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Entrepreneurial optionsPPT4
Entrepreneurial optionsPPT4
OPTIONS: START-UP,
BUYOUT OR
FRANCHISING
ENTREPRENEURIAL OPTIONS: START-UP, BUYOUT OR FRANCHISING
Uncertainty about the market demand for your new product or service
It takes time and energy to create an image, build patronage, work the bugs
out of new systems and procedures, and reach out a break-even level of
sales
Staff must be hired, contacts developed with suppliers
Risks that investment will not be recouped, unexpected competition may
emerge and potential customers may be more difficult to attract than you
had anticipated
BUYING AN EXISTING BUSINESS, WHY?
6. Are the fixed assets property valued considering their cost and
depreciation charges?
7. Are the expenses in line with average statistics for this type of firm?
8. If the location is rented, what is the nature of the lease?
9. What is the competition in the area?
10. What are the present owner’s plans when he sells?
EVALUATING AN OPPORTUNITY TO BUY
11. Will I need any of the present employees? Are they satisfactory?
12. What are the prospects for increasing profits
13. What is the customer and neighborhood attitude toward the firm?
14. What is the reputation of the firms among businessmen of the area?
15. Are there any nationality, religious or political factors in the area
which would discourage purchase?
EVALUATING AN OPPORTUNITY TO BUY
1.Capitalized Value
2.Appraised Value
CAPITALIZED VALUE (DIVIDING THE ANNUAL PROFIT BY THE
SPECIFIED INTEREST RATE)
1. Business Name
1. Cost of investment
2. Franchisee’s preference and interest
3. Location of the franchise
4. Reputation of the franchise organization
5. Franchise support and assistance
6. Possibility of obtaining a master franchise
FACTORS NECESSARY TO A SUCCESSFUL FRANCHISE
1. An effective organization
5. Territorial protection by the franchisor
2. A clear regulation on products and services
6. Geographical limits and restrictions to the
to carry
franchisee
3. Policy control on operating assets, goods
7. Exclusivity and focus in business
and services for quality and uniformity
relationship
4. Regulation on the use of the franchisee’s
8. Restrictions on transfer of the franchise
business premises
FACTORS NECESSARY TO A SUCCESSFUL FRANCHISE
1. Business must be in operation for at least a 4. There is a need for the kind of business in
year other places
2. The business systems can be easily 5. The products or services is needed for a
migrated and operationalized long time
3. The business has proven record of 6. The prospective franchisor can cope up
profitability with expanding administrative job
MISTAKES TO AVOID IN BUYING A FRANCHISE
DISCLAIMER
No copyright infringement intended for this presentation, solely for educational purposes only.