Admin Ch4

• Innovative
• Risk takers
• Motivated to succeed
• Flexible and self-directed
• Work well with others and posses good leadership skills
• “System thinkers”

• Lifestyle entrepreneurs
• Micropreneurs
• Home-based entrepreneurs
• Internet entrepreneurs
• Growth entrepreneurs
• Intrapreneurs

• Opportunity and innovation
• Financial Independence
• Control
• Flexibility
• Unemployment

• Accumulating too much debt
• Inadequate management
• Poor planning
• Unanticipated personal sacrifices:

• Company Information
• Marketing Plan
• Operational Plan
• Financial Plan
• Risk Analysis

• Mission Statement
• Current Status
• History
• Management team

• Competitive Analysis
• Pricing
• Distribution
• Promotion and Brand Development

• Staffing
• R+D
• Manufacturing Plan
• IT Plan

• Current Financing
• Funding Needs and Plan
• Financial History
• Financial Forecasts
• Valuation

• Risk Evaluation
• Risk Management Plan

• Freedom to do what you want.
• You can start small and grow the business over time.
• The satisfaction of building something from nothing.
• You can create the kind of image and reputation you want.

• It is very risky.
• The business has no proven track record.
• It takes time to build a good reputation.
• Nothing is established…You need to do everything.
• There is no existing cash flow, and it can take a long time before the business begins to earn a profit.
• It can be difficult to obtain financing.

• Ease of start-up
• Existing customer base
• Financing opportunities

• High purchase price  
• Inheriting the previous owner’s mistakes
• Unknowns in transition

• Why is the business for sale?
• What do current customers say?
• How much time does the current owner put into the business?
• Are there opportunities for growth?
• Who is the competition?
• Get an independent valuation of inventory and equipment.
• Have an accountant go over financial statements for the past 3 years.
• Have a lawyer analyze pertinent business documents—property leases, employment contracts, etc.
• Talk to suppliers to see if they will continue to supply the business when ownership changes hands.
• Check for lingering or festering hazardous waste problems. They’ll become your responsibility as the new owner.

A franchise is a method of doing business whereby the business (the franchiser) sells a company’s products or services under the company’s name to independent third-party operators (the franchisees).

• It is a proven system of operation.
• There is strength in numbers.
• Initial training is part of the deal.
• Marketing support is provided.
• Market research is often provided.

• Lack of control.
• Start-up costs.
• Internal competition.
• Workload.
• Share common problems.
• Shave some of the profit

• Government of Canada, Canada Business
• Industry Canada, Businesses
• Entrepreneurs’ Organization (EO) 
• Ontario Ministry of Economic Development and Trade, SMEC
• Small Business Association of Canada (SBA-Canada
• Business incubators

• Cash
• Credit cards
• Banks and small business loans
• Grants
• Angel investors
• Venture capitalists
• Small Business Investment Company (SBIC) program

• Capital contributions
• Responsibilities of each partner
• Decision-making process
• Shares of profits or losses
• Departure of partners
• Addition of partners

• General partnerships
•   -Default arrangement
•   -Simplest to form
• Limited partnership
•   -General partners
•   -Limited partners

• Shareholders
• Board of Directors
• Corporate Officers
• Chief Executive Officer
• Chief Financial Officer - Chief Operating Officer

• Public corporations
• Private corporations
• Non-Profit Corporations

• Choose a Name
• Appoint Directors
• File Articles of Incorporation
• Draft Bylaws
• Hold a Meeting of the Board
• Issue Stock
• Obtain Licences and Permit

• Cooperative: a business that is owned and governed by members who use its products or services.
• Mountain Equipment Co-op is Canada’s largest retailer cooperative.
• Members can be individuals or businesses
• Members set policy and elect directors

• Easy of  Formation       High
• Continuity         Low
• Protection Against Liability    Low
• Tax Advantages       High
• Ease of Raising Money     Low
• Government Regulation     Low

• Easy of  Formation         High
• Continuity              Low
• Protection Against Liability        Low
• Tax Advantages          High
• Ease of Raising Money        Medium
• Government Regulation       Low

• Easy of  Formation     Medium
• Continuity     High
• Protection Against Liability     High
• Tax Advantages     Low
• Ease of Raising Money     High
• Government Regulation     High

• Easy of  Formation       Medium
• Continuity                         High
• Protection Against Liability     High
• Tax Advantages              High
• Ease of Raising Money     High
• Government Regulation       Medium

Two companies join to form one company

• One company takes over another company
• When the acquisition is supported by the target company’s management and board of directors, it is called a friendly takeover.
• If the takeover goes against the wishes of the target company’s management and board of directors, it is called a hostile takeover.

An unfriendly or hostile acquisition attempt occurs through a tender offer, where the acquiring firm offers to buy the target company’s stock at a price higher than its current value to induce shareholders into selling.

Another method of acquiring a company against its wishes is through a proxy fight in which the acquiring company tries to persuade the target company shareholders to vote out existing management and to introduce management that is sympathetic to the goals of the acquiring company.

• Synergy is the achieved effect when two companies combine and the result is better than each company could achieve individually.
• Economies of scale
• Fewer redundancies(in staff)
• Discounts available to larger firms
• Create a greater competitive advantage

• Horizontal merger:
• Vertical merger
• Product extension merger
• Market extension merger
• Conglomeration

Horizontal merger: Two companies that share the same product lines and markets and are in direct competition with each other, such as Exxon and Mobil and Daimler-Benz and Chrysler.

Vertical merger: Two companies that have a company/customer relationship or a company/supplier relationship, such as Walt Disney and Pixar or eBay and PayPal.

Product extension merger: Two companies selling different but related products in the same market, such as the 2005 merger between Adobe and Macromedia.

Market extension merger: Two companies that sell the same products in different markets.

Conglomeration: Two companies that have no common business areas merge to obtain diversification. For example, Citicorp, a banking services firm, and Travelers Group Inc., an insurance underwriting company, combined to form one of the world’s largest financial services group, Citigroup, Inc.