Methods to Initiate Ventures

8/10/2019 Methods to Initiate Ventures

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Agenda

Major pathways and structures for entrepreneurialventures

Factors involved in creating a new venture

Elements involved in acquiring an established

venture

Franchise and its structure

Benefits and drawbacks of franchising


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The Pathways to New Venturesfor Entrepreneurs

Acquiring anExisting Venture

Creating theNew Venture

Obtaining aFranchise

Pathways to NewVentures


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Creating New Ventures

Approaches toCreating a NewVenture

New-NewApproach

New-OldApproach


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Emerging Opportunities

Green Produc tsOrganic foods

Organic fibers/textiles

Alternative Energy

Solar

Biofuel

Fuel cells

Energy conservation

Health CareHealthy food

School and govt.-

sponsored programs

Exercise

Yoga

Niche gyms

Children

Nonmedical

Pre-assisted livingAssisted living transition

services

Niche Consum ables

Chocolate

Burgers

Coffee houses

Exotic salads

Home Automat ion andMedia Storage

Lighting control

Security systems

Energy management

Comfort management

Entertainment systems

Networked kitchen

appliances

Emerging Internet Opportunities Emerging Technology Opportunities

Mobi le Advert is ing

Cell phones

PDAs

Concierge ServicesNiche Social Networ ks

Seniors

Music fans

Groups of local users

Pet owners

Dating groups

Virtual Economies

Online auctions

Education al Tutoring

Human Resou rces ServicesMatchmaking

Virtual HR

Online Staffing

Nanotechnology

Wireless Technolo gy

Source: Steve Cooper, Amanda C. Kooser, Kristin Ohlson, Karen E. Spaeder, Nichole

L. Torres, and Sara Wilson, 2007 Hot List, Entrepreneur(December 2006): 8093.

Trends Creating Business Opportunities


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Source:William J. Dennis,A Small Business Primer(Washington, DC: NationalFederation of Independent Business, 1993) 27. Reprinted with permission.

Sources of New Business Ideas Among Menand Women


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Examination of the Financial Picture

Upside gain and downside loss expectations The profits the business can make and the losses it

can suffer.

How much money will the enterprise take in if all goes well?

How much will it gross if operations run as expected?

How much will it lose if operations do not work out well?

Risk vs. reward analysis

Points out the importance of getting an adequatereturn on the amount of money risked


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Checklist for Estimating Start-Up Expenses


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Checklist for Estimating Start-Up Expenses(Contd)


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Acquisition of a Business Venture

Acquiring aBusiness Venture

Asking Key Questions

Examinationof

Opportunities

Evaluation ofthe Venture

PersonalPreferences


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Advantages of Acquiring an Ongoing Venture

Buying an

Ongoing

Venture

Purchasing at a

Good Price

Reduced Time

and Effort

Less Fear about

Successful Future

Operation


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Evaluation of the Selected Venture

Factors Affecting

Sale of the

Venture

Assets of the

Venture

Profits, Sales, and

Operating Ratios

The Business

Environment


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Negotiating the Deal

Factors AffectingNegotiations

Alternatives

Time Pressure

Information


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1. Have a seller retain a minority interest in the business2. Never rely on oral statements

3. Have an accountant examine the books and check the

cash flow

4. Investigate, investigate, investigate!

5. Interview the employees

6. Find out the real reason the company is for sale

Dos and Donts of Buying a Business


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Franchising: The Hybrid

FranchisingAny arrangement in which the owner of a trademark,

trade name, or copyright has licensed others to use it

in selling goods or services

FranchiseeA purchaser of a franchise

Franchisor

The seller of the franchise


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How a Franchise Works

Franchisee Obligations:1. Make a financial investment in the operation

2. Obtain and maintain a standardized inventory and/or

equipment package usually purchased from the

franchisor3. Maintain a specified quality of performance

4. Follow a franchise fee as well as a percentage of the

gross revenues

5. Engage in a continuing business relationship


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How a Franchise Works (Contd.)

Franchisor Provides:1. The company name that provides drawing power

2. Identifying symbols, logos, designs, and facilities

3. Professional management training for each

independent units staff4. Sale of merchandise necessary for the units

operation, equipment to run the operation, and the

food or materials needed for the final product

5. Financial assistance, if needed6. Continuing aid and guidance to ensure that

everything is done in accordance with the contract


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Franchising

Advantages Training and guidance

Brand-name appeal

A proven track record

Financial assistance

Disadvantages Franchise fees

Franchisor control

Unfulfilled promises of

franchisor


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Evaluating the Franchise Opportunity

Seeking

Professional Help

Investigating the

Franchisor

Finding Reliable

Information

The Franchise

Opportunity Decision


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THANK YOU!

Documents

Methods to Initiate Ventures