Questions and Answers of Entrepreneurial Small Business

5. Why do you have to give up more ownership to get outside investment if your business is risky?
4. In what ways does accepting outside investment change the ways you manage your business?
3. What things do you need to do to convince an investor to make you a loan or purchase equity in your business?
2. Explain how a sole proprietorship differs from a corporation.
1. Why does a business require a constant flow of money and capital assets during its existence?
5. Make an appointment with a commercial bank loan officer who handles business loans. Ask about the bank’s documentation requirements. Determine what commitment, if any, the bank has for making
4. Find out if your city or county has any tax abatement economic development zones. What must you do to be able to take advantage of the tax abatement?
3. Find out if your city has an office of economic development.(Almost every city with a population greater than 100,000 does.) Contact the office and inquire about the programs that it supports. Ask
2. Contact the owner of a business you would like to own. Arrange an interview. Ask how the owner arranged for start-up financing. What sources of financing does the owner use today? Report your
1. Go to the SBA directory of SBICs (http://www.sba.gov/INV/index.html). Search through the directory, specifically looking for SBICs that will invest in businesses in the industry in which you are
7. Assume that you are preparing to open a new business. You need both an on-location sign and professional accounting services. Do a Web search and examine your local telephone book to find (a) a
6. Use the resources of your library and the Internet to identify five credit card processing providers. Contact each and determine the following:a. The cost of equipment to be able to accept credit
5. Form a group from your classmates who completed Exercise 4 above. Collect your findings into a chart. Compare and contrast bank offerings. Present your findings to your class with a recommendation
4. Do a telephone survey of banks in your area. Ask:a. Do they use electronic check clearing?b. If they use a clearing bank to manually clear checks, ask what bank they use.c. Ask what the average
3. Do a Google search, using the name of your city and “online banking.” Examine the sites returned to determine:a. How often is the account balance updated online?b. Are monthly account
2. Form a group from your classmates who completed Exercise 1 above. Collect your findings into a chart. Compare and contrast bank offerings. Present your findings to your class with a recommendation
1. Make an appointment with a loan officer at your bank who handles small businesses. Conduct an interview to find out the following:a. Will the bank lend to small businesses, using receivables for
9. How does using the float as a cash management method differ from deliberately writing NSF checks?
8. The text calls the practice of gaming the payment process,“underhanded.” What is your opinion of this common practice?Does it have any ethical implications?
7. Discuss four methods to decrease cash outflows.
6. Discuss five methods commonly used to increase cash inflows.
5. What are the relationships among planning, budgeting, and forecasting?
4. How do the economic and accounting definitions of cash differ?
3. What are the primary purposes of money?
2. What is money, and how does it differ from profits?
1. Why is it important to plan for the amounts and timing of cash inflows and outflows?
2. Develop a plan to address the problems.Hal Carrier, of Bulltuff Stock Trailers, Inc., has asked you for help. In the last four months, he has had several checks written to suppliers that were
1. What is causing Hal’s cash flow problems?Hal Carrier, of Bulltuff Stock Trailers, Inc., has asked you for help. In the last four months, he has had several checks written to suppliers that were
13. Is there any advantage to making a series of budget schedules, rather than just producing a pro forma income statement and balance sheet? What are the advantages, if any?
12. How are budgets related to business plans, as described in Chapter 8?
11. A budget is a collection of estimates—a big word that means the same thing as “guess.” If you are guessing what future results will be, what value can a budget really have?
10. Why would a small business ever need an accounting system more complicated than a simple checkbook register?
9. You can sell your product (have revenues) without receiving any money. You can receive money (customer deposits) without having any revenue. Because revenue, expenses, and cash are so different,
8. Which financial report is most important for managing a small business? Why?
7. What are the three most important functions (think cash, accounts payable, owners’ equity, etc.) that a computerized accounting system should have? Why are they the most important?
6. What are the three most important characteristics of a small business computer accounting system? Why do you think these are the most important?
