Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
My Own Business
www.myownbusiness.org
Course Topics
PART ONE: EVALUATING THE BUSINESS
1: Deciding on a business
2: The business plan
PART TWO: BEFORE YOU START
5: Business organization
8: Communication tools
PART THREE: OPERATING PITFALLS
10: Location and leasing
12: E-Commerce
13: Opening and marketing
15: Expanding and handling problems
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Starting My Own Business
www.myownbusiness.org
Session 1: Deciding on a business
Characteristics of a Successful Entrepreneur
Guts:
Guts mean you must have an entrepreneurial instinct, which is an overwhelming desire to have your own
business. You must have the guts and dedication to be completely devoted to your goal. Incidentally,
devotion to your goal is much more likely if you have a love for your intended business. Life is too short to
start a business that doesn't give you satisfaction and joy. And, through good times and bad times, you will
stick with something you love. As Solomon said, "There is nothing better for men (and women!) than they
should be happy in their work-so let them enjoy it now."
Brains:
While appropriate educational credentials are important, entrepreneurial "brains" means more than
scholastic achievements. To become a successful entrepreneur, you should have a working knowledge
about the business you plan to start before you start it. Common sense, combined with appropriate
experience, is the necessary brainpower. Prudence, follow through and attention to detail are very
important.
Capital:
Every Business needs money of your own plus sufficient cash to maintain a positive cash flow for at least a
year. In a future session operating entrepreneurs will learn how to forecast future cash requirements
through cash flow control. Many businesses can be started on a very small scale with a small investment.
Then, as the business grows and you gain experience, cash flow from your business can be used for growth.
In some cases, you don't need starting capital to hire other people because you might start by doing
everything yourself. The "do it yourself" start is a good way to learn everything about your business and
also makes you better qualified to delegate work to others later on. You can control your risk by placing a
limit on how much you invest in your business.
Interview to:
Gwyn Myers, Ph. D., Management Consultant
What would your top recommendations be for people just starting out in business?
Number one would be to make sure that you have a goal and that you are determined to make
that goal - that nothing is going to stop you. There are going to be so many valleys that you
are going to go through, but that you are absolutely determined to make it. And I think that
it has shown over and over that persistence is the key to really starting a business and
sticking with it and making it successful.
The second thing that I would tell them is just a well known business fact: revenue is on the
outside, costs are on the inside. So spend as much time as you can on the outside during the
times that people are going to listen to you: spreading your message, networking and finding
out what people need. And maybe it's going to be evening hours, early morning hours or
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
weekend hours that you devote the time internally to get yourself organized to set up that
infrastructure and get going.
So one thing is persistence and the second is get out there where the revenue is and make
sure it's coming in.
* * * * *
Interview to:
Maureen Costello, Wholesale Distributor
You have some wonderful credentials including being a CPA, an MBA and being president
of a large company. Were these credentials helpful to you when you purchased your own
business?
Very much. I think one of the things I’ve learned over the years is that for anybody to be
successful in any role you have to have ability to begin with and then you need education and
training and experience and probably most of all the willingness to do whatever the function
is that you are going to take on. My educational experience certainly helped prepare me
because it gave me an overview of what kinds of things happen in a business and I got some
basic accounting skills which are really critical to a business. That's probably the lifeblood of
a business; making sure you have cash and that you know how the cash is coming in and going
out. But the experience is invaluable and everybody is going to make mistakes in life, in the
job.
Your employees are going to make mistakes. You can't expect them to be perfect. Those
mistakes are going to cost you money and you almost have to budget for that. I was able to
make my mistakes on somebody else's dime which was probably good for me, maybe not so
good for them, but that is part of the cost of doing business. Now you as the owner of a
business are going to have to accept the fact that when you bring somebody in new, part of
the cost of hiring a new employee and training them is that they are going to make mistakes
that cost you money and you may as well budget for it. But I had the opportunity to make
those mistakes before I bought a business and that prevented me from making a lot of
mistakes after I purchased the business.
* * * * *
Step-by-Step Approach
Decide if you really want to be in business:
You are putting some (not all, hopefully) of your net worth at risk. You may run the risk of becoming
eccentric, meaning creating a life that is out of balance, with working hours taking away from other family
or pleasurable activities. There may be levels of stress you have not experienced as an employee.
Decide what business and where:
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Once you are satisfied you have the characteristics of a successful entrepreneur and that you definitely
want to be in business, then you must decide which business is best for you and where to locate that
business. Selection strategy is covered later on in this session.
Decide whether to operate full-time or moonlight:
There are some interesting advantages and some pitfalls in operating as a moonlight business. (That is, a
business you start in your off hours while still working at your current job.) More often than not, the
advantages of starting as a moonlighter outweigh the risks:




You avoid burning your bridges of earnings including retirement, health and fringe benefits and
vacations.
Your full-time job won't suffer if you maintain certain conflict of interest disciplines, including
compartmentalizing your job and business into completely separate worlds.
You can avoid conflict of interest with your job by choosing a business that is appropriate for
moonlighting, such as single products, real estate, specialized food, e-commerce, direct marketing
or family-run operations.
There are great advantages for operating a family business. If you are a moonlighter the family can
run the business while you are at work. You have a built-in organizational structure. You can teach
your kids the benefits of being in business.
But there are also some pitfalls to consider in starting a moonlight business:




There is a temptation to spend time at your job working on your moonlight business. That is unfair
to your employer and should not be done under any circumstances. (You may need a family
member or some trusted person to cover emergencies when you are at your job.)
Another problem may be competing with your employer, which is not right. Think of how you
would feel or handle this employee if you were the boss.
Any kind of conflict with your regular work can jeopardize your job and your moonlight business.
Overwork and mental and physical exhaustion can also become a very real problem for moonlight
entrepreneurs
Selection Strategy
Operating the wrong business is the most frequent mistake that start-up entrepreneurs make. Here is a
checklist to help you to evaluate if you are in a potentially successful one or to reassess the business you
are in:





If you have not yet selected a business, take your time and wait for the business that is just right for
you. You will not be penalized for missing opportunities. The selection process takes a lot of
planning and your experience and complete knowledge is vital for your success.
Don't tackle or pursue businesses that may be too challenging. It is better to identify a one-foot
hurdle than try to jump a seven-footer.
Try to identify a business that has long-term economic potential. Follow Wayne Gretzky's advice,
"Go to where the puck is going, not to where it is."
A big mistake can be an error of omission. This means you may fail to see an opportunity that is
right in front of you.
Keep in mind that as a general rule specialists do better than non-specialists. Wouldn't you be more
inclined to take your sick cat to a veterinarian whose practice is limited to cats rather than to a
general practitioner?
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014







Operate a business that will grow in today's and tomorrow's markets. Many small retail stores are
no longer in business because huge stores such as Wal-Mart and Home Depot provide more
choices to the customer and often at a cheaper price.
Follow the advice of Chairman Warren Buffett, of Berkshire-Hathaway Inc. and the most successful
business picker in American history. Mr. Buffett looks for businesses that focus on a "consumer
monopoly" with pricing power and long-term predictable growth prospects. Here are two books
that will give you invaluable insights into how Mr. Buffett selects businesses in which to invest. You
can copycat these basic principles to help select your own business
Businesses to avoid are "commodity" businesses where you must compete entirely on price and in
which you must have the lowest cost to survive. As Mr. Buffett has said, "In a commodity type
business you're only as smart as your dumbest competitor."
Most service businesses have pricing power. Pricing power means that you will not need to have
the lowest price in order to secure business. Your customers will be willing to pay a fair price for a
better product or service.
Should you bet on a business you don't know when you can bet on a business you do know?
If you are manufacturing a product, consider the pros and cons of contracting out production to a
low-cost supplier. In other words, operate a "hollow corporation." A "hollow corporation" is a
company that subcontracts manufacturing and packaging.
If your business is based on marketing an invention or patent, keep these ideas in mind:
o First check to determine if there are any issued patents similar to your idea. You can secure
information from the U.S. Patent office at www.uspto.gov.
o Be cautious about getting involved with firms that ask for up-front fees to market an
invention.
o No matter what you hope for, you will need a product to test, to show and to solicit
feedback
Interview to:
Stan Henslee, C.P.A.
What recommendations do you have for someone just starting out in business?
Well there are a number of things I think that they should do. Number one, they should talk
to other people that are already in the industry and ask them what they feel they need to
know. Learn as much as you can from others who have already started their own business and
been successful and find out what some of their secrets were.
Number two, make sure that you're going to be adequately capitalized so that you have the
necessary funds to get your business started and to support you for a while, while the
business is growing.
Number three, make sure that you have your family's support, both emotionally and
sometimes even financially.
And number four, take stock of your emotional ability to deal with some of the
disappointments that are going to come along in the early stages, because there will be
disappointments. There will be some rough times and you want to make sure you know yourself
well enough so that you can cope with those disappointments and ride them out till it all gets
better.
*
*
*
*
*
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Things to Watch Out For



