Question: Should a small business owner’s judgment

> How can profitability ratios allow insight into the effectiveness of management? Liquidity ratios? Activity ratios? Leverage ratios?

> Think of transactions you have entered into in the past: whom were you agreeing with, what was the agreement about, and what were the terms? When did you have a written contract? When was an oral contract in place? Use several examples to analyze: buying

> Name and explain the four elements that a contract must have to be valid.

> Compliance with government regulations is sometimes burdensome for small business owners. What can they (and you) do to change the laws and regulations that influence small business in order to lessen the burden?

> What licenses are required by the owner of a small business?

> List and briefly explain the laws that protect people in the workplace.

> How does the Federal Trade Commission protect consumers?

> Are the antitrust laws established in the late 1800s and early 1900s still pertinent in the twenty-first century? Why or why not?

> Why would an entrepreneur be concerned about harvesting a business that has not yet been started?

> How is small business management different from entrepreneurship?

> Describe the significance of triggering events in entrepreneurship. Give examples.

> You need to write a business plan for a startup business. How do you come up with the numbers for your pro forma financial statements? Do you just guess and make them up? (Hint: the process starts with a sales forecast.)

> As you have read about ISO 9000 certification in both Chapter 15 and this chapter, it is both expensive and time-consuming. Describe what type of small business should pursue such certification, assuming that not every manufacturing business should.

> This chapter concentrated on both productivity and quality. In running your small manufacturing business, can you increase both, or are they mutually exclusive?

> What type of small business would benefit from having ISO 9000 certification?

> Define six sigma both technically and as used as a business standard.

> Give examples of products that would be better suited to each of the dispatching rules.

> Explain the difference between forward and backward scheduling.

> How can ergonomics be tied to productivity? To motivation? To Maslow’s hierarchy?

> Define productivity.

> What is the difference between flexible production and mass customization?

> What would happen if the feedback were not included?

> Assets = Liabilities + Owner’s Equity. How would you restate this equation if you wanted to know what your liabilities were? Your owner’s equity?

> What would happen if the control system were not included?

> Discuss the elements of an operations management system.

> Give examples of stress and distress.

> Are you a good manager of time in your personal life? How will this affect your ability to manage your time as a business owner?

> What is motivation? Can managers really motivate employees?

> As a business owner, in which of the leadership attributes discussed in the text are you the weakest? How could you help yourself improve in this area? How could others help you? What is your strongest skill?

> What are positive and negative aspects of delegation?

> How can the owner of a small business apply Maslow’s hierarchy of needs to working with employees?

> Review the five stages of business growth. Which of these five would you aspire to for your own business. Be prepared to justify your answer.

> Which exit strategy discussed in the chapter would you consider ideal? What would a downside of that strategy be?

> How can financial records allow you to identify problems in your business?

> We read in this chapter that entrepreneurs try to build competitive advantages for their businesses by being unique. How will these partners know if their Fluzzle Tube idea will stand out, or sink? 2. Put yourself in the position of Whitehead and De Arko

> This Concept Module described five stages a business goes through as it grows. How would management style need to change from stage to stage.

> Discuss some of the skills or characteristics that are needed by a manager in the startup phase of a business that differ from those needed later to manage a larger, established firm.

> Refer to the chapter opening story. List two differing activities in which each manager engages.

> Give examples of efficiency and effectiveness in managing your everyday life.

> How would promotional mix decisions change for a small business that is expanding into a foreign market?

> Explain the ratchet effect on sales.

> Discuss the personality traits that a good salesperson should have. What traits would detract from the personal selling process?

> What factors should be considered when a small business owner decides to advertise?

> What advantages and disadvantages are involved for a small business offering sales on credit?

> Discuss the importance of remaining professional and friendly when trying to collect an unpaid bill.

> Explain the difference between cash and accrual accounting.

> As the owner of a small, hometown drugstore, how would you prepare for a Wal-Mart being built in your area?

> What strategies should be considered if a small business is setting prices for a product that is to be exported? How are these strategies different from those used in a domestic market?

> Of the pricing techniques described in this chapter, which one do you think is most commonly used by small business? Why?

> What can happen if the price of a product does not fit with the three other Ps of the marketing mix?

> What do you think is the biggest limitation for small businesses conducting market research?

> What are some of the limitations of market research? What can the entrepreneur do to offset these limitations?

