Unit 7 Seminar

AB209, Small Business Management

Unit 7 Seminar Game Plan Course Check-In

Course Website Check-InCourse Activities & Assignments Check-In

Review Unit 5 & 6 ContentContent ReviewAssignment Review

Unit 7 Check-InLook Ahead to the Unit 9 Seminar

Review of Financial Management from Unit 5

Understanding Financial Statements

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Financial Statements (Accounting Statements)Reports of a firm’s financial performance and

resourcesHelps determine a startup’s financial requirementsAssesses the financial implications

of a business plan

Basic Financial StatementsIncome statementBalance sheetCash flow statement

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Exhibit 10.3 The Balance Sheet: An Overview

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Exhibit 10.5 The Fit of the Income Statement and Balance Sheet

The Cash Flow Statement

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Cash Flow Statement

A financial report showing a firm’s income (cash) when it is received and expenses when they are paid.Cash flows from normal operations (operating activities)

Cash flows related to the investment in or sale of assets (investment activities)

Cash flows related to financing the firm (financing activities)

Determining Financing Requirements

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Basic Principles for Financing of FirmsThe more assets a firm needs, the greater the

firm’s financial requirements.A firm should finance its growth in such a way

as to maintain proper liquidity.The amount of total debt used in financing a

business is limited by the funds provided by the owners.

Some types of short-term debt maintain a relatively constant relationship with sales.

Equity ownership comes the investments of owners, and retained earnings (profits).

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Exhibit 12.3 Sources of Financing Funds

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Exhibit 12.4 Startup Financing for Inc. 500 Companies in 2003

Source: Mike Hofman, “The Big Picture,” Inc. Magazine, Vol. 25, No. 12 (October 2003), p. 87. Copyright 2003 by Mansueto Ventures LLC. Reproduced with permission of Mansueto Ventures LLC in the format Textbook via Copyright Clearance Center.

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Exhibit 12.5 Sources of Personal Capital for Small Firms

Source: Republished with permission of Dow Jones Inc. from Staff, “Entrepreneurship Monitor 2002,” Wall Street Journal, August 26, 2003, p. B8; permission conveyed through Copyright Clearance Center, Inc.

The Government

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Small Business Administration (SBA) loansThe 7 (a) Guaranty Loan Program

SBA guarantees repayment of loan to lenderThe Certified Development Company (CDC) 504

Loan ProgramThe 7(m) Microloan ProgramSmall Business Investment Companies (SBICs)Small Business Innovative Research (SBIR)

Unit 6 Review Information

Unit 6:  Building Customer Relationships & Pricing and Supply Chain Management

Reading Discussion AssignmentFinal Project – Marketing and Sales Review

Discussion PostsVideo Case Study questionsReview Multiple Choice

What is Customer Relationship Management?

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Customer Relationship Management (CRM)A company-wide business strategy designed to

optimize profitability and customer satisfaction by focusing on highly defined and precise customer groups.

Focus of CRM:Customers rather than productsChanges in processes, systems, and cultureAll channels and media involved in the

marketing effort, from the Internet to field sales.

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Exhibit 14.1 Sources of the Next Sale

Importance of CRM to the Small Firm

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Economic benefits of maintaining relationships with current customers:

1. Acquisition costs for new customers are high.2. Long-time customers spend more money

than new ones.3. Happy customers refer their friends and

colleagues.4. Order-processing costs are lower for

established customers.5. Current customers are willing to pay more

for products.

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Extraordinary Service

Do Business on First-

name Basis

Do Business on First-

name Basis

Address Problems Promptly

Address Problems Promptly

Keep in Touch

Keep in Touch

Ways to Provide Extraordinary Service

Ways to Provide Extraordinary Service

Find Ways to Help

Find Ways to Help

Provide Custom Service

Provide Custom Service

Final Project Activity: Marketing

Definition of the Market & Products/ServicesThis portion of your mini-business plan should contain

information on the market you plan to serve. Include summary information on the size and composition of your target market and your business competitors. Briefly describe your products/services, including their unique features.

Marketing & Sales StrategyThis portion of your mini-business plan should contain

information on how you will market, sell, and distribute your products/services.

Please remember: As a guide to help you develop your mini-business plan, please refer to the content of the Atayne, LLC business plan on pages 675 to 695 of our textbook.

Unit 7 Information

Unit 7:  Pricing and Credit Decisions, Promotional Planning and Global Marketing

Reading Discussion Final Project: Finish Marketing and Sales StrategiesReview Seminar

Discussion PostsReview – 20 questions

Innovation: A Path to Growth

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Competitive Advantage and InnovationInnovation and entrepreneurship often go

hand-in-hand.Coming up with and perfecting new products

or services is often not easy.The risk of failure increases when innovation is

the goal.Innovation is a means by which a firm can

sustain its competitive advantage.

Sustainability and Innovation

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Sustainable Competitive AdvantageA value-creating position likely to endure over

timeIs difficult to imitateCreates high barriers to market entryCan be patented or copyrightedIs renewable at higher performance capabilities

Stages in the Competitive Advantage Life CycleDevelop: invest resourcesDeploy: boost performanceDecline: competitors overcome advantage

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Exhibit 15.1 The Competitive Advantage Life Cycle

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Exhibit 15.2 Sustaining Competitive Advantages

The Product Life Cycle and New Product Development

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Product Life CycleA detailed picture of what happens to a specific

product’s sales and profits over time

Promotion, pricing, and distribution policies must be adjusted to the product’s position on the curve.

It is important to rejuvenate product lines before they die.

The life cycle of a product follows the classic sigmoid curve—innovation is necessary for a firm’s survival.

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Exhibit 15.3 The Product Life Cycle

Supply Chain Management

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Supply Chain ManagementIntegrates and coordinates the means by which

a firm creates or develops a product or service and delivers it to customers.

DistributionPhysically moving products and establishing

intermediary relationships to support such movement.

Physical Distribution (Logistics)The activities of distribution involved in the

physical relocation of products.Channel of Distribution

The system of relationships established to guide the movement of a product.

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Exhibit 15.8 Alternative Channels of Distribution

Scope of Physical Distribution

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StorageLack of storage space is a common problem.

Materials HandlingProtecting the firm’s output during

warehousing.Specifying Responsibility for Delivery Terms

Paying freight costs—F.O.B. origin, freight collect.

Selecting the carriers.Bearing the risk of damage.Selecting the modes of transport.

Scope of Physical Distribution (cont’d)

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Logistics CompaniesFirms which specialize in providing cost-effective

transportation, storage, and distribution services to small companies.TruckingPackagingWarehousing

Look Ahead

Unit 8 Information

Unit 8:  Professional Management & Managing Human Resources

Reading Discussion AssignmentProject: Finish Org./Mgmt.

Discussion PostsVideo Case Study questions

Unit 7 Seminar Wrap-UpIf you need assistance:

o Contact instructor at their KU email addresso Post message to “Instructor’s Office”o Meet with instructor during Virtual Office Hourso KU Tech Support: 1-866-522-7747o Academic Advisor: If you have any challenges

that prevent you from succeeding this term or at KU in general

o Other KU Resources: Writing Center, etc.Our next “live” seminar: Unit 9Questions?

o Course Website or Content?o Assignments?o Other issues?