1) Advantages of Small Business

- Being the boss b) Business analysis

- Offering services large companies cannot offer - The product relationship to the existing product
- Ease of formation line
2) Nature of SBM - Cost of development and introduction
a) Shoestring Budget - Available personnel and facilities
A sole proprietor or a small group of people operate
- Competition and market acceptance
small businesses. These businesses often run on
c) Development of the physical product
‘shoestring budget’ meaning that small businesses
function on a very tight budget. - Plan for branding, packaging, and other
supporting efforts, such as pricing and
b) Labour intensive promotion
Small businesses are mostly labour intensive. - Actual prototype
Various types of small business largely rely on labour d) Product Testing
for their functioning. The primary nature of small - Determine whether the physical product is
businesses is more involvement of physical work acceptable – safe, effective, durable, etc.
rather than intellectual work. The lack of machinery - 80% high performing companies, test on what
makes the employees manage their operations customer really want
manually. 4) Franchise/franchisor
a) Term
c) Community-based
Small businesses are started with the motive of A business relationship in which an entrepreneur
satisfying the needs and demands of a local area or can reduce risk and benefit from the business
community. These businesses demographically experience of all members of the franchise
target few areas of concentration and are hence system.
community-based.
b) 2 parties involved in the franchising system:
d) Indigenous technology Franchisor – the party in a franchise contract
Due to small businesses being community focused that specifies the methods to be followed and
and labour oriented they often thrive upon native the terms to be met by the other party
methods of operations. In India, there are many
businesses in the rural sector that still use outdated Franchisee – an entrepreneur whose power is
technology. This might give uniqueness to the limited by a contractual relationship with a
products but hinders the development of the franchising organization
business. c) The Pros and Cons of Franchising
- Pros
3) New product development process  Reduced risk of failure
a) Idea Accumulation  Going into business for yourself, but not by
- Increasing pool of ideas under consideration yourself
- Sales staff, Engineering personnel, or other  Use of a valuable trade name and trademark
employee within the firm  Access to a proven business system
- Government owned patents-royalty free basis  Management training provided by the franchisor
- Privately owned patents
- Acquisition or merger - CONS
- Competitors’ products and promotional  Misleading or exaggerated earnings claims
campaigns by franchisors.
- Requests and suggestions from customers  Opportunity behaviour by which the
- Brainstorming franchisor becomes a competitive threat to
franchisees.
- Marketing research
  Restrictions on franchisees who desire to – Business in third and subsequent
liquidate their holdings in favour of generations when children of the siblings
alternative investment opportunities. take ownership and management positions
 Conflicts of interest, such as when a Advantage family business
franchisor forces franchisees to be captive  Family business culture and values
outlets for other suppliers owned by the  Commitment
franchisor.  Knowledge
 Churning: terminating a successful franchise  Long-range thinking
operation in order to resell it and gain  A stable culture
additional franchise fees.  Speedy decisions
 Reliability and pride
d) Buyout process Disadvantage family business
Definition: A buyout is the purchase of at  A family is a unit that balances relationships
least 51% of a company. Under a buyout,  The family seeks to perpetuate traditions,
the previous ownership loses control over while business must innovate to grow
the company in exchange for compensation.  A family is characterized by unity and
Example: cooperation; but company grows through
i. begins when an interested purchaser or diversity and competition
group of purchasers makes a formal  Families tend to be stable, while businesses
buyout offer to a company's board of competing and often face instability
directors.  For families, loyalty trumps opportunity, but
ii. Negotiations and/or a tender offer businesses challenged by opportunities
ensue, and the board of directors
eventually either recommends that the Commitment of Family Members
shareholders sell their shares to the
 Commitment
purchaser or discourages the
 Desire based commitment
shareholders from doing so.
 Obligation-based commitment
iii. Buyout firms usually seek out and
 Cost-based commitment
purchase underperforming or
 Need-based commitment
undervalued companies in order to "fix"
them and sell them or take them public
 The fear of commitment
many years later.
iv. When it sells one of its companies, the  Fear of failure
buyout firm takes a commission, which  Fear of success
it passes on to its investors.  Fear of commitment
 Fear of disappointing your parents
5) FAMILY BUSINESS  Fear of disappointing others
What is family business
Commitment Through Unity
• Family
– A group of people bound by a shared history Family unity – openness of mind, feeling and
and a commitment to share a future action among family members
together, while supporting the development
and well-being of individual members Family unity important for:
• Owner-managed business - business success
– Venture operated by a founding - strategy, ownership and management-
entrepreneur completely unified
• Sibling partnership - sales, growth and past growth
– Business in which children of the founder - stakeholders
become owners and managers
• Cousin consortium
6) BUSINESS PLAN 7) MARKETING PLAN
What is the purpose in the BP? CHARACTERISTICS
 Reality Test – the market really exist. 1. The success depends to a large extent upon
 Competitive Test – the company’s position human behaviour and response.
compared to competitors. 2. They are complicated in nature.
 Value Test – to convince lenders and 3. Marketing decisions have long term effects on
investors to put their money into the efficiency, profitability and market standing of
venture, a business plan must prove to them the firm.
that it offers a high probability of repayment 8) HUMAN RESOURCE
or an attractive rate of return STEPS IN JOB INSTRUCTION TRAINING
3 Elements of business plan 1. Prepare employees
1) The Management Team  Put employees at ease
A strong management team with a mediocre  Place them in appropriate jobs
idea is more attractive to many investors than a  Find out what they know
weak management team with a great idea.  Get them interested in learning
When writing your business plan, dissect 2. Present the operations
your previous experience as if you were the  Tell, show, and illustrate the task
investor. If you have partners, outline which  Stress key points
areas of responsibility each of you will  Instruct clearly and completely
undertake as well as the experience that each of 3. Try out performance
you brings to the venture.  Have employees perform the task
2) The Finance  Have them tell, show and explain
- Operating budget. List your business’s  Ask employees questions and correct any
day-to-day operating expenses — rent, errors
salaries, supplies, insurance, telephone, 4. Follow up
Internet and the like — and the income  Check on employees frequently
that you’ll need to offset them.  Tell them how to obtain help
- Cash-flow statement (projected). This  Encourage questions
identifies your business’s sources of
From Training to Implementation
income and when they’ll arrive. For
example, you may have revenue from a  Put it on paper
big quarterly order as well as a steady  Measure results
stream of income from monthly sales.  Get peers to help
- Sales projections. Where will your sales  Involve supportive superiors
be in six months? A year from now?  Provide access to expert
Realistic projections will help you
identify how much you’ll need to 9) FINANCIAL STATEMENT
reinvest in your business to meet
expenses as more supplies, equipment What is Financial Statement?
and employees become necessary to - Financial statements are the financial
support its growth. performance and resources, include the
3) The Executive Summary income statement, balance sheet and cash
If you have trouble articulating your business’s flow statement
purpose, strengths, challenges and goals clearly
in a few pages, this is a sign that you might not
be clear about your business vision or market
strategy.
 What are the purpose of ratio? material for the required knowledge of
customers.
 The gross profit margin (GPM) shows the
 Four major categories of information for
firm`s profit margin after deducting costs of
customer profiles:
goods sold but before deducting operating
• Transactions
expenses, interest expenses, and taxes.
• Customer contacts
 This ratio is also known as gross profit ratio.
• Descriptive information –background
Gross Profit Margin = Sales – Cost of Goods Sold / information
Sales • Response to marketing stimuli