> Identify some valuable sources of information for the entrepreneur who is designing a market research plan to analyze competitive advantage.

> What types of data should be collected and analyzed in order to get a clear picture of the market for the good or service being produced?

> Explain the market research process from a small business owner’s perspective when he or she is trying to assess competitive advantage.

> What purpose do GAAP and FASB serve for a small business owner?

> What is the significance of market research to the small business owner? How is market research defined, and what degree of complexity is necessary in the research plan for it to be valid?

> Segmentation is the process of breaking a population down into smaller groups and marketing to them. Is it possible for a small business to oversegment its market? How would that be dangerous?

> We all assume several different roles (parent, student, sibling, athlete, business owner, and so on) at any given time, and those roles affect our behavior as consumers. Describe how your various roles affect your purchases.

> Why is segmenting a niche market so crucial for small business?

> What determines which type of sales forecast would be important to a small business? Describe how a specific small business would implement the build-up approach.

> What would happen to a business without a marketing strategy. Why?

> Marketing plays a key role in a small business’s success. Can a small business succeed without adopting the philosophy underlying the marketing concept. Why or why not?

> A mother believes that all the family’s children should have equal ownership of the family business regardless of their participation in the business. The father sees the situation completely differently. He believes that the children who are actively in

> What is meant by “thinning the assets”? Cite examples.

> How can a buyer determine the rate of return to use in evaluating the worth of a business?

> How can being close to your customers give you a competitive advantage?

> What is goodwill, and how may its value be determined?

> Discuss the ways in which the tangible assets of a business may be valued. What is the most realistic approach to determining a business’s true value? Why?

> Does competition help or hurt the valuation of a business? Explain.

> Which is more important in appraising a business—profitability or return on investment? Discuss.

> Which type of asset would be more difficult to value - tangible or intangible? Why?

> Does every business for sale have an intangible asset of goodwill? Explain.

> You are analyzing the financial records of the business you have been thinking about buying. You discover that, although the firm has excellent current and quick asset ratios by industry standards (current assets are higher than current liabilities), its

> What should a prospective buyer know about the seller’s inventory sources and other resource contacts? How is this information obtained?

> What factors warrant special attention in appraising a firm’s (a) inventory? (b) equipment? (c) accounts receivable?

> When buying an established business, what questions should you ask about it? From whom might you seek information about the business?

> Explain the term creative destruction.

> What are the positives and negatives of searching for a business for sale via an online site?

> Discuss the advantages of dealing through a business broker. What precautions should one take when dealing with a business broker?

> Should one ever consider purchasing a presently unsuccessful business (that is, a business with relatively low or no profits)? Explain.

> What are some arguments for buying an established business rather than starting one yourself?

> What do you think will be the growth areas (in products, services, and geographic areas) for franchises in the near future?

> What is the difference between a franchise, a franchisee, and a franchisor?

> Explain how a franchise could be considered a partnership. What makes a franchise agreement simpler than a partnership that you would start with another individual?

> If you are the franchisee of a bookstore and you are offered twice the business’s book value to sell it to a third party, should you or the franchisor collect the additional money? Take a position and justify it.

> You are worried that someone else will buy a specific franchise in your area before you do. Would it be all right to sign the franchise agreement before talking to your lawyer or accountant if you intend to meet with them later? Explain.

> What are the potential sources of conflict between franchisees and franchisors?

> After reading about the topics included in a franchise agreement, who do you think controls most of the power in a franchise: the franchisee or the franchisor? Explain.

> Why are small businesses more likely than large businesses to be innovative?

> Is the disclosure statement the only source of information you need to check out a potential franchise? Why or why not?

> What is a royalty fee?

> What do you expect to get in return for paying a franchise fee?

> What are the biggest advantage and the biggest disadvantage of franchising? Justify your answer.

> How would you explain the difference between franchises and other forms of business ownership?

> What is the difference between a pull system and a push system of inventory control?

> After you have read about entrepreneurship in Chapter 2, would you consider someone who buys a franchise to be an entrepreneur? Does franchising stifle entrepreneurship?

> What is the difference between product-distribution franchises and business-format franchises? Give an example for each that has not been cited in the text.

> Consider the make-or-buy decision. Give three examples of situations when a business should make rather than buy. Give three examples of situations when a business should buy rather than make.

> How would the computer industry be different today if there were no businesses under 500 employees? Would personal computers exist?