Deck 7: Pathways to Entrepreneurial Ventures

Question 1

In addition to personal and financial issues, what other factors should the prospective owner be concerned with? Describe at least four.

Answer 1

Factors concerned with a prospective owner other than personal and financial issues:
Prospective owner should be vigilant in all areas of an organization. Personal and financial issues are the significant factors. Following are the factors, which are concerned with prospective entrepreneur other than personal and financial issues.
• Business environment
• Business assets
• Market and marketing
• Attitude of employees
Business environment:
Business environment should be analyzed by a prospective owner. Lack of facilities in present location may create the burden for production. It includes attitude of society on company, infrastructure, and location of an organization. It can be avoided by proper investigation about the present environment.
Business assets:
An organization contains different classes of assets. It is tangible, intangible wasting, and fictitious. Each class of assets should be valued by an entrepreneur. Proper valuation of assets can help to identify actual value of assets. It is also helpful for examine the condition of tangible assets.
Market and marketing:
Present market is the key factor. It provides present demand, growth and attitude of customers on a product in the market. It helps to develop marketing strategies to prospective entrepreneur.
Attitude of employees:
Employees are the backbone of an organization. Attitude of employees on change of ownership is very important. In some cases, they feel the job will goes due to change of management. It will create conflicts in an organization. Hence, prospective owner has to consider the attitude of employees for the change of ownership.

Question 2

What are the advantages of buying an ongoing business? Explain them.

Answer 2

Advantages of purchasing ongoing venture:
Purchase of ongoing venture is favorable for an entrepreneur. It acquires not only a firm, it acquire the firm as well as market also. It reduces the risk of an entrepreneur. Following are the advantages for an entrepreneur through buying an ongoing business.
• Ongoing venture is already in an operation. It improves the chances of success.
• It reduces time and effort that need to startup a new business.
• Sometimes it is possible to buy the ongoing business at a bargaining price.
• It reduces preliminary cost.

Question 3

What "right questions" need to be answered when deciding whether to buy a business?

Answer 3

Questions to be answered weather to buy a business:
Acquiring a current business is a good method for a new entrepreneur. It helps an entrepreneur by several ways. It reduces cost, increases efficiency, and reduces time and effort. However, there is a question to be answer to take up a business. These are as follows.
Reason to sell the business:
By investing in an ongoing venture, the investor must conscious about why they sell the business. There should be an honest answer from seller. It may be due to retirement, to change the operation, and not interested or not challengeable. If it is an accurate answer, it is better to invest. However, identify the honest reason from reliable sources.
Condition of inventory:
It is good to check the book value of stocks by physical examination of an inventory. It can identify the salable inventory and dead stock.
Condition of other kind assets:
A company must have different classes of assets for its operation. Such kinds of assets are computer, printer, and scanner. In other category assets are goodwill, patent and copy right. The examination of such kind of assets may help to identify the value of business.
Competition of business:
Competition is "another" important question. Kind of competition is faced by the company. It can be identified by market investigation. It understands the market size and potential of company's product.
Financial picture of a firm:
Finance is a significant part of firm. The analysis on financial position may help to identify the productivity, position of the firm, trend of the firm and nature of the firm so on. It can identify the solvency and further financial needs.

Question 4

How should a prospective buyer examine the assets of a company? Explain.

Question 5

What is meant by the term franchise ?

Question 6

In a franchising agreement, what is the franchisee often called on to do? What responsibility does the franchisor assume?

Question 7

What are some of the major advantages of franchising? Cite and explain three.

Question 8

What are some of the major disadvantages of franchising? Cite and explain at least two.

Question 9

How can a prospective franchisee evaluate a franchise opportunity? Explain.

Question 10

In evaluating whether or not to buy a franchise operation, the potential investor should ask a series of questions. What questions should the potential investor ask about the franchisor, the franchise, the market, and the potential investor (himself or herself)?

Question 11

Where can a prospective franchisee seek professional help to evaluate a franchise?

Question 12

Identify the Franchise Disclosure Document. Explain why it is important in franchising.

Question 13

Identify the three main pathways to entering business for a prospective entrepreneur.

Question 14

What is the new-new approach to starting a new venture? How does this approach differ from a new-old approach?

Question 15

How can an individual who is thinking of going into business evaluate the financial picture of the enterprise? Use the methodology of Table 7.2 to prepare your answer.