 operating profit margin (OPM) shows the 11) HARVEST

firm`s profit margin after deducting cost of Definition - is a business plan for either cancelling or
goods sold and operating expenses but reducing marketing spending on a product. The
before interest expenses and taxes. management has decided that it would cost too
much to boost sales. In other words, they could not
 The operating profit is the earnings before justify the expense after considering likely future
interest and taxes or EBIT as a percent of revenues from the product.
sales. - The term ‘harvest strategy’ may also refer to
Operating Profit margin = EBIT / Sales a brand or line of business.
- Marketing executives choose a harvesting
10) CRM – HOW TECHNOLOGY CAN IMPROVE CRM strategy when a product has reached the
 Long term transactional relationships with end of its life cycle. They aim to extract
customers are built on good information, and a maximum profit from any remaining sales.
logical time to gather helpful data is during
direct customer contracts such as when a SECTION B
product is being sold.
12) 6 METHOD OF PRICING
Customer contacted via phone calls, letters,
personal interactions, e-mail, text messages. 1. PENETRATION PRICING
A technique based on setting lower than normal
 CRM software program is designed to help
companies gather all customer contact prices to hasten market acceptance of a product or
service or to increase market share.
information into a single data management
2. SKIMMING PRICING
program,
 Web based marketers, are attracted to such A technique based on setting very high prices for a
technology – it helps to make their complex job limited period before reducing them to more
competitive levels.
far more manageable. Some company outsource
certain application such as “call centre, that
handle e-mails and others. 3. FOLLOW THE LEADER PRICING
 Web based self-service systems – customer A technique based on using a particular competitor
as a model in setting prices.
information management systems
4. VARIABLE PRICING
CRM- BUILDING CUSTOMER PROFILE - Variable pricing strategy – a technique based on
setting more than one price for a product or
 Customer profile- a collection of information
service in order to offer price concessions to
about a customer, including demographic data,
certain customers.
attitudes, preferences, and other behavioural
- Dynamic (personalized) pricing strategy – a
characteristics, as defined by CRM goals.
technique based on charging more than the
 Customer profiles are essential to a successful
standard price when a customer’s profile
CRM program, as they represent building
suggests that the higher price will be accepted.
 5. PRICE LINING hinder the performance of firms operating
- A technique based on setting a range of several there.
distinct merchandise price levels.
– Exchange rate – the value of one country’s
6. PRICING AT WHAT THE MARKET WILL BEAR
currency relative to that of another country.
- When the seller has little or no competition.
- This strategy will work only for non-standardized • The “ease of doing business index”
products.
– Business to government the large impact
13) CREDIT - FACTOR that regulatory conditions have on economic
growth and development
5 factors related to entrepreneur’s decision to extend
credit: – Green “go” countries; yellow “proceed with
caution”, red “stop and think carefully”
o Type of business countries
o Credit policies of competitors
o customers’ age and income levels 15) PROFESSIONAL LEADERSHIP
o The availability of working capital Managerial Responsibilities of Entrepreneurs
o Economic conditions

14) GLOBAL MARKETING

FACTORS:
i. Expanding Markets
Traditional motivation: Extend the product life cycle
Emerging Motivation: find buyers for highly
specialized products
ii. Gaining Access to Resources
Traditional Motivation: find new materials
Emerging motivation: obtain human resources
iii. Cutting Costs
Traditional motivation: reduce labor and
transportation cost
Emerging motivation: obtain tariff reductions
iv. Capitalizing on Special Features of Location
Traditional Motivation: Profit from unique local
features, such as Italian artisans’ flair for design Types of entrepreneurship
Emerging Motivation: follow large client firms that
locate abroad - Small business entrepreneurship
- Scalable Start-up Entrepreneurship
CHALLENGES: - Large Company Entrepreneurship
• Political risk - Social Entrepreneurship

– The potential for political forces in a country

to negatively affect the performance of
businesses operating within its borders.

• Economic risk

– The probability that a country’s government

will mismanage its economy in ways that