Text 5 How to Become a Small Business Owner

A person becomes a small business owner in one of three ways: taking over the family business; buying an existing business; or staring a new firm.

a. Taking over the family’s Business – Those with experience in the business have a good chance to succeed. Those with no experience have a good chance of failing.

b. Buying an Existing Firm- It is critical that you find out why the owner is selling and how profitable the firm has been in recent years.

c. Starting a New Firm –It is a fresh start with no bad reputation to overcome or obsolete plant or materials, but you also have no customer base to begin bringing money.

Starting a small business takes a lot of planning and know-how. At the very least you should consult an accountant, an insurance agent, a lawyer, and a banker for the following:

1 .Conducting a Situation Assessment

In a situation assessment you take an in-depth look at both yourself and the business environment.

2. Developing an Overall Business Plan

A business plan is a document that spells out in detail a firm's objectives, form of ownership, and actions needed to achieve the objectives.

3. Projecting Financing Needs

Projecting financing needs requires (1) setting up a capital budget, (2) preparing month-by-month projected income statements, (3) preparing month-by-month projected cash flow statements, and (4) preparing a projected balance sheet.

4. Securing the Needed Resources and Permits

A new firm secures the needed capital through equity or debt financing. Equity capital is funds provided by the owner. 'Debt funds are borrowed funds. Venture capitalists are individuals and businesses willing to provide money to entrepreneurs who have new products or new-product ideas that are as yet unproven on the market but have a good chance of becoming successful.

5. Establishing Internal Control Procedures

Internal controls include an accounting system and a security system.

6. Starting to Serve Customers

Your firm will not be profitable if its costs are greater than its sales revenues. Keeping track of costs and measuring progress against the firm's objectives is called control.

Successful small business expansions and new formations lead the way in creating new markets, innovations, and jobs that fuel economic growth and prosperity. Your success in business depends on what you know and how well you can apply what you have learned.

In recognition of the importance of small business to a strong economy, Apple Computer, Inc. has joined with the U.S. Small Business Administration (SBA) to help meet the information needs of existing business owners and aspiring entrepreneurs by providing the necessary information.

The Importance of Information

Information is power. It is an asset that can help overcome uncertainty and open new avenues for opportunity. With the right information, your business gains an important edge in today's competitive world. Learn to use information sources. They are the key to unlocking your business's full potential.

The Small Business Administration

The SBA is an independent government agency created by Congress to help small businesses grow and prosper. The SBA has over 100 offices that offer small firms financial assistance through guaranteed loans, management assistance, help in obtaining government contracts, counselling services, and many low-cost publications. The SBA is an excellent source of information.

Assignments to text 6:

1. Read the following descriptions given in a jumble order. Match the following factors with the sentences which explain and clarify them.

· Greater flexibility

· More personal attention to customers and employees

· Lower fixed costs

· Greater motivation of the owners

· Poor management

· Inadequate financing

· Ethical issues in partnership

2. Now write them out in two separate paragraphs, one including factors in small business success, the other – factors in small business failure.

Дата добавления: 2015-11-16