5. Defend the statement, “The function of accounting is to produce information that is useful for decision making.”
4. Why should you, as a business owner, care about the distinction between costs and expenses?
3. How are costs and expenses different?
2. How does the accounting equation relate to the balance sheet?
1. Which of the three types of accounting is most important to small business? Which is the least? Why do you think so?
6. Do a Google search on the terms “accounting system” and“small business.” Follow the Google returns to the Web sites of the companies (other than the ones named in the text) that you can
5. Go to either the QuickBooks or the Peachtree Web site.Download and install a demonstration copy of its accounting program. Using either the budget schedules you developed in exercise 4, or the
4. Either by yourself or in a group of other students, select a business that you could reasonably expect to be able to start and run right now. (This could be as simple as a T-shirt company.) Using
Choose a public business that is in the same industry as the business you would like to own. Go to the company’s Web site and find “investor relations.” Download a copy of the business’s most
Choose an industry in which you would like to own a small business. Use the Internet, the university library, and the public library to find the names and addresses of industry trade
Assume that you have decided to purchase a computerized small business accounting system. Visit the Web site of each of the accounting systems named in this chapter. From the information there
Comment on the viability of this business and the advisability of the investor making a $50,000 investment to get it started.Phionia Phelps has developed a gourmet cat food. Not only is this food
Prepare the following budgets for the period, January through June:a. Sales budget in dollars.b. Production budget in units.c. Direct materials purchases budget in pounds.d. Direct materials
Use the filtering process and consider the steps you would take in trying to resolve the dirty car problem. What does this tell you about the product, price, promotion, and location of your potential
How could you segment your car wash market? Brainstorm as many different ways as possible. (Remember that some of the most successful businesses are those that have found unique ways to segment and
8. Going back to our car wash example, list all the ways you could differentiate your product, price, promotion, and distribution from the competition.
7. Is it ethical to pose as a customer in order to gather data from a competitor? What sort of behaviors do you believe to be ethical and justifiable, and which ones cross the line?
6. With your classmates, make a list of several products or services unlikely to be tied to other products or services.How might you estimate sales with these?
5. With your classmates, make a list of products or services that are or could be tied to other products or services. To which products or services are they tied? How could this be used to predict
4. Create a questionnaire that could be used to gather data for your car wash. Use both closed- and open-ended questions.
What sorts of primary data could you collect using observation for your car wash?
What are some of the ways that you could use secondary research to better understand the various segments of your market and to develop promotional materials?
Consider that you are planning to open a self-service car wash in town. What sorts of secondary data might be helpful in creating your marketing plan?
8. Interview someone at the company where you work. What kind of marketing plan does the company have (formal, informal, detailed, etc.)? How often is it reviewed?
7. Using the competitors identified in question 6 (or choosing a different product or service), attempt to identify the target marketing they have selected. (Good ways of doing this is by identifying
6. Make a list of the competitors of the company for which you work. What are their strengths and weaknesses? Are you aiming at the same target market(s)?
5. Assume your dry cleaning business is a service that you’ve found the average person will use once a month in your area.You also discovered that customers want to drive less than three miles for
4. Select an item from your list in question 3 and collect data for 15 minutes. What does your information tell you, and how could you use it?
3. Select a local shopping mall to do some observation and primary data collecting. (Try a food court or bench in a waiting area where you can be comfortable and unobtrusive.) Make a list of the
2. Revisit the U.S. Census Bureau Web site ( www.census.gov )and list secondary data that might be useful in opening your dry cleaning business.
1. Visit your school’s library or your local public library and investigate the reference section. Make a list of resources that might be useful if you were opening a new dry cleaning business.