Impatience
Do not let over confidence short-circuit you from analyzing your business carefully. You must not
fear hearing the negative aspects; it is much better to be aware of them and face them early on.
The lure of high rewards. They will come if you have selected the right business and if you
understand every aspect of the business before you open its doors.
Suggestions For People In Transition
More people than ever are victims, or are about to be victims, of downsizing: also known as "reduction in
force", "made redundant", or "your job just went overseas". Scary questions begin to arise: Where do I go
from here? How am I going to make my mortgage payment?
For a laid-off worker who doesn't have bright prospects for replacing his or her job, there is a possibility not
to be overlooked - Why not go into business for yourself? For those still in jobs but fearful of losing them
(the signs are usually evident), there is the possibility of starting a moonlight business now, while still
working.
Required Activities
It is worth repeating: The most common mistake — and the most costly one — is not selecting the right
business initially. This is the time for soul-searching for operating entrepreneurs.
IF YOU HAVE NOT YET DECIDED ON A BUSINESS, DO THIS:
On the top of a blank sheet of paper, write an activity you like to perform (make this the heading). Do a
separate page for each activity or interest you have.
On those same sheets list as many businesses you can think of that are related to that activity.
On the same sheets, list all the products or services you can think of that are related to that activity. Use
your imagination and think of every possible product or service you could perform.
Make a list of businesses that do better in bad times (one may be appropriate for you). Some examples
might be pawnshops, auto repairs and fabric stores.
EXAMPLE
Let's assume you end up with three potential businesses: towing service, used car sales and auto repairs.
You can now make a comparative evaluation using the following checklist (or better still your own checklist)
with a 1-10 scoring system. This kind of analysis can help you gain objectivity in selecting your business.
Towing
Service
Used Car
Sales
Auto
Repair
Can I do what I love to do?
6
3
10
Will I fill an expanding need?
8
5
10
Can I specialize?
7
8
10
Can I learn it and test it first?
9
8
9
Objective
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
This kind of analysis can help you gain objectivity in selecting your business.
How to Evaluate the Business
Here are some questions to help clarify your thoughts:

Is it something I will enjoy doing? As Harvey McKay has said, "Find something you love to do and
you'll never have to work a day in your life."
Also, if you're doing something you love, you're much more likely to stick with it through thick and
thin times.
My favorite activities are ________________________________________________________
I like to serve people by ___________________________________________________________







Will it serve an expanding need for which there is no close substitute?
Can I be so good at a specialized, targeted need that customers will think there is no close
substitute? For example, in California, nobody comes close to See's Candies.
Can I handle the capital requirements? In Session 8, you will learn a simple cash flow control
method to forecast your future cash needs.
Can I learn the business by working for someone else first? Our favorite example: if you're planning
to open a convenience store, for heaven's sake go to work for a national chain first!
Could I operate as a hollow corporation, without a factory and with a minimum number of
employees? For example, if you have in mind marketing a line of furniture, you might consider
outsourcing to a manufacturing vendor in China. Cost savings is often the prime objective, but you
also free up your time and capital. The major risk is the performance of the vendor and your
success in developing good relationships that provide mutual benefits.
Is this a product or service that I can test first? Your concept of a successful product or service may
not be in harmony with the reality of the market place. On a small scale, prove it out first. As
Wolfgang Puck states: "I learned more from the one restaurant that didn't work than from all the
ones that were successes."
Should I consider a partner who has complementary skills or who could help finance the business?
Interview to:
Rod Banks, Executive Vice President, Small Business Market, Bank of America
How important is it for a new entrepreneur to have a written business plan in hand
before seeking out financing sources and why?
Well, a great question. Having a business plan is actually more important than the loan
application because before you make an application for a loan you really need to have that
business plan. The business plan needs to be your vision as to why you want to start this
business and where you're going to go with it.
You typically start with an executive summary because at some levels not everybody is going
to read every single page. You need to have the executive summary that talks about why
you're going to start this business, what you're going to do with it and then you need to
describe your product. You need to describe the competitive environment you're in. Talk
about competition. Talk about cash flow, because in your business there is probably going to
be seasonality. You need to talk about any financial headwinds that might come about, what
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
might the difficulties be and how would you as an entrepreneur be able to weather those
headwinds.
* * * * *
Use a "For" and "Against" List to Evaluate your Business
Make a "for" and "against" list regarding characteristics of the business. On a blank piece of paper, draw a
vertical line down the middle of the page and list on one side all the "for's" and on the other all the
"against's." Sometimes this will help clarify your thinking. Or, you can use the template provided at the end
of this session. We have provided a "for" and "against" template for you to use at the end of this session.
Write down the names of at least five successful businesses in your chosen field. Analyze what these five
businesses have in common and make a list of reasons for their success.
Talk to several people in your intended business. Don't be afraid of the negative aspects of your intended
business. Instead, seek out the pitfalls -- better now than after you open your doors. Take notes if possible.
Write down the information as soon as you can.
Analyze the competition that are not doing well and write down the reasons.
Get Completely Qualified
Before you proceed further in your business, get completely qualified:




