4. STARTUP BUSINESS
• I DENTI FYI NG STARTUP IDEAS
Accordi ng t o Amar Bhi de:
“St art up product s t hat do not
serve cl ear and i mport ant needs
cannot expect t o be
“di scovered” by enough
cust omers t o make a
di f f erence. ”
9. BUYOUT BUSINESS
1. To r educe uncer t ai nt i es t hat must
be f aced i n st ar t i ng a busi ness.
2. To acqui r e a busi ness wi t h ongoi ng
oper at i ons and est abl i shed
r el at i onshi ps wi t h cust omer s and
suppl i er s
3. To obt ai n an est abl i shed busi ness
at a pr i ce bel ow what i t woul d cost
t o st ar t a new busi ness
4. To begi n a busi ness mor e qui ckl y
t hat by st ar t i ng f r om scr at ch.
REASONS FOR BUYING EXISTING BUSINESS
10. SOURCES
A sales representative, a manufacturer, or a
wholesaler may be offered an opportunity to buy a
customer’s business
Suppliers
Distributors
Bankers
Realtors
Specialized brokers, “matchmakers”
FINDING A BUSINESS
TO BUY
12. VALUING THE BUSINESS
NUMEROUS TECHNIQUES FOR
VALUING A COMPANY:
1. ASSET- BASED VALUATION
2. MARKET- COMPARABLE VALUATION
3. CASH FLOW- BASED VALUATION
14. BUYER
• You are working to secure the best
possible price.
• The price you pay should be no greater than
you determined in advance.
SELLER
• Working to recoup as much money as
possible through the sale.
NEGOTIATING AND CLOSING
THE DEAL
• When det er mi ni ng t he pr i ce and t er ms of t he sal e, i t i s essent i al t o
cl ear l y est abl i sh what i s bei ng pur chased- ASSET ONLY or THE BUSINESS
AS A WHOLE
• Ter ms of t he sal e wi l l be a maj or f act or .
• Al l t he t er ms and condi t i ons shoul d be agr eed upon.
• Under st and al l l egal agr eement s
• Will the previous owner hold a note payable on all or part of the purchase price?
• Under what repayment terms?
• Is there a noncompete agreement restricting when and where the seller can open the same kind
of business?
• Is the seller remaining with the business for specified amount of time to perform particular
duties?
16. ALL ABOUT FRANCHISING
FRANCHI SE- a busi ness t hat
mar ket s a pr oduct or ser vi ce
devel oped by a f r anchi sor .
FRANCHI SI NG- t he syst em of
oper at i ng a f r anchi se gover ned by
l egal agr eement bet ween
f r anchi sor and f r anchi see.
17. FRANCHISOR
• A per son who
devel ops a
f r anchi se or a
company t hat sel l s
f r anchi ses and
speci f i es t he t er ms
and par t i cul ar s of
t he f r anchi se
agr eement .
FRANCHISEE
• The second par t y t o
t he f r anchi se
agr eement , t he
owner of t he uni t
or t er r i t or y
r i ght s.
FRANCHISOR VS
FRANCHISEE
18. 2 TYPES OF FRANCHISES
PRODUCT AND TRADE- NAME
FRANCHISING
• Fr anchi see usual l y
sel l s pr oduct s t hat
ar e manuf act ur ed by
t he f r anchi sor .
BUSINESS- FORMAT
FRANCHISING
• Fr anchi see secur es
t he pr oduct and
t r ade- name benef i t s
but al so oper at i ng,
qual i t y assur ance,
account i ng,
mar ket i ng met hod,
and suppor t of t he
f r anchi sor .
19. FACTORS TO CONSIDER BEFORE
BECOMING A FRANCHISEE
1. Franchi sor success
2. Franchi sor durabi l i t y
3. Franchi sor f i nanci al heal t h
4. St art up i nvest ment
5. Fi nanci ng support
6. Purchasi ng requi rement s
7. Term of agreement
8. Compet i t i on
9. Management f i t
27. WHAT IS A FAMILY
BUSINESS?
• FAMILY BUSINESS
– A company t hat t wo or mor e of t he
same f ami l y own or oper at e
t oget her or i n successi on.
– A f i r m i s r ecogni zed as a f ami l y
busi ness i f i t passes f r om one
gener at i on t o anot her .
28. FAMILY VS BUSINESS
FAMILY
• Primary function is the care and
nurturing of family members.
• Family’s goals are the fullest
possible development of each
member.
• Disciplining an employee is much
more problematic if he/she is also
a family member.
BUSINESS
• Concerned with the production
and distribution of goods and/or
services.
• Business’s goals are profitability
and survival.
• Some choose business over
family.
29. ADVANTAGES
FAMILY BUSINESS ADVANTAGE
Strong motivation of
family members to see
business succeed.
Developing firm-
specific knowledge
among family
members.
Focus on the long run. Reduced cost of
control
Ability to use family
theme promotions
Shared social
networks among
family members.
Preservation of the
firm’s reputation based
on maintenance of high
standards.
31. FAMILY ROLES
The man or woman who f ounded t he f i rm and pl ans t o
pass i t on t o a son or daught er. Some f ounders
achi eve a del i cat e bal ance bet ween t hei r busi ness
and f ami l y responsi bi l i t i es.
Thei r rol es vary dependi ng on t hei r backgrounds and
expert i se.
In t he ent repreneuri al f ami l y, t he nat ural t endency
i s t o
t hi nk i n t erms of a f ami l y busi ness career and t o
push
a chi l d, ei t her openl y or subt l y, i n t hat di rect i on.
32. IMPORTANT NOTES
• Fami l y counci l – An or gani zed
gr oup of f ami l y member s who
gat her per i odi cal l y t o di scuss
f ami l y- r el at ed busi ness
i ssues.
• Fami l y busi ness const i t ut i on- a
st at ement of pr i nci pl es
i nt ended t o gui de a f ami l y
t hr ough t i mes of cr i si s and
Notas del editor
Type I- startup ideas centered around providing customers with an existing product not available in their market.
Type II- involves new technology, centered around providing customers with a new product
Type III- centered around providing customers with an improved product.
basically asks what it would cost to recreate the business. A method that analyzes the underlying value of the firm’s asset as a basis for negotiating the price.
The key assumption behind the market comparable valuation methods is that the value of a business is revealed once you see what similar companies sell for.
Cash flow is normally defined as earnings before interest, taxes, depreciation, and amortization