business Plan: Don’t Launch
Without It 256
Description of Firm’s Product or Service 257
Business and Industry Profile
258
Goals and Objectives 258
Business Strategy
258
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Competitor Analysis 259
Marketing Strategy
259
Visualizing a Venture’s Risks and Rewards
263
What Lenders and Investors Look for in a Business Plan
Capital
265
Capacity
265
265
Collateral 265
Character
265
Conditions 265
The Pitch: Making the Business Plan Presentation 266
Conclusion 268
Suggested Business Plan Elements 268
Chapter Review
271 •
Discussion Questions
SECTION III Building a Marketing Plan
Chapter 9
272
273
Building a Bootstrap Marketing Plan 273
Creating a Bootstrap Marketing Plan 274
◼ IN THE ENTREPRENEURIAL SPOTLIGHT Bootstrap Marketing
in the New Music Industry 276
Market Diversity: Pinpointing the Target Market 277
Determining Customer Needs and Wants Through Market Research 278
How to Conduct Market Research 280
◼ IN THE ENTREPRENEURIAL SPOTLIGHT Bootstrap Marketing Using
Databases 282
Plotting a Bootstrap Marketing Strategy: Building a Competitive Edge
Find a Niche and Fill It
283
284
Retain Existing Customers
285
Concentration on Innovation 285
The Marketing Mix
Product
288
288
Promotion
296
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR Marketing
to Millennials 298
Price
302
Place
303
Chapter Review
304 •
Discussion Questions
304
Chapter 10 Creative Use of Advertising and Promotion 305
Define Your Company’s Unique Selling Proposition
Creating a Promotional Strategy 307
306
Publicity 307
Personal Selling 309
◼ ENTREPRENEURSHIP IN ACTION Should an Ambulance Service Hire
Its First Sales Representative? 311
Advertising
312
Selecting Advertising Media
Media Options 316
314
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR E-Mail Ads That
Produce Results 322
How to Prepare an Advertising Budget 339
How to Advertise Big on a Small Budget 340
Cooperative Advertising 340
Shared Advertising
341
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Stealth Advertising 341
Other Ways to Save 341
Chapter Review
341
•
Discussion Questions
Chapter 11 Pricing and Credit Strategies
342
343
Pricing: A Creative Blend of Art and Science 344
Three Powerful Pricing Forces: Image, Competition, and Value 348
Price Conveys Image 348
Competition and Prices 349
Focus on Value
350
Pricing Strategies and Tactics 351
New Product Pricing: Penetration, Skimming, or Sliding 352
Pricing Techniques for Established Products and Services 354
◼ IN THE ENTREPRENEURIAL SPOTLIGHT How to Compete with Cheap
Knockoffs of Your Successful Product 355
◼ ENTREPRENEURSHIP IN ACTION Social Coupons: Beneficial—or Just Plain
Bad—for Business? 359
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR Enhancing Your
Company’s Pricing Power 361
Pricing Techniques for Retailers 362
Markup
362
Pricing Techniques for Manufacturers 364
Direct Costing and Pricing 365
Computing a Break-Even Selling Price 365
Pricing Techniques for Service Businesses 367
The Impact of Credit on Pricing 369
◼ ENTREPRENEURSHIP IN ACTION To Accept Credit Cards or Not:
That Is the Question 369
Credit Cards 370
Chapter Review
372
•
Discussion Questions
Chapter 12 Global Marketing Strategies
373
375
Why Go Global? 378
Going Global: Strategies for Small Businesses 381
Creating a Presence on the Web 381
◼ IN THE ENTREPRENEURIAL SPOTLIGHT Going Global One Step
at a Time 383
Relying on Trade Intermediaries 384
The Value of Using Trade Intermediaries 385
Joint Ventures
387
Foreign Licensing 388
International Franchising
388
◼ ENTREPRENEURSHIP IN ACTION Growing Beyond the Borders
391
Countertrading and Bartering 392
Exporting 392
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR
in the World 400
Finding Your Place
Establishing International Locations 402
Importing and Outsourcing 402
Barriers to International Trade
404
Domestic Barriers 404
International Barriers
405
Political Barriers 406
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Business Barriers 406
Cultural Barriers
407
International Trade Agreements 408
World Trade Organization
408
North American Free Trade Agreement 409
The Dominican Republic-Central America Free Trade Agreement 409
Conclusion
409
Chapter Review
411 •
Discussion Questions
411
Chapter 13 E-Commerce and Entrepreneurship 413