The best way to become qualified is to go to work for someone in the same business.
Attend all classes you can on the skills you need: for example, accounting, computing and selling.
Read all the "How To" books you can.
Don't be afraid to ask questions or seek help from the most successful people in your intended
business.
Decision Time
To get the most benefit out of the remaining sessions of this course, you should either:
a. have decided on a business to start, or,
b. be operating the business that you think is best for you!
Top Ten Do's and Don'ts
TOP TEN DO'S
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Live frugally and begin saving up money for operating your business.
Learn your business by working for someone else in the same business first.
Consider the benefits of starting a moonlight business.
Consider the advantages of operating a family business.
Objectively measure your skills and training against potential competition.
Consider subcontracting to low cost suppliers if you're manufacturing a product.
Test market your product or service before starting or expanding.
Make "for" and "against" list describing the business you are in or considering.
Talk to lots of people for advice.
Make a comparative analysis of all opportunities you are considering.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
TOP TEN DON'TS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Quit your job before you have completed start-up plans.
Consider operating a business in a field you do not enjoy.
Risk all the family assets. Limit your liabilities to a predetermined amount.
Compete with your employer in a moonlight business.
Be in a hurry to select a business. There is no penalty for missed opportunities.
Select a business that is too high a risk or hurdle. Go for the 2-foot hurdle.
Operate a business in which you must have the lowest price to succeed.
Neglect to learn the negative aspects of an intended business.
Permit entrepreneurial self-confidence to outweigh careful diligence.
Allow the promise of a conceptual high reward deter reality testing first.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
SESSION TWO - Business Plan
SECTION 1: THE BUSINESS PROFILE
Description of My Business
(Session 1): Describe your product or service.
Targeted Market and Customers
(Session 1): Describe your customer profile and why customers want or need your product or
service.
Growth Trends In This Business
(Session 1): Is the market for your product or service growing or shrinking?
Pricing Power
(Session 1): Explain the unique qualities or circumstances concerning your product or service
that will enable you to maintain profitable pricing.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
What Is a Business Plan?
The primary value of your business plan will be to create a written outline that evaluates all aspects of the
economic viability of your business venture including a description and analysis of your business prospects.
We believe that preparing and maintaining a business plan is important for any business regardless of its
size or nature. But it will not ensure your success. If you maintain a correct assessment of the changing
economics of your business, your plan will provide a useful roadmap as well as a financing tool. But if you
have miscalculated the potential, then your business plan could become a roadmap leading to failure.
Since the My Own Business, Inc. course is broken down into fifteen of the most important topics to
consider in starting or operating a business, your business plan can easily be organized into this same
format. Included in this session, and in each of the following sessions, there is a one-page business plan
template, which you can fill in and print. (Session 2 contains templates for both Sessions 1 and 2.) When
you put these all together, you will have completed your personalized, overall plan.
We suggest that you fill in each section of the business plan, found at the end of each session, as you
proceed through the course.
Search engines, libraries and bookstores provide sources that sell ready-made plans for specific businesses.
But it is our recommendation that you be sole author of your plan. Write out the plan yourself, in your own
words.
Each of the Business Plan Sections can be downloaded from our Web site and provide you with a single,
attractively presented document.
Keep in mind that creating a business plan is an essential step for any prudent entrepreneur to take,
regardless of the size of the business. This step is too often skipped, but we have made it easy for you by
providing this ready format to build your plan as you progress through this course.
Be aware now that most start-up entrepreneurs are reluctant to write down their business plan. It is,
therefore, strongly recommended that you complete each segment of the plan as you progress through this
course. We make it easy for you by providing sample plans for both product and service businesses and also
an attractive blank form that you can download onto MS Word and customize yourself.
Do not expect that all of your plan's initial assumptions will be correct. Instead, look at your business plan
as an ongoing assessment that you will frequently review and change to conform to actual operating
experiences. For example, your cash flow projection should be updated frequently to ensure ongoing
liquidity (not running out of cash).
Your business plan will become your roadmap to chart the course of your business. But at the outset you
cannot predict all of changing conditions that will surface. So after you have opened for business, it is
important that you periodically review and update you plan.
Interview to:
Dr. Dan Nathanson, Anderson Graduate School of Business, UCLA
What is the most important advice you give to your business school students?
The advice I give most of my graduate business students as well as entrepreneurs with whom
I work, is don't write the plan in your basement. Get feedback from the market. And the
first way you do that is take your idea and talk to your friends and family. See if they go wow
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
or not. If they don't go wow, you know you have a problem. But when you do talk to your
friends and family, say look please give me some good feedback on my idea. Ok, because if you
don't, I'm liable to spend a fortune and a lot of time chasing something I shouldn't be
chasing.
Once you've got a lot of feedback on your basic idea, the next step is to go and test the
market it's self. Now that may take creating a prototype or a sample of what you're doing.
It's very hard to get market feedback without a particular product or service that you're
going to be selling. The people who you are getting the market feedback from, your target
market the people you're going to be selling to have to know specifically what that product is.
They have to really understand the product or service.
Now why do I say to do all that before you start writing a business plan? You need to know
the market well, you need to know the products well, you need to refine it and you need to
get it. So really what I am saying is planning before the plan. If you start with an idea and
just go directly to a plan, to the strategic plan the business plan, you're going to end up
writing it and re-writing it. As it is, it is an iterative process. You go back and forth keeping
on changing the plan until you're ready to present it. Then later on you're changing the plan.
So it's not a static kind of thing the business plan.
So the first thing I say is do your homework to my students and to my entrepreneurs.
Understand, "will the customers buy?" The biggest problem in small businesses and why they
fail, and they fail very often, is because there really is no demand for the product. And the
entrepreneur has failed to explore that. If just because they like the idea that everybody
will like the idea and that could be farther from the truth. Writing a plan its self is not the
hardest part, the planning, the understanding is the hardest part.
* * * * *
Why Prepare A Business Plan?
Your business plan is going to be useful in a number of ways




First and foremost, it will define and focus your objective using appropriate information and
analysis.
You can use it as a selling tool in dealing with important relationships including your lenders,
investors and banks.
Your business plan can uncover omissions and/or weaknesses in your planning process.
You can use the plan to solicit opinions and advice from people, including those in your intended
field of business, who will freely give you invaluable advice. Too often, entrepreneurs forge ahead
("My Way!") without the benefit of input from experts who could save them from potentially
disastrous mistakes. "My Way" is a great song, but in practice can result in unnecessary hardships.
To help get started in lining up appointments, you can fill in and use the following template. We
have also provided a larger blank template for you to use at the end of this session. People to see
include your investors, family members, banker, lawyer, attorney, business mentors, trusted
business friends, potential customers, competitors (distant ones), potential landlords, and the U.S.
Small Business Administration.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
What to Avoid in Your Business Plan
Place some reasonable limits on long-term, future projections. (Long-term means over one year.) Better to
stick with short-term objectives and modify the plan as your business progresses. Too often, long-range
planning becomes meaningless because the reality of your business can be different from your initial
concept.
Avoid optimism. In fact, to offset optimism, be extremely conservative in predicting capital requirements,
timelines, sales and profits. Few business plans correctly anticipate how much money and time will be
required.
Avoid language or explanations that are difficult to understand. Do not ignore spelling out what your
strategies will be in the event of business adversities.
Don't depend entirely on the uniqueness of your business or even a patented invention. Success comes to
those who start businesses with great economics and not necessarily great inventions.
Interview to:
Maureen Costello, Wholesale Distributor
If you had to do it over again, what things would you do differently?
Well, if I had it to do over again I would completely understand what the nature is of every
function of everybody who works in the business. Not that I need to be able to do every
function but I need to understand what they need to know to be able to do the function and
then make sure that there are always at least two people who can also do that function. That
way there is back up. If we lose someone or someone's sick or on vacation or for some reason
they retire or leave the company, at least I know I've got enough back up and everything will
get done without me getting dragged into it. We can then look to bringing in the next person
to be the back up. So I would say focusing more on cross training.
* * * * *
Business Plan Format
The Business Plan format is a systematic assessment of all the factors critical to your business purpose and
goals. Here are some suggested topics you can tailor into your plan:
A Vision Statement: This will be a concise outline of your business purpose and goals.
The People: By far, the most important ingredient for your success will be yourself. Focus on how your
prior experiences will be applicable to your new business. Prepare a résumé of yourself and one for each
person who will be involved with you in starting the business. Be factual and avoid hype. This part of your
Business Plan will be read very carefully by those with whom you will be having relationships, including
lenders, investors and vendors. Templates for preparing résumés are available in your library, Kinko's,
bookstores and the Internet under " résumés."
However, you cannot be someone who you are not. If you lack the ability to perform a key function, include
this in your business plan. For example, if you lack the ability to train staff, include an explanation how you
will compensate for this deficiency. You could add a partner to your plan (discussed in Section 4) or plan to
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
hire key people who will provide skills you don't have. Include biographies of all your intended
management.
Your Business Profile: Define and describe your intended business and exactly how you plan to go about it.
Try to stay focused on the specialized market you intend to serve. As a rule, specialists do better than nonspecialists.
Economic Assessment: Provide a complete assessment of the economic environment in which your
business will become a part. Explain how your business will be appropriate for the regulatory agencies and
demographics with which you will be dealing. If appropriate, provide demographic studies and traffic flow
data normally available from local planning departments.
Cash Flow Assessment: Include a one-year cash flow that will incorporate your capital requirements
(covered in Session 11). Include your assessment of what could go wrong and how you would plan to
handle problems.
Marketing Plan and Expansion Plans: Your expansion plan should describe how you plan to test markets
and products before rolling out. Refer to helpful government Web sites such as the Small Business
Administration. See "Resources" on the home page of this Web site.
Damage Control Plan: All businesses will experience episodes of distress. Survival will depend on how well
you are prepared to cope with them. Your damage control plan should anticipate potential threats to your
business and how you plan to overcome them. Here are three examples:



