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Introduction

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Page 1: Introduction
Page 2: Introduction

EntrepreneurIntroduction

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Entrepreneur OverviewFocus on the essentials of running a retail business:

Manage staffing for a retail business.Learn about the impact of marketing

and promotion.Practice running the operations side

of a small business.Understand how to read and utilize

basic financial statements.Discover the effect of good business

practices within a local community.

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Entrepreneur ContentIn this computer simulation, you will open and manage a retail clothing shop for up to 12 simulated quarters and make decisions in the areas of:

• Management• Marketing• Operations• Finance

Your group plays the role of the retail clothing store owner.

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Entrepreneur CompetitionYour simulation may have been set up with multiple stores all starting from the same position, competing directly with each other, with each store's decisions affecting the others ("direct competition").

…or…

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Entrepreneur Competition…your simulation may have been set up playing against the computer, where you will compare your performance with your classmates playing in the same environment ("benchmark competition"). Decision deadlines are flexible with this approach.

Or, you may play in both types of competition!

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The Entrepreneur processYou will enter decisions each period.

• At startup, you will enter a business name, select a financing option, and a store location.• After startup decisions are finalized, you will then enter your

first set of quarterly decisions.• Your instructor will advance the simulation according to a

schedule that he/she has established for your class.• The simulation will be run for a set number of periods.

Let's begin…

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Startup

Create a business name:• Identifies your store in Entrepreneur reports.• Instructor may rate business names.• Promotes image and sets customer expectation.

Finance your business (select from among):• Bank Loan• Private Loan• Angel Investor

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Startup

Select your store location:• Current Location: near university• Shopping Center: 1 mile from university• Main Street: metropolitan area• Corner: near university / downtown

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Decisions

Operations• Maintain inventory of pants and tops.• Establish a return policy.• Determine inventory levels for seasonal changes.• Set store hours.• Keep or change your type of product line.

Pricing• Choose price range—low, medium, high.• Set product prices.

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Decisions

Marketing• Advertise to inform potential customers about your

business.

Staffing• Determine the number of part-time sales clerks.• Set pay rate for part-time personnel.• You may need to hire/fire sales clerks to meet

fluctuations in seasonal demand.

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DecisionsSpecial: Product Line (select from):• Uniforms• Ultra-trendy• Casual• Ethnic• Designer

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Decisions

Special: Incidents may be availableIncidents*:• Challenge your team to reach consensus.• Your instructor determines sequence and number of

incidents.• Enter your decision regarding ethical retailing incidents

that may occur from time to time.*Instructor selected option

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Company Reports• Learn about local demand in your company dashboard.• Follow your store's stock price and value.

Market Research (direct competition ONLY)• Become aware of competitors’ selling prices.• Know the return policies of your competitors.• Discover how many direct competitors you have.

Business Issues

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Business Issues

Finance• Keep track of store revenue and expenses.• Pay stockholder dividends; decide how much.• Make an extra loan payment and how much.

Special• What type of product line do you want to carry?• How will you respond to a retailing event (Incident)?

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Analysis Tools

Inventory Analysis tool• Use this tool to determine the amount of inventory to

carry next quarter.

Breakeven Analysis tool• Use this tool to determine the

breakeven point so you can set reasonable selling prices.

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Analysis Tools

Cash Analysis• Use this tool to determine how much cash you'll need to

operate next quarter.

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Operations Considerations

Inventory:• What quantity of pants and tops should you keep in

stock?• How much extra inventory will you need to offset

shrinkage?• If you run short of inventory, will your future sales be

affected?• Do you need to adjust your store hours?• Do you need to adjust your return policy?• Should you change your product line?

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Marketing Considerations

Advertising and Promotion:How will potential customers learn about your store?

• Web Site• Radio• Community or Campus

Newspapers• Flyers (handbills)

• Neighborhood Ad paper• Promotion Budget• Social Media• Direct Mail

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Pricing Considerations

Price Ranges & Unit Pricing:• Select price range—low,

medium, high.• Set tops unit selling price.• Set pants unit selling price.• What is your breakeven on

tops? …on pants?

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Staffing Considerations

Manager:• One full-time manager; salary is preset.• Main tasks: manage store, oversee employees,

and, if needed, waiting on customers as well.Sales Clerks:• Will higher paid sales clerks be a good investment?• How many part-time sales clerks to hire (or fire)?• What wages should you pay part-time sales clerks?• How much should you spend on training?

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Staffing Considerations

Things to keep in mind:• Sales clerks wait on customers. Without enough clerks,

managers are left with the task, and they have limited time to serve customers.• Consider the effect of too many or too few sales clerks

on profits.• Look at the local labor report to see how your wages

compare with other stores (direct competitive mode only).

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Finance Considerations

Dividends:• Should you pay a dividend to your stockholders this

quarter? If so, how much?

Extra Loan Payment:• Should you add an extra amount into your loan payment

this quarter? If so, how much?

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Accounting ConsiderationsConsider:• Do your receipts

(revenues) cover your disbursements (payments)?• If your cash balance

drops below $0, you have protection in the form of an automatic loan.

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Accounting ReportsIncome Statement:• revenue, expenses, profit, etc. for the previous quarter• cost of goods sold (COGS—represents the total direct

cost associated with revenues)

Balance Sheet:• assets, liabilities, available cash• shareholder equity accounts• snapshot of your organization at a current point in time

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Accounting Reports

Cash Analysis:• beginning and ending cash• tax payments, loan principle, extra loan payments• inventory purchase expenses• available cash• dividends paid

Inventory:• beginning/ending inventory• unit sales• shrinkage

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Environment

Learn about the environmentand your company in the Dashboard:• local demand for current quarter and the projected

demand for next quarter• stock price and other company measures• quarterly profits and dividends• alerts you to an upcoming retailing incident• alerts you to items in need of your attention

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Environment

Learn more about the localmarket in Market Research Reports*• Discover how many stores compete for the same

customer base.• Learn about the average unit sales and pricing in

your local market.• Competitor promotion and advertising budgets.• Learn about competitor return policies.

* direct competition mode only

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Things to keep in mindAnalyze the Situation:• Internal and External AnalysisFor example, when making a pricing decision, know how much it costs to purchase what you sell (internal) and what your competitors charge (external).

Integration of Decisions:• What other functional areas will be affected by a decision?For example, a price change may impact the number of sales clerks required, inventory purchased, cash flow, etc.

Choose a course of action. Monitor the impact of your decisions.

Page 30: Introduction

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