Factors to Consider Before Launching into E-Commerce 416
Ten Myths of E-Commerce 418
Myth 1. If I Launch a Site, Customers Will Flock to It 418
Myth 2. Online Customers Are Easy to Please 420
Myth 3. Making Money on the Web Is Easy 420
Myth 4. Privacy Is Not an Important Issue on the Web 420
Myth 5. “Strategy? I Don’t Need a Strategy to Sell on the Web! Just Give Me a Web Site,
and the Rest Will Take Care of Itself” 421
Myth 6. The Most Important Part of Any E-Commerce Effort Is Technology 422
Myth 7. On the Web, Customer Service Is Not as Important as It Is in a Traditional Retail
Store 422
Myth 8. Flashy Web Sites Are Better Than Simple Ones 423
Myth 9. It’s What’s Up Front That Counts
424
Myth 10. My Business Doesn’t Need a Web Site 424
Strategies for E-Success
425
Focus on a Niche in the Market 426
Develop a Community
426
Attract Visitors by Giving Away “Freebies” 427
Make Creative Use of E-Mail, but Avoid Becoming a “Spammer” 427
Sell the “Experience” 428
Make Sure Your Web Site Says “Credibility” 429
Make the Most of the Internet’s Global Reach
429
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR How to Make Your
Business Ready for Global E-Commerce 431
Go Mobile 432
Promote Your Web Site Online and Offline 433
Use Social Media Tools to Attract and Retain Customers 433
◼ ENTREPRENEURSHIP IN ACTION
Media 434
Enhancing E-Commerce with Social
Capture Local Traffic 435
Develop an Effective Search Engine Optimization Strategy 435
Designing a Killer Web Site 438
Decide How to Bring Your Site to Life 439
Start with Your Target Customer
439
Give Customers What They Want 439
Select an Intuitive Domain Name
439
Make Your Web Site Easy to Navigate 441
Provide Customer Ratings and Reviews
442
Offer Suggestions for Related Products 442
Add Wish List Capability
442
Create a Gift Idea Center
442
Establish the Appropriate Call to Action on Each Page 442
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Build Loyalty by Giving Online Customers a Reason to Return to Your Web Site 442
Establish Hyperlinks with Other Businesses, Preferably Those Selling Products or
Services That Complement Yours 442
Include an E-Mail Option, an Address, and a Telephone Number on Your Site 443
Give Shoppers the Ability to Track Their Orders Online 443
Offer Web-Only Specials
443
Use the Power of Social Media 443
Use Customer Testimonials 443
Follow a Simple Design 443
Assure Customers That Online Transactions Are Secure
445
Post Shipping and Handling Charges Up Front 445
Create a Fast, Simple Checkout Process 445
Provide Customers Multiple Payment Options
445
Confirm Transactions 445
Keep Your Site Fresh 445
Rely on Analytics to Improve Your Site 445
Test Your Site Often 445
Consider Hiring a Professional Designer 446
◼ IN THE ENTREPRENEURIAL SPOTLIGHT Web Site Makeovers
446
Tracking Web Results 447
Software Solutions
447
Ensuring Web Privacy and Security 448
Privacy
448
Security 448
Chapter Review
451
•
Discussion Questions
452
SECTION IV Building a Financial Plan 453
Chapter 14 Creating a Solid Financial Plan
453
Basic Financial Reports 454
The Balance Sheet
455
The Income Statement
456
The Statement of Cash Flows
458
Creating Projected Financial Statements 459
Projected Statements for the Small Business 459
Ratio Analysis
465
12 Key Ratios
466
◼ IN THE ENTREPRENEURIAL SPOTLIGHT Pitcher Strikes Out While
Trying to Hit a Home Run 475
Interpreting Business Ratios
476
What Do All These Numbers Mean? 479
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR
a Competitive Edge 481
Break-Even Analysis
Gaining
482
Calculating the Break-Even Point 483
Adding a Profit
484
Break-Even Point in Units
484
Constructing a Break-Even Chart
Using Break-Even Analysis
485
486
◼ IN THE ENTREPRENEURIAL SPOTLIGHT Open Book
Management 487
Chapter Review 488 • Discussion Questions 488
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Chapter 15 Managing Cash Flow
489
Cash Management 490
Cash and Profits Are Not the Same
493
◼ IN THE ENTREPRENEURIAL SPOTLIGHT Cash Flow and Pass-Through
Entities 494
Preparing a Cash Budget 495
◼ LESSONS FROM THE STREET-SMART ENTREPRENEUR A Short Season 496
Step 1: Determining an Adequate Minimum Cash Balance
498
Step 2: Forecasting Sales 498
Step 3: Forecasting Cash Receipts 502
Step 4: Forecasting Cash Disbursements 502
Step 5: Estimating the End-of-M