Plan for 35% loss of sales: During economic downturns, your survival will depend on your ability to
maintain liquidity for a period of at least 12 months. Can your Damage Control cash flow plan show
how to avoid running out of cash? Session 11 will explain cash flow control.
Plan for a catastrophic incident: Businesses can be overturned by unforeseen disasters which can
be avoided by maintaining appropriate insurance. You will need the assistance of a qualified
business insurance agent.
Plan for product obsolescence: If your business is in a rapidly changing technology area such as
Netflix's home delivered DVDs, you will need to plan now to keep a step ahead of technical changes
or advancements.
In addition, a very popular software is Palo Alto's Business Plan Pro (U.P. $99), a user-friendly business
plan software with very wide range of sample plans already included.
For a more advanced template, especially useful if you are looking for partners or investors, we
recommend the Ultimate Business Plan Template (U.P. $97) from Growthink.
Interview to:
William H. Crookston, Ph.D., Professor of Clinical Entrepreneurship, University of
Southern California
We find that many entrepreneurs find it difficult to write out a business plan. Could you
cite why this important step should not be overlooked?
My experience has been both with students and with individual executives who are trying to
start or plan or grow a business and are attempting to do it without a plan. Those particular
projects don't get the help that good planning could give and it's my belief over many years
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
of experience as well as teaching that it's a necessity to have a written business plan. It
helps you figure out where you're going. It helps get people to support you. It's an important
sales document. It's a very important financial document and really is your first child.
If you can't write that business plan you can imagine what a mess your second child, the
actual business, could be. So if there is anything here that you should tell the world, it is:
write a business plan. It doesn't have to be elaborate. There are many templates out there.
We prefer to make sure the entrepreneur does it themselves. You should revise it anytime
you think it needs revision but without it you’re just stumbling around in the dark.
* * * * *
Interview to:
Eddy Chavey, Independent Web Designer
What would you recommend to those starting out a business that still have a day job?
When I was going to start a business I knew that I needed some more equipment. And I knew
I needed a financial cushion because you don't work well if you are under a lot of financial
pressure. So I stayed at my job for six additional months, just knowing I was going to take
the money from that six months and create this financial cushion: to buy a computer and the
stuff I needed for a successful business. And it turned out to be the best six months I ever
had at that job--knowing I was going to leave it. Keeping an eye on where my money was going
and just kind of seeing this finishing line. I would totally recommend tightening up on your
budget and don't quit your day job.
* * * * *
Eight Steps To A Great Business Plan
Start-up entrepreneurs often have difficulty writing out business plans. This discipline is going to help you in
many ways so don't skip this planning tool! To make it easier, here are six steps that will produce a
worthwhile plan:
1.
2.
3.
4.
5.
Write out your basic business concept.
Gather all the data you can on the feasibility and the specifics of your business concept.
Focus and refine your concept based on the data you have compiled.
Outline the specifics of your business. Using a "what, where, why, how" approach might be useful.
Put your plan into a compelling form so that it will not only give you insights and focus but, at the
same time, will become a valuable tool in dealing with business relationships that will be very
important to you.
6. Review the sample plans we furnish and download the blank format to a MS Word document. Fill
this in as you progress through the course
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Six Steps To A Great Business Plan
Start-up entrepreneurs often have difficulty writing out business plans. This discipline is going to help you in
many ways so don't skip this planning tool! To make it easier, here are six steps that will produce a
worthwhile plan:
1.
2.
3.
4.
5.
Write out your basic business concept.
Gather all the data you can on the feasibility and the specifics of your business concept.
Focus and refine your concept based on the data you have compiled.
Outline the specifics of your business. Using a "what, where, why, how" approach might be useful.
Put your plan into a compelling form so that it will not only give you insights and focus but, at the
same time, will become a valuable tool in dealing with business relationships that will be very
important to you.
6. Review the sample plans we furnish and download the blank format to a MS Word document. Fill
this in as you progress though the course
Does Your Plan Include the Following Necessary Factors








A Sound Business Concept: The single most common mistake made by entrepreneurs is not
selecting the right business initially. The best way to learn about your prospective business is to
work for someone else in that business before beginning your own. There can be a huge gap
between your concept of a fine business and reality.
Understanding of Your Market: A good way to test your understanding is to test market your
product or service before your start. You think you have a great kite that will capture the
imagination of kite fliers throughout the world? Then craft some of them and try selling them first.
A Healthy, Growing and Stable Industry: Remember that some of the great inventions of all time,
like airplanes and cars, did not result in economic benefit for many of those who tried to exploit
these great advances. For example, the cumulative earnings of all airlines since Wilber Wright flew
that first plane are less than zero. (Airline losses have been greater than their profits.) Success
comes to those who find businesses with great economics and not necessarily great inventions or
advances to mankind.
Capable Management: Look for people you like and admire, who have good ethical values, have
complementary skills and are smarter than you. Plan to hire people who have the skills that you
lack. Define your unique ability and seek out others who turn your weaknesses into strengths.
Able Financial Control: You will learn later the importance of becoming qualified in accounting,
computer software and cash flow management. Most entrepreneurs do not come from accounting
backgrounds and must go back to school to learn these skills. Would you bet your savings in a game
where you don't know how to keep score? People mistakenly do it in business all the time.
A Consistent Business Focus: As a rule, people who specialize in a product or service will do better
than people who do not specialize. Focus your efforts on something that you can do so well that
you will not be competing solely on the basis of price.
A Mindset to Anticipate Change: Don't commit yourself too early. Your first plan should be written
in pencil, not in ink. Keep a fluid mindset and be aggressive in making revisions as warranted by
changing circumstances and expanding knowledge.
Include Plans for Conducting Business Online: According to the January 2005 Trend/Forecasting
Report of The Dilenschneider Group, in the U.S. alone, the 2004 holiday season online shopping
jumped by more than 25% from 2003. (In 2005 it jumped another 25%!) Consumer and business-tobusiness online sales are set to expand exponentially in the coming decade, and small retailers can
reach an ever-increasing pool of customers. Be sure to see the how-to details in the following
Session 10, E-commerce.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Ezequiel Padilla
Jugos Tropacales Mexican Food
My name is Ezequiel Padilla. I'm the owner of Jugos Tropicales Fast Food Mexican Restaurant
in Compton, California. I started my business ten years ago. I had many years of experience
and had my savings. I thought I knew everything. But I didn't have the most important thing:
a business plan. So, there I was working on a daily basis with nowhere to go until I learned
from the My Own Business seminar all the basic tools I needed to reach success. I would like
to give you some important tips before you start.






Create your business plan. There are some computer programs that will help you do it.
It is very important to find a good location. Make sure you have plenty of parking.
Make sure you read and agree to all the terms and conditions of the lease contract
before you sign it.
Learn the basics of accounting and know your product.
When you are ready to open your business, be honest and treat your employees and
customers as you would like to be treated. Remember that a satisfied customer will
help increase your clientele.
Always be ready for the unexpected.
Overlooking these details might cost you a lot of money, and you might go out of business. We
don't want that.
One last thing, when your business is doing well, consider buying the property if it is possible.
Real estate is always a good investment. If you follow these simple steps, I'm sure you will be
a successful businessperson like me. Good luck in your business venture.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
SESSION THREE
Computer & Communication Tools
Types of Communication
External communication
Internal communication
Communication is key to any business success. Unless potential clients and customers are aware of your
business, they will not have the information to contact you or to purchase your products. When they are
aware of your business, they must be able to contact it easily.
Two types of communication are essential - external and internal.

External communication reaches out to the customer to make him or her aware of your product or
service and to give the customer a reason to buy. This type of communication includes your
brochures, various forms of advertising, contact letters, telephone calls, Web sites and anything
else that makes the public aware of what you do.
Image is extremely important in external communication! Your logo should represent who you are;
your letterhead should be a selling tool; your telephone message should reflect your
professionalism.

Internal communication is essential to attracting and retaining a talented staff. You must provide
the direction for the company by consistently communicating that message; you must motivate
your staff through various forms of communication, which can include awards, newsletters,
meetings, telephone calls and formal and informal discussions.
Effective communication requires tools and planning. In this session, we will discuss those tools, as well as
planning guidelines, to facilitate this key element of your business, communication. The following
discussion will be grouped into:



Basic communication tools
Computers
The Internet
Basic Communication Tools
Specific tools that can be used for communication include landline telephones, cell phones, smartphones
and fax machines. The lines between the devices are blurring. For example an advanced cell phone (the
smartphone) can contain many of the functions of a computer including Internet, email, faxing, word
processing and more. For this discussion, each device will be presented as a separate entity.
Landline Telephones
There are many types of telephones, and only you can decide which type(s) or combinations of types are
right for you. Even the standard telephone (landline) that is installed in your office has many options. You
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
should start with at least one line that is unique to your business. This line should have the capability to
take messages in case it is not answered personally. Here are some telephone tips:

It is important to treat the telephone as an important business tool. Record a voice mail message
that indicates when you will return the call and then continually check your voice mail to return
calls promptly.

Have a separate line for your business phone and your personal phone. Don't have family members
pick up or use the business phone. Get any required extra telephone lines installed before you
start.

A remote (voice mail) answering system is usually more desirable than using an answering
machine. Voice mail is reliable, reasonable in cost, accessible from anywhere and projects a more
business-like image.

The need for an 800 number is becoming less important because long-distance rates are much
more affordable.

Consider using either a wireless or corded headset for both landline phones and cell phones. It is
clearer, safer and you can move about with free arms.

When leaving phone messages, clearly state your name and phone number at the beginning and
the end of the message.

