PowerPoint Presentation Section 3.2 Pages 43-49

PowerPoint Presentation

Section 3.2Section 3.2 Pages 43-49Pages 43-49

What you’ll learnWhat you’ll learn The challenge of entering a family business

The benefits and drawbacks of buying a business

The responsibilities of starting your own business

3.2 Starting Versus Buying a Business

Why it’s importantWhy it’s important Many people think that being an entrepreneur means starting a business from scratch.

Many successful entrepreneurs buy an existing business then make it better.


Key TermsKey Termsgoodwillgoodwill

franchisefranchise

franchiseefranchisee

franchiserfranchiser

business brokerbusiness broker


I.I. SHOULD YOU ENTER AN SHOULD YOU ENTER AN EXISTING BUSINESS?EXISTING BUSINESS?A.A. Being Being opportunistic does not opportunistic does not

always mean starting a always mean starting a business from scratch.business from scratch.



B.B. You can enter a family You can enter a family business or buy an existing business or buy an existing business.business.


Discussion Starter

Make a list of local businesses in the following categories:1. Family Business2. New Business3. Franchise

II.II. ENTERING THE FAMILY ENTERING THE FAMILY BUSINESSBUSINESSA.A. Family businesses are an Family businesses are an

important part of the U.S. important part of the U.S. economy.economy.


B.B. Family businesses are not Family businesses are not generally high-growth generally high-growth businesses, but some have businesses, but some have become very large.become very large.


III.III. THE UP SIDE – AND THE THE UP SIDE – AND THE DOWN OF FAMILY DOWN OF FAMILY BUSINESSESBUSINESSESA.A. Only about one-third of Only about one-third of

family-run businesses family-run businesses survive to the second survive to the second generation.generation.


B. B. The trust and togetherness a The trust and togetherness a family shares can be a real family shares can be a real asset. asset.

C.C. A disadvantage is that A disadvantage is that family owners can never get family owners can never get away from the business.away from the business.


IV.IV. QUESTIONS TO ASK QUESTIONS TO ASK BEFORE ENTERING A BEFORE ENTERING A FAMILY BUSINESSFAMILY BUSINESSA. A. Do I have the ability to Do I have the ability to

work for a family work for a family member?member?


B.B. Do I get along well with these Do I get along well with these family members?family members?

C.C. Do we share the same business Do we share the same business goals?goals?

D.D. Do we share the same general Do we share the same general goals for our personal lives?goals for our personal lives?



Critical Thinking

Why are family businesses not always perpetuated by second generations?


V.V. BUYING A BUSINESSBUYING A BUSINESSA.A. Buying a business may be Buying a business may be

less risky than starting one less risky than starting one from scratch.from scratch.

B.B. Buying a business may be Buying a business may be attractive to one without attractive to one without business experience.business experience.


VI.VI. KINDS OF BUSINESSES KINDS OF BUSINESSES AVAILABLEAVAILABLEA.A. One can buy an existing One can buy an existing

business or the right to set business or the right to set up a new business up a new business patterned on an existing patterned on an existing model.model.

B.B. An existing business already has An existing business already has a location and physical plant. a location and physical plant.

C.C. Customer loyalty to an existing Customer loyalty to an existing business, or business, or goodwillgoodwill, is an , is an extremely valuable business extremely valuable business asset.asset.



D.D. McDonald’s is an example of a McDonald’s is an example of a franchise. A franchise. A franchise franchise is a legal is a legal agreement to begin a new agreement to begin a new business in the name of a business in the name of a recognized company.recognized company.

E.E. The purchasers of franchises The purchasers of franchises pay a percentage of the pay a percentage of the profits annually to the owners profits annually to the owners of the franchise.of the franchise.



F.F. The buyer of a franchise is The buyer of a franchise is called the called the franchiseefranchisee..

G.G. The seller is the The seller is the franchiserfranchiser..


Critical Thinking

What problems might a franchiser have?


VII.VII. A GOOD DEAL OR A A GOOD DEAL OR A BAD ONE?BAD ONE?A.A. Acquiring an existing Acquiring an existing

business has business has advantages.advantages.


1.1. Location Location

2.2. Goodwill Goodwill

3.3. Staff Staff

4.4. Plant Plant

5.5. Inventory Inventory

6.6. Established procedures Established procedures


B. B. There are can be disadvantages There are can be disadvantages to buying a business.to buying a business.

1.1. Lack of success Lack of success

2.2. Poor reputation Poor reputation

3.3. Dated inventory Dated inventory

4.4. Poorly maintained facilities Poorly maintained facilities


VIII. WHERE TO FIND A VIII. WHERE TO FIND A BUSINESSBUSINESSA.A. Read the newspaper. Read the newspaper.

B.B. Network with others. Network with others.

C.C. Hire a Hire a business brokerbusiness broker, a , a person who brings buyers person who brings buyers and sellers together.and sellers together.


IX.IX. QUESTIONS TO ASK QUESTIONS TO ASK YOURSELF BEFORE YOURSELF BEFORE BUYING A BUSINESSBUYING A BUSINESSA.A. Is the business interesting? Is the business interesting?

B.B. Why is the owner selling? Why is the owner selling?

C.C. What is the potential for What is the potential for growth of the business?growth of the business?


X.X. STARTING YOUR OWN STARTING YOUR OWN BUSINESSBUSINESSA.A. There is more effort There is more effort

involved before even involved before even opening the doors to opening the doors to business.business.


B.B. The principal benefit is that The principal benefit is that you can do things your own you can do things your own way.way.


XI.XI. QUESTIONS TO ASK QUESTIONS TO ASK YOURSELFYOURSELFA.A. Do I have the motivation to Do I have the motivation to

start from nothing?start from nothing?


B.B. Do I have sufficient knowledge Do I have sufficient knowledge of basic operations to undertake of basic operations to undertake the business?the business?

C.C. Do I have enough financial Do I have enough financial resources to start from scratch?resources to start from scratch?


XII. THE CREATIVITY XII. THE CREATIVITY FACTORFACTORA.A. Think creatively about the Think creatively about the

business you choose to business you choose to enter. enter.

B.B. Constantly be on the Constantly be on the lookout for opportunity.lookout for opportunity.


End of Section 3.2End of Section 3.2

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PowerPoint Presentation Section 3.2 Pages 43-49