3. Researchers call this process transmigration, changing a company so it can enter a peripheral or related industry. Select a firm you know and brainstorm several transmigrations it could make.David
2. Can you identify other markets that could benefit from the basic concept of Wheeler’s software?What changes might need to be made for these markets?David Wheeler got into business in order to
1. In selecting a new target market, InfoGlide would have had to adjust all parts of the marketing plan as well. What changes could you envision in the product, the price, the promotion strategy, and
8. Assume you have developed innovative new business software and want to sell it internationally. Without doing any research, come up with a list of likely countries. Why did you choose the ones you
7. Pick a hobby or sport you enjoy. If you had developed a product related to that hobby or sport, what are likely groups, associations, or other organizations that have meetings which might be a
6. What direct response ads can you recall seeing or hearing lately? Which ones were more effective? Why?
5. The chapter mentioned several unique guerilla marketing pieces that stood out from the rest—the landscaper who used a plastic sandwich bag of decorative stones with his business card and the
4. What products could be sold in vending machines that currently are not? What about party sales?
3. What competitive clusters can you identify in your hometown or school location?
2. What would be good traffic generators for a fast food restaurant?For an office supply shop? For a tattoo parlor?
1. Some of the most innovative start-ups have been firms that have dared to buck tradition in their distribution choices, like Netflix.com which distributes rental videos through the mail from its
5. Keep a list of direct marketing you experience for a week.Which messages did you find particularly appealing? Why?Which ones were you more likely to ignore?
4. Visit two stores, one where you belong to the target market and one where you do not. Make a list of all the atmospherics you detect and explain how they appeal to the target market.
3. Select a major high customer contact business category (restaurant, retail, dry cleaning, beauty salon, etc.)—and visit two or more different providers. What do you see in their store layout
2. Choose a business that you might someday like to start. Try one of the direct marketing address providers’ Web sites listed in the chapter and locate a list that you feel would be appropriate to
1. Select a product or service and pretend you are able to start that business anywhere in the United States. Using Skill Module 11.2 in the chapter, find a location different from your hometown or
How could these businesses let eBay users know they are available?Randy Adams had a garage full of stuff too good to throw away. It was so bad that his car would no longer fit. His wife suggested
What other possible spin-off businesses could be generated from eBay’s success?Randy Adams had a garage full of stuff too good to throw away. It was so bad that his car would no longer fit. His
If you were starting a similar service, where would you locate? What sort of building would you want?Randy Adams had a garage full of stuff too good to throw away. It was so bad that his car would no
6. Imagine you sold someone a new movie DVD in a factorysealed package, and a day later they bring it in for a refund, saying the movie does not play, and they no longer want to see it. It works fine
5. If you were consulting for a small firm, what advice would you give to the owner on how to write a press release? What specific tips would you give him or her on ways that they could generate
4. Recall the last time you purchased a product or service from a small firm. Did it use any of the techniques or skills involved in personal selling? How did the salesperson close the sale with you?
3. How have you seen the use of referrals and word-of-mouth advertising work to the benefit of a small business owner?Provide examples. How have these methods worked in reverse(to the disadvantage of
2. In your opinion, what do you think is the most effective and efficient way for small business owners to promote and market their products or services? Why?
1. What are some ways that you see small business owners promote their products or services? Provide examples of your perception of their value proposition to each of the markets they are currently
Imagine that you own a small independent bookstore. You are holding a special reading and book signing by a well-known author:a. Describe what your goal(s) might be in arranging this event.b. Write a
Go to the Better Business Bureau’s Dispute Resolution Web page at http://www.dr.bbb.org and look at the rules for the hotlink for “The Commonsense Alternative.” Put together a chart comparing
Read your local newspaper for information about a small business that you think stems from a publicity effort (e.g., new location or management, product line shift or expansion, special events, or
Visit three independently owned small retail establishments in the same industry or business. Ask the manager of each business the following questions. What target market(s) does your store appeal
Compare the promotional materials from two competitive(small) businesses. What are the goals and objectives of the promotions? How well do you think they fulfill these objectives?
Collect promotional materials from a small business in your area. These can include coupons, loyalty programs, special tie-ins, special events, advertisements, or any other promotional materials.
4. What characteristics about the Red Dress Collection would motivate someone to purchase the clothing? (Think along the lines of developing a value proposition.)Michelle Moran’s business plan was,
3. Identify some events or organizations where Moran can potentially create a business relationship.Does Clothes for a Cause effectively utilize the media? How can it do this better?Michelle

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