Be polite in cell phone use! Good business courtesy includes avoiding being interrupted by
telephone calls when in a meeting or during a business lunch.
Cell phones/Mobile Phones
The cell phone, also called a mobile phone, is used for mobile communications over a cellular network of
cell sites. There are numerous plans and carriers. Many carriers have plans tailored for small businesses
including options that bundle popular features and usage patterns, making them very cost effective. Be
sure to ask questions about your specific needs before selecting a carrier and a plan.
When your usage or needs change, do not hesitate to request information on plans that more closely meet
your new set of requirements. Most cell phone companies allow you to return the phone within 15 to 30
days after activation if you are not happy. Use this time to check if the cell phone has acceptable reception
at your home and work place. Basic cell phones are offered free by many carriers for a specific length of
time, usually two years. But be aware there are hefty fees for canceling early.
Greg Washington
Consultant, Marketing for Physicians
I'm Greg Washington, and I'm President and Founder of Patients Unlimited Marketing
Consultants. We are an advertising agency that does marketing and public relations. Our
current business concentration is in the Internet. We have been involved with the
development and advancement of Internet businesses now for about five years.
One of the most important things that I would tell you as aspiring businesspeople is that the
Internet is probably the best thing that could happen to a small business owner and operator.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
The reason is that it levels the playing field. As you present your services and meet your
customers and clients on the Internet, they can't tell a big company from a small company.
So there is a wonderful opportunity there for those of you who are astute enough and
resourceful enough to find the kind of individuals who can create a presentation of what you
do and how you do it on the Internet. Look at the Internet as an opportunity to create an
electronic brochure that will tell your story in a very quick way better than anything you
could possibly do.
One final point that I think is very important is not to overlook the opportunity to have a
Web site or an address where information on your business can be found. Not to have vital
information on the Internet is a serious handicap because you're competing with other
businesses--very small businesses that look very big on the Internet--and if you don't have
that little special place to get information, it suggests that maybe you really do not have a
successful business.
Smartphones
Growth in demand for advanced mobile devices boasting powerful memory, larger screens and open
operating systems has outpaced the rest of the mobile phone market for several years. A smartphone is a
cell phone offering advanced capabilities with computer-like functionality. A smartphone can incorporate
advanced features like e-mail, Internet and e-book reader capabilities and include a full keyboard or an
external keyboard. In other words, a smartphone is a miniature computer that has phone capability.
Smartphones are also capable of text messaging and may include a camera and video recorder. Some
models are capable of "Push to Talk" which is a feature similar to a walkie-talkie. Outside your office a
smartphone can become a valuable tool for e-mail, web browsing and the ability to review and edit
documents. Several models have global positioning system (GPS) capability and many other available
applications. The most popular are the iPhone, Blackberry, Droid and Google's Nexus One. Each has
different strengths you will need to factor into your business needs.
Video and Web Conferencing
Video conferencing transmits and receives images and voice in real-time. Web conferencing adds another
dimension – it allows you to share documents and applications.
Telepresence takes video and web conferencing to new levels. A telepresence conference room includes
ultra-high-definition video cameras, large screens displaying life-size images, and spatially discrete audio to
create an "in person" experience. Facial expressions for crucial business discussions and negotiations can
be discerned across the "virtual table." Telepresence solutions can be deployed to support your business’
need from one-on-one conferencing in private offices to stadium seating for larger meetings.
All these solutions allow you to communicate as if you were face-to-face with customers anywhere in the
world. Time and money that would be spent on traveling can be used to conduct meetings. You can share
documents, make presentations and conduct meetings on short notice. For example, without leaving your
office you can collaborate with employees who work from home or from other company locations.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Social networking sites
A social network is a social structure made of individuals or organizations that are tied together by common
interests, often like a community. Internet-based social networking occurs through a variety of websites
that allow users to share content and interact around similar interests. It has expanded to include a
company's customers, celebrity's fans and a politician's constituents. This has created a great opportunity
for businesses to generate interaction with present and potential customers through Web-based sites
established for that purpose. To be successful requires a steady effort and participation over time. With an
ongoing commitment of effort you can create a niche market through sites such as MySpace, Facebook and
Twitter. A note of caution on Internet social networking: once you put something out there it's hard to take
it back, so you have to be careful.
Online chat tools
Wikipedia describes chat tools best: "Online chat can refer to any kind of communication over the Internet,
but is primarily meant to refer to direct one-on-one chat or text-based group chat using tools such as
instant messengers." It is commonly used in place of email when there is a need to communicate live. Chat
tools can be used both for internal and external communication and can be placed on a website so
customers can talk to a customer service person in real-time. Utilizing chat tools usually requires a free
software download. There are many options available including AOL, GoogleTalk and Yahoo IM. Features
can vary from simple one-on-one messaging to highly developed tools for group chat, file transfers, video
and document collaboration such as WebExConnect.
Fax Machines
The decision must be made as to whether to buy a stand alone fax machine or an "all-in-one" model. All-inones function as a printer, scanner, copier and fax. (Not all models have the fax or scanner capability). If
you plan on sending and receiving lots of faxes you might consider the stand alone. For less frequent use
the all-in-one can cost less. They are also compact and more energy efficient. Consideration should be
given to your budget and your space constraints. Generally, the simpler the machine, the less problems you
will have with it. If your business will rely heavily on faxing, it is important to get as much memory as
possible to speed up the printing of documents.
Some phone vendors can provide you with a fax number that works with your e-mail system. Receiving a
fax works just like it does when the fax is being received by another machine but you receive it as an
attachment to an e-mail. This can be very handy for those who travel on a frequent basis and are not
always near a fax machine. Here are tips:


Use a cover page that is appropriate for your company. Remember, this is an external
communication that reflects your business and your image.
Use a separate dedicated phone line for your fax machine.
Computers
A computer is so affordable that it should be included as a key tool in your business. Computers can be
purchased for a wide range of prices. For basic word processing, e-mail, accounting, and spreadsheet work
you will not require a top-of-the-line computer. While what you buy today may soon become obsolete, this
does not mean that the computer you purchase will not meet your business requirements for a much
longer period of time. The following discussion will focus on the growing number of options that are
available:
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014





Desktop
Laptop
Notebook (or netbook)
Tablet
Handheld
Desktops
This is the most common type of computer: one that is set up to operate in your office. The computer
system should include:






A basic processing unit: either a PC (Personal Computer) or a Macintosh (Apple). PC's are in more
common usage and are lower in cost. Most businesses work in a PC format. However, for many
users and applications including graphic arts, the Mac enjoys very steadfast supporters.
A flat-panel monitor.
Internet connectivity, a CD/DVD drive and USB ports.
A printer. Laser printers cost more up front but are less expensive over the long run when taking
printing costs into account. If you have a small space to work with, consider an all-in-one printer.
Some type of backup storage should also be considered, such as a USB Flash Drive, External Hard
Drive or a writable CD or DVD.
An antivirus program is essential. You can purchase one or use a free program; however the free
programs will not afford you as much security as the paid versions
Laptops
A laptop computer offers portability with many of the features offered by a desktop which make it ideal for
meetings or if you travel frequently. Drawbacks for laptops include: they are higher in price than desktops,
have smaller keyboards and monitors and are subject to theft. Traditional and wireless printers, keyboards
and even the traditional mouse are options available with laptops. If you travel and need computing
capability, it is worth the extra expense.
Notebooks and Netbooks
Since their recent appearance, netbooks have grown in size and features. At the same time, notebooks
have become smaller and lighter. The result is that for practical purposes we are going to use the two
words interchangeably since there is no longer a significant distinction between them. They both can be
described as rapidly evolving categories of small, light and inexpensive laptop computers suited for general
computing and accessing web-based applications. They are gaining in popularity especially with students,
bloggers, and even some businesses.
While generally less expensive than laptops, manufactures are starting to beef up notebooks, which is
increasing their cost. A caution: their compact size makes them attractive for traveling but if you are
considering one to save on the cost of a laptop, you probably will be getting less memory and many do not
have full applications or compatibility with your other business applications.
Things to keep in mind if getting a desktop, laptop or netbook:



Get as much capability as you can afford. Laptops are not typically as easy to upgrade as desktop
computers because of the nature of their construction.
Be sure you get all the features you need when you purchase.
If you do not normally have access to an electrical outlet, get a laptop or netbook with extended
battery life.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014

