chapter 8 selecting your business. listen to your market!
TRANSCRIPT
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CHAPTER 8
Selecting Your Business
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Listen to your market!
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Product or Service?
Product – something that exists in nature or is made by human beings – tangible, can be touched
Service – work that provides time, skills, or expertise in exchange for money – intangible, and can’t be touched
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Four Basic Business Types
Manufacturing – makes a tangible product
Wholesale – buys in quantity from the manufacturer and sells to the retailer
Retailer – sells to the consumer Service – sells an intangible product to
the consumer
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Turning hobbies, skills, and interests into business – refer to Star Profile
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Your Strategy for Beating the Competition Quality Price Location Selection Service Speed/turnaround
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Ethics of Conducting Business Not against the law Will not hurt others Not spread negative messages or ideas in
the marketplace
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Start-up Considerations
Naming your business Risks of using your name in the business
Money alone is not a good reason to start a business
How could your dream help the community? What is the value of your time? Entrepreneurs and philanthropy
100 business ideas for young entrepreneurs
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CHAPTER 9
The Costs of Running a Business
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Understanding Costs
Define your unit of sale Three kinds of costs
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Varied and Fixed Costs
Costs of goods sold or costs of services sold Materials Labor
Other variable costs Commissions Shipping and handling
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Measuring Profits and Costs
Calculating gross profit per unit Total Costs Per Unit Selling price – cost of goods sold – other
variable costs – gross profit Calculating gross profit Cost of Services Sold (COSS) Handling Economics of One Unit per sale
(EOUs) when selling more than one product
An EOU with a variety of costs
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Fixed Costs
Overhead – costs such as Utilities Salaries Advertising Insurance Interest Rent Depreciation
Depreciation – method used to save the money that will be needed to replace expensive pieces of equipment
Fixed costs do change – over time
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Addressing Fixed Costs
Economics of scale Spread fixed costs over as much output as
possible Get better deals from suppliers
Make your fixed costs variable whenever possible
Fully allocating your fixed costs Keep at least three months in reserve to
cover fixed costs
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CHAPTER 10
What is Marketing?
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Marketing
Identifying and responding to customer needs Marketing – satisfying the customer at a profit – the
art of getting the customer to come to the product. Meet your customer’s needs to gain their
loyalty Marketing explains the benefits of a product The marketing vision drives all business
decisions Marketing establishes your brand
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Branding in Marketing
Focus your brand Ford’s examples
Costly failure – the Edsel Marketing success – the Mustang
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How to Build Your Brand
Choose a business name that is easy to remember, describes your business, and establishes mind share (the degree your business comes to mind when a customer needs something)
Create a logo that symbolizes your business to the customer
Develop a good reputation Create a brand personality Communicate your brand personality to
your target market
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Side Notes
Represent your brand Mind share vs. market share
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The 4 “P”s
1. Product - should meet the need or create a consumer need
2. Place - place your product where customers who need it do their shopping
3. Price - the product has to be priced low enough so the public will buy it, and high enough for the business to make a profit.
4. Promotion - consist of advertising, publicity, and promotional items
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Success
The Basics of Business Success How can you tell if your promotions are
working? Philanthropy can bring positive publicity
Cause-related marketing – social, environmental, or political cause
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CHAPTER 11
Market Research
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Performing Research
Listen to the consumer Tangible market demographics Types of market research
Surveys General research Statistical research Industry research
Your research method is important
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Performing Research (cont’d) Market research questions Research your market before you open
your business Do you know ten people who love your
product? You may have a winner Make market research ongoing Who is in your market segment? Researching your market segment Market research avoids costly mistakes
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CHAPTER 12
Keeping Good Records
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Daily Records
Keep Daily Financial Records Three reasons to keep good records
every day Keeping good records will show you how to
make your business more profitable Keep accurate records to create financial
statement and ratios that will show your business is doing well
Keeping good records will prove that payments have been made
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The Banking Relationship
Savings accounts Checking accounts Writing a check Technology tip: 24-hour banking and
online banking
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Accounting
A basic accounting system (will be covered in the QuickBooks section)
Save receipts for tax time Basic accounting principles
Keep up your records daily Support your records with receipts and invoices Use business checks for business expenses
Avoid using cash for business Deposit money from sales right away
Assets, liability, owner’s equity review