Achieving Success in the Small Business Chapter 20 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Achieving Success in the Small Business Chapter 20 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use.
Dec 25, 2015
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Achieving Success
in the Small Business
Chapter 20
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Learning Objectives
LO1 Recognize the stages of the small business life cycle.
LO2 Consider the impact of the product life cycle.LO3 Understand the options for harvesting or
closing the small business.LO4 Know the firm-level critical success factors for
small business.LO5 Understand what success means with the
quadruple bottom line.
20-2
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Small Business Life Cycle
Business life cycle The sequence or pattern of developmental stages
any business goes through during its life span.
20-3
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
The Small Firm Life Cycle
20-4
Figure 20.1
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Life Cycle Stages
20-5
Emergence
Existence
SurvivalSuccess
Resource Maturity
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Small Business Life Cycle
Liability of newness The set of risks faced by firms early in their life
cycles that comes from a lack of knowledge by the owners about the business they are in and by customers about the new business.
20-6
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Small Business Life Cycle
Slack resources Profits that are
available to be used to satisfy the preferences of the owner in how the business is run.
20-7
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Avoiding Customer Complacency
20-8
Recency Frequency
Potency Recommendation
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The Product Life Cycle
20-9
Figure 20.2
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Service Life Cycle
20-10
Figure 20.3
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The Hierarchy ofBusiness Outcomes
20-11
Figure 20.3
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Closing the Small Business
Harvest Recover value through a sale of a firm or its
assets.Initial public offering (IPO)
Transfer method describing the first-time public sale of a stock listed on a public stock exchange.
20-12
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Closing the Small Business
Consolidation A transfer method in which a small business is
bought by a larger firm for the purpose of quickly growing the larger firm.
Employee stock ownership plan A formalized legal method to transfer some or all
of the ownership of a business to its employees.
20-13
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Closing the Small Business
Transfer An endgame
strategy in which ownership is moved from one person or group to another.
Termination An endgame
strategy in which the owner closes down a business
20-14
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Closing the Small Business
Liquidity enhancement An estate planning strategy which focuses on
generating cash to cover likely estate taxes.Tax management
An estate planning strategy which focuses on minimizing estate tax payments.
20-15
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Closing the Small Business
Estate freeze An estate planning strategy which focuses on
transferring assets to heirs when the asset costs are low.
Walkaways Business terminations in which the entrepreneur
ends the business with its obligations met.
20-16
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Closing the Small Business
Bankruptcy An extreme form of business termination which
uses a legal method for closing a business and paying off creditors when debts are substantially greater than assets.
20-17
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Closing the Small Business
Workout A form of business termination in which the
firm’s legal or financial obligations are not fully met at closing.
20-18
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Closing the Small Business
Reorganization The popular name for a Chapter 13 bankruptcy in
which a bankrupt firm continues to operate while paying off debts identified by the bankruptcy trustee
20-19
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Closing the Small Business
Liquidation The popular name for a Chapter 7 bankruptcy in
which a bankrupt firm’s assets are sold by the bankruptcy trustee and the proceeds used to pay the firm’s debts.
20-20
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Closing the Small Business
Serial entrepreneurs People who open
multiple businesses throughout their career.
20-21
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The Not-So-Secret Secrets of Success
Critical Success Factors fall into two broad types:Outside helpEntrepreneurial experience.
20-22
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Critical Success Factors
Being incorporatedEmployeesExtreme start-up capitalProtectable intellectual propertyBrand name affiliations or partnersOptimal strategiesPresales
20-23
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The Four Bottom Lines
20-24
Table 20.1
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