Keep all documentation, software, and accessories that come with your device.
Tablet Computers
A tablet computer is equipped with a touch screen or stylus rather than a keyboard to operate the
computer. The advantages include using when it is not convenient to use a keyboard and mouse, recording
diagrams and symbols, and easier navigation than a keyboard and mouse or touch pad. Disadvantages
include higher cost, slower input speed and risk of damage to the tablet screen.
Handheld Devices
Handheld computers, or Personal Digital Assistants, are still popular despite the growing sales of
smartphones. There are basically two versions of these units: 1) those using the Palm Pilot operating
system and 2) those using the Microsoft Windows Mobile operating system. These units allow
synchronizing your key organizational elements with your computer. Functions of a PDA and smartphone
have become almost indistinguishable; however PDAs generally perform faster and can synchronize data to
your PC. The capabilities of PDAs are not built around a cell phone whereas a smartphone is a cell phone
with other capabilities built into the phone. More and more features are being built into these units,
integrating them as a powerful tool in the business world.
Software
The software you purchase is key to making your computer productive. The operating system, whether it is
a PC or a Macintosh, should be preloaded onto the system. Many software packages are often bundled into
the system at the time of purchase and some in the form of trial software. At the bare minimum, you
should have the capability to do word processing, spreadsheets and presentations
Additionally, you should consider financial and accounting software that is appropriate for your business.
Keep in mind that many accounting/bookkeeping software packages are not double-entry systems and care
must be taken in making the entries correctly. Keep in mind that home and professional versions of
accounting software may not be compatible or may not be appropriate for your operating system. Be sure
to read specifications before you purchase.
Ken Blake
C.P.A.
Do you recommend business owners use accounting software and why?
Most business owners will realize some definite advantages if they get a software program to
handle their accounting. The main purpose with accounting software is that it allows the easy
production of reports versus having to sit down with manual records and trying to put
together your reports. So there is not a lot of time saving when you use the accounting
programs except when you get to the report level and that's where the value comes in. As far
as the type of program, what I always recommend is that people talk to their accountant
before they jump into a program.
It's so easy to buy something off the shelf and then realize after getting back to the place
of business that it might not be for the company. If you have an accountant that's familiar
with your business, there is a lot of software out there that is especially designed for
certain industries. So if your accountant deals in your industry, he can put you in touch with
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
the software that would be specific for your company. This will allow you to bypass a lot of
the set-up time and go right into some relevant accounting helped by the accountant who is
familiar with the software. Even if your accountant is not industry specific, often they have
expertise in some of the more popular packages like QuickBooks or Peachtree and if they are
comfortable with one or the other packages you would tend to want to go with them so they
can look at your data and be able to work with you on a more one on one basis.
The Internet
The Internet has become a very important marketing and communication tool. For example, a new
marketing tool that is a huge benefit to local businesses is the "local" link on search engines. To
demonstrate the power of this tool, please go to a search engine such as Google or Yahoo and enter
"Flower Shops". Then, click on the "local" link at the top of the page and enter your zip code. Presto: local
flower shops will be displayed on a map along with links to their Web sites. Savvy businesses today are
taking advantage of this marketing tool. It can be used at a basic level for e-mail communication and for
research and it can be used at a more comprehensive level as a channel for selling your products and
services.
To get access to the Internet, you need a browser. This is a piece of free software. Microsoft Internet
Explorer and Mozilla Firefox are the two leading browsers.
Now that you have a browser, you need to get access to the Internet. This is done through an Internet
Service Provider (ISP). These providers range in the features that they provide. As with other forms of
communication, there are many plans and prices from which to choose.
How you use the Internet in your business is up to you. Perhaps you are not ready to sell your products on
the Internet, but you are interested in developing a Web site that lets people know what you do. At the
other extreme, you may want to use the Internet as your main sales channel. Just remember, the basics are
still on the ground - you need products and services that people need; you need to attract people to your
Internet site so that they have the option of purchasing these products and services from you; you need to
convince them to buy; you need a place to store your products; and you need a way to get them to the
purchaser.
Technology Planning
Before you start, plan for the technology that you will need. Get those extra telephone lines; purchase and
learn how to use the computer; decide how you will and will not use the Internet.
Keep in mind that the monitoring of employees' use of the Internet while at work is not a violation of their
rights to privacy. Your policy should be in writing and signed by your employees.
Remember, appropriate use of technology can make your business look established and successful from
the very beginning!
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
SESSION FOUR
Business Organization
Should You Have a Partner?
It is best to make your decision concerning whether to have a partner by preparing a "for" and "against"
list. The most common reasons for joining with another person to start the business:





There is safety in numbers. In other words, you have two heads instead of one to discuss and make
decisions. In the words of Solomon: "Two can accomplish more than twice as much as one. If one
fails, the other pulls him up; but if a man falls when he is alone, he's in trouble. And one standing
alone can be attacked and defeated, but two can stand back-to-back and conquer. Three is even
better, for a triple-braided cord is not easily broken."
You will not need to be at the business at all times. You will have someone else who will be there to
share the load and permit you to take a vacation and have sick time.
You will also have a highly motivated co-worker, not just someone who is earning a paycheck.
Partners can also be advantageous when they have complementary skills.
It may be necessary to have a partner to contribute capital and share the risk when things do not
proceed as planned.
Some of the arguments against having a partner:





You will have to share the rewards if the business is successful.
You will lose total control over the business, particularly if you and your partner have difficulty in
making decisions.
You will have to share the recognition that will come if the business is successful.
A partner can be a disaster if his or her judgment is not good.
You run the risk of a falling out and perhaps the necessity of one partner buying the other out if
dissention arises.
Some of the things to consider in deciding whether a particular person will make a good partner are
whether you have similar work habits, similar objectives concerning how to run the business and whether
your strong points are similar or complementary. For example, different capabilities permit you to spread
the workload and provide better coverage for problems.
Different capabilities may permit you to give each partner a veto over important decisions in his or her area
of expertise to help maintain stability and eliminate conflicts. Finally, you may want to consider whether
you should have a buy-sell agreement in the event of a disagreement, and how the purchaser will pay for
the portion of the business he or she is buying (and whether you should fund the buy-sell agreement with
insurance in the event of the death of a partner).
John Powers
Attorney-at-Law
Do you have any recommendations on how one should go about evaluating the pros and cons of
taking on a partner?
Partnership is a very popular form of operating entity. And I think what is most important is
to think in terms of a business marriage. You're going to be living and working with this
person on a daily basis, so you want to have somebody you're compatible with and someone
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
who complements and perhaps strengthens any weaknesses you have in order to better fulfill
the goals of the business. If you have certain strengths but know that you have certain other
areas you're not good at, and you have a proposed partner that maybe strong in those areas,
that would be something to consider if you're able to get along and work out the other issues.
I also recommend that with regard to partnerships you investigate whether there are limited
liability protections available in your state and also give some thought to what would happen if
in fact the partnership fails. Keep in mind that it is just like a business divorce. And you want
to have given some thought to that; perhaps have an agreement in writing as to what would
happen in that circumstance before you get started.
What Type of Business Organization is Best for You?
Whether you are going it alone or with another person, it is best to consult a lawyer to determine which
form of business organization will be best for you. Your choices and the benefits of each form are
essentially as follows:






Sole Proprietorship: A sole proprietorship is one person alone. He or she will have unlimited
liability for all debts of the business, and the income or loss from the business will be reported on
his or her personal income tax return along with all other income and expense he or she normally
reports (although it will be on a separate schedule). Although proprietorship avoids the expense of
forming a partnership or corporation, many start businesses this way because they are unfamiliar
with the other forms of organizations.
General Partnership: In a general partnership, each of the two or more partners will have unlimited
liability for the debts of the business. The income and expense is reported on a separate return for
tax purposes, but each partner then reports his or her pro-rata share of the profit or loss from the
business as one line on his personal tax return.
Limited Partnership: With a limited partnership, each of the general partners has unlimited liability
for the debts of the partnership, but the limited partner's exposure to the debts of the partnership
is limited to the contribution each has made to the partnership. With certain minor exceptions, the
reporting for tax purposes is the same as for a general partnership
Corporation: A corporation provides limited liability for the investors. Except as indicated below,
none of the shareholders in a corporation is obligated for the debts of the corporation; creditors
can look only to the corporation's assets for payment. The corporation files its own tax return and
pays taxes on its income. If the corporation distributes some of its earnings in the form of
dividends, it does not deduct the dividend in computing its taxes, but the shareholder recipients
must pay taxes on those dividends even though the corporation has paid taxes on its earnings. A
corporation has some tax benefits such as deductibility of health insurance premiums.
"S" Corporation: A corporation that has made an election to be an "S" Corporation for federal
income tax purposes is treated as a partnership for tax purposes, although it is treated as a regular
corporation for other purposes.
Limited Liability: A limited liability company provides limited liability for all of its members, but
typically can be treated as a partnership for federal income tax purposes. State laws may differ as
to whether it is treated as a partnership or a corporation for state income tax purposes. It can be
managed by all of the members or can have centralized management in one or more of the
members
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Stan Henslee
C.P.A.
What are some of the most common mistakes you see with people going into small business?
Basically I think there are three. The first one is that they're going into the business undercapitalized. They put everything they've got into the business at the very start and they
don't have anything to fall back on. If they just had some high limit credit cards that were
fairly clean to have something to fall back on to pay the bills when the business takes off a
little slower than expected.
The second problem I see is co-mingling funds: paying personal expenses out of the business
bank account and paying the business bills out of the personal bank account. You have to keep
them separate and you have to treat the business as a separate entity and let it stand on its
own.
The third biggest mistake I see, and this cripples most young businesses, is that owners take
too much money out of the business in the early stages; where they leave the business under
capitalized and no longer have the money needed to replace the product on the shelf or to
expand into new areas. That is the kiss of death to a young business.
How Can Your Professionals Help You?
Your Attorney
In addition to the above items, your attorney should draw your partnership agreement or form your
corporation, including the issuance of stock and appropriate filings with the Secretary of State and the
Department of Corporations. He or she will help advise on the best form of ownership, assist in
negotiations to buy an existing business and review documents if you are buying a franchise. He or she will
also advise on buy-sell agreements and draft appropriate documents.
If your business will require renting an office, store or factory, your attorney should review and approve
your lease document. A lease obligation can become your biggest liability, and your attorney can help
negotiate fair and protective terms. For example, if you anticipate growth, your lease should include a
provision for how expansion requirements will be handled.
Your new business may require specialized legal advice to establish and protect your intellectual property
rights. Intellectual property includes your ownership rights to your business name, trademarks, copyrights
and patents. Intellectual property law is a specialized field, and you may need an attorney who specializes
in these matters.
Your Accountant
Your accountant can be an important advisor in start-up decisions, such as




Deciding the appropriate division of the capital you contribute to a corporation between stock and
loans.
Determining the best form of ownership.
Helping set up the books and records of the business.
Advising computer needs for accounting purposes.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014

Filing tax returns, advising on compensation of owners, preparing financial statements, helping
forecast cash needs, including whether to expand, addition of employees and determining
profitability.
He or she will have a continuing role in filing tax returns, advising on compensation of owners, preparing
financial statements, helping forecast cash needs, including whether to expand, addition of employees, and
whether you are really making money in this venture.
Your Payroll Service Provider
All entrepreneurs face the dreaded question, "How am I ever going to handle my payroll, payroll taxes and
comply with ever-changing state and federal laws?"
Thanks to efficiencies achieved through computer technologies, a huge industry has emerged to take over
increasingly complex payroll issues. "Payroll Service Providers" now permit small businesses to outsource
these functions at very low costs. Now the start-up entrepreneur, even with a payroll of one person, can
"outsource" his or her Human Resources department.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
SESSION SEVEN
Business Location and Leasing
Location, Location, Location
Whether you are a moonlight or full-time entrepreneur, at some time real estate issues will become
important to you. The success or failure of most retail businesses will hinge on the owner's selectivity and
judgment in selecting the right location.
An initial step in business is selecting where you will live and where your business will be located. You may
have the opportunity to relocate to an area where you would really enjoy living and working.
Zoning Categories
Every city has a planning department at City Hall. You will be dealing with this and other municipal
departments and agencies that have discretionary authority to approve or disapprove your intended plans.
You can no longer rely on zoning codes to determine what the rules are in your desired location. Your
intended location will often be subject to "precise plan" approval, an environmental impact assessment,
and other regulatory issues.
You may find yourself appearing before a review board that can often seem unreasonable in its decisions.
Many cities have redevelopment agencies authorized to impose conditions even more stringent than those
established by local codes.
One shopping center developer was so frustrated with the demands of city agencies that he finally threw
up his hands and sold off his rights to the property. The new owner succeeded in developing the property.
His secret, "I went into City Hall and told them that I would do anything they wanted me to do-----and did
it."
Now, obviously there will be times when unreasonable conditions will make a location for your business
unattractive. In such cases, you should unemotionally look for another location.
Phil Holland
Founder, My Own Business
Could you offer some suggestions about locating a business and signing a lease?
These are two important business decisions that you will need to make. One is deciding on a
location for your business and the second is signing a lease. This will probably be one of the
largest financial obligations you will incur. If you sign a lease for $2,000 a month for five
years, you will have a total obligation of $120,000. So you have to be absolutely certain that
your judgment will be correct both as to the location and also the lease document itself.
If you're in the retail business your location is going to be most important of all because
every retail business has its own special criteria. If you're opening a donut shop, you want to
be sure you're on the going to work side of the street. And if you're opening a liquor store,
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
you'll want to be on the side of the street that people use going home. So you will need to
know the special criteria for your business and this session will explain how you can do that.
A couple of suggestions: When you sign a lease, sign a short term lease, like a one or two year
lease and ask for options. Be sure you have a lawyer working with you in the document itself
because you will find that his experience will save you a great deal of trouble and money as
well. So even though you may not be looking for a real estate location today (you may start by
be operating out of your spare bedroom or garage) someday, as your business expands, you'll
be facing this big issue. I would suggest that you review this chapter now and also have a
copy of the My Own Business Textbook handy for the future. When you need it, you can pull
it off the shelf and refer to all the basic do's and don'ts of locating your business.
Criteria for Home-Based Businesses
Be sure your home business is permitted and you have the license required by the city. Many homes have
an association with regulations for the owners. Check to ensure you are in compliance. See our home based
business session for those considering operating a business from their home.
Criteria for a Manufacturing, Warehousing, or Industrial Business






Room for future expansion
Convenient for employees
Good Accessibility
Available labor force
Appropriate utilities
Convenient to freight and express delivery systems
Criteria for a Retail Business
Each retail and commercial business has its own criteria. For example, a donut shop should be located on
the "going-to-work" side of the street. On the other hand, a liquor store should be on the side of the street
with traffic going home from work.
The selection of your first location will have an overwhelming impact on your chances for success.
In Session 1, you analyzed businesses that are similar to the one you chose. Did you analyze where they
were located and why?





Select the appropriate type of center (mall, strip, mini). Some business do best in a large center but
some, like Mini-Marts, video stores and laundromats, do better in much smaller centers. Others such
as florist, nursery or antique stores, do well located on the street front.
Demographic data will provide you information about the neighborhood. It will inform you about the
population, the number of households, estimated population by race, age and income level within a
one, two or five-mile radius. You can find firms that supply this information on the Internet. A good
place to start is the International Council of Shopping Centers at
www.icsc.org/srch/rsrch/demographics/.
Walk and talk the area. You will be surprised how much you can learn by talking to customers,
employees and owners.
Traffic count is very important because it will give you the number of cars at the intersection. You
can also get the pedestrian count, which is great for drop-in or walk-in business. This report can be
obtained from the local traffic department.
Visibility and signage: Customers must know you are there. They should be able to see your store.
Usually the end or corner location is better, which is why the rent for those spaces is higher. Get the
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014



biggest sign you can. Tell the public clearly what you are selling. Examples: Travel, Gifts, Pets, tell
the products. Both your lease and the city ordinances will have limitations regarding your signs.
Access and parking: Be sure you have adequate and convenient parking. Avoid streets with dividers
or one-way traffic. Customers prefer stores where the parking is in the front.
Proximity to competition: Know where your competitors are located. You can get the names and
address from the Yellow Pages. Find out what your competition is doing and how they are doing it.
Generators (anchors): These are the big national stores in a mall or shopping center. For example,
Albertson's, Nordstrom, Wal-Mart and/or McDonald's will help to bring customers into the center. The
closer your business can be to generators, the better it usually is for your business
Leasing Checklist



Retain a real estate lawyer to assist you in negotiating your lease or purchase. A five-year lease on a
$1,000 per month space is $60,000 (probably a personal obligation) and may well be your largest
obligation for your beginning business.
Most retail stores leases are Net, Net, Net (NNN) leases (a.k.a., Triple Net Lease) meaning that you
as tenant will pay for the taxes, insurance, gardening, utilities, security, trash and sewer, litter, graffiti
removal and repairs. This charge is based on the square footage of your space. CAM (Common
Area Maintenance) charges can be costly so find out the estimated cost per month before signing
the lease. CAM charges can vary but will normally include parking lot sweeping and repair and all
aspects of common area upkeep.
Ask for options. At the end of your base term, you can then renew the lease or move. Try to keep
your initial term short. There are some compelling reasons to have a short-term lease with options:
Your business may not be successful at your initial location. A short-term lease will minimize your
overall rent obligation.
You need flexibility in lease terms to accommodate growth. Start-up businesses frequently find that
their growth rate is more rapid than expected.

Consider the possibility that you need to expand your business and will need more space. To
provide for this, your lease could provide that if you need more room, your space can be expanded,
you can move to another location in the center or you can cancel your lease.


Don't hurry your decision. There is no such thing as the last good location.
Don't judge entirely on rent. Pay fair rent for an outstanding location. Don't let the leaser dictate all
the lease terms.
An Internet marketing tool is now available to enable you to locate potential competitors: the “local”
link on search engines. To demonstrate the power of this tool, go to a search engine such as Google
or Yahoo and enter the type of business you plan to start. Then, click on the “local” link at the top of
the page and enter you zip code. Presto: your local competition will be displayed on a map along
with links to their Web sites.

Points to Consider Before Signing a Lease or Purchasing Property



Is the location the best available in the area where you want to be?
Does it meet your own specific criteria?
Are utilities and tenant improvements adequate?
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Basic Lease Provisions:
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Rent: Is the rent comparable to other rents in the same location?
Term: Is your lease for a short-term (a year or less) or long-term?
Floor area: How much square footage of the space? Rent and CAM charges are based on the square
footage of your space.
Common area maintenance charges (CAM): What are the estimated charges for a year?
Options: Do you have options to renew the lease after the first term expires?
Rent increase: Is it a fixed rent increase or is it based on the CPI (Consumer Price Index). If CPI, negotiate a
percentage cap.
Percentage rent: Some landlords will ask for fixed rent plus a percentage (of your sales) rent. This is an
issue to negotiate.
Tenant improvements: Put the agreement in writing as to the responsibilities of the landlord and your
responsibilities to do the necessary improvements to get the space open for business. Landlord's
Construction Exhibit "C" should be made a part of the lease. Please refer to the sample exhibit furnished in
this session.
Right to assign or sublet: Landlord's consent "not to be unreasonably withheld."
Signs: Be specific with exhibit and description.
Provision for expansion requirements: If you think your business will be expanding, make provisions in your
lease to provide for anticipated future needs.
Parking rights: Be sure that adequate parking space is provided. In most retail centers, tenants share
"common area parking" rights. Nearby restaurants or theaters can monopolize the parking spaces you
require.
Personal guarantee: You should avoid this, if possible. If it is required, ask your lawyer to review this clause
carefully.
Exclusive: Ask that no other business similar to yours be allowed in the center if it's appropriate
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
All leases have Exhibits
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
1. Site plan, which is a drawing of the inside of the store, restrooms, windows, doors, A/C vents and
utilities.
2. Sign criteria, put in a drawing of the type of sign you want, be sure to state color and size.
3. Construction obligations: state exactly what the landlord will do and what you will do.
4. Special requirements of tenant
To Rent or to Buy Considerations





For start-ups, the primary consideration is that capital is needed for the business.
Are requirements going to change? If so, renting is probably preferable.
Are there tax or borrowing incentives available if you buy?
Some make more on the real estate than on the business. Talk to the Community Development
Department.
Ownership fixes future cost and availability of the location.
Site Location Criteria
You can create your own "Site Model" in order to maintain objectivity when evaluating locations for your
business. This can be done by assigning different values to the factors that are most important for your
particular business. Then each location can be evaluated against these measurements.
Some things to keep in mind in site selection:






There's no such thing as the "last good location."
Copycatting your most successful competitor's site criteria can help you avoid making mistakes.
If you are building a chain of stores, never sign a lease on your second location until your first
location is profitable and proven.
It is better to pay fair rent on a great location than pay great rent on a fair location.
Don't rely on leasing agents to make your site decisions.
Driving streets and walking neighborhoods is a good way to scout for locations.
The following form will give you a methodical approach for evaluating the strengths and weaknesses of each
potential location.
First, evaluate your site location for each factor on a scale of 1 to 10, Number 10 being the highest.
Second, decide the importance of each factor to your particular business on a scale of 1 to 5, Number 5
being the most important.
Multiply the grade by the weight to determine the points for each factor. Add up the points to get a total
score. Repeat this process for each site to gain an objective, comparative analysis.
Site Criteria Table
Factors
Traffic count: Cars or pedestrians
Visibility access
Proximity to competition
Zoning
Parking (include off-street parking)
Condition of premises
Proximity to customer generators
Income level of neighborhood
Grade 1-10
Weight 1-5
Points
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Population density
Ethnic make up of neighborhood
Age factor
Directional growth of area
Area improving or deteriorating
Crime/shoplifting rates
Availability of qualified employees
Labor rates of pay
Supplier proximity
Terms and rental rates
Adequacy of utilities, gas, & water
Transportation accessibility
Total Points
Top Ten Do's and Don'ts
TOP TEN DO'S
1. Talk to your city hall planning and zoning department to be sure your intended location conforms to
all code requirements.
2. Create a Site Model Criteria for your particular business.
3. Look at many locations to establish comparable values for rent and location potential.
4. Order demographic data to provide information about your customers.
5. Retain a real estate lawyer to assist in negotiating your lease or purchase.
6. To minimize your risk, negotiate for a short-term lease with options.
7. Provide terms in your lease for potential expansion requirements.
8. Have every agreement put into writing.
9. Ask that no other similar business be allowed in your shopping center.
10. Use signs that are the largest allowed and clearly state what you are selling.
TOP TEN DON'TS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Be hasty in making a real estate decision. (There is no such thing as the last good location.)
Don't judge a location entirely on rent.
Permit a potential landlord to dictate all the lease terms.
Personally guarantee your lease if possible.
Sign a purchase or lease document without the approval of your lawyer.
Depend on the advice of a landlord's leasing agent.
Submit to unreasonable conditions; unemotionally look for another location.
Depend on any verbal agreements with landlords or sellers - get it in writing.
Open the second store until the first one is proven and profitable.
Sign a lease without the condition that it is subject to securing all permits and licenses.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Session 12: E-Commerce
What is e-commerce?
E-Commerce is the sale of products and services over the Internet. It is the fastest growing segment of our economy. It
allows even the smallest business to reach a global audience with its product or message with minimal cost. The sale of
products or services on your Web site can generate sales that will make the difference between success and failure.
Even Walmart, the largest retailer in the world with one billion dollars sales per day, could not anticipate the increasing
wave of Internet business.




180 million people in the US use the internet at least once per month.
In 2005 there were approximately 1.08 billion people worldwide who used the internet at least once a month.
This grew to 1.6 billion in 2010.
The online population has hit 73% of all U.S. adults.
The average income of Internet households is over $72,744, making the Internet user a very attractive customer
for you to target.
Is an e-commerce Web site right for your business?
Probably. Much depends on the nature of your business. Web site such as Amazon.com and Barnes & Noble have
established their hold over the book market, and their sheer size, name recognition and the relationship of trust they
have with their customers allows them to dominate this market with good pricing (due to economies of scale) and
remarkable customer loyalty.
However, if you own a local bookstore, there are several ways to reach new customers, get them to know you better and
have them keep coming back for more. You might want to offer notices of special promotions or readings by authors.
Trust will become the cornerstone of building your e-business. As Warren Buffett has said, "If you don't know jewelry,
know your jeweler."
A Web site doesn't need to exist solely to sell your product online. It could supplement the sales of your already
established retail store. If you sell a unique product, such as wheat grass or gourmet chocolates, you might find success
reaching others around the country (or the world, for that matter) who do not have access to these products in their own
towns.
Using the Internet for conducting e-commerce will not assure you of being able to compete favorably with large
established competitors. They already have the inventory, delivery and marketing systems in place, and they can deliver
the groceries as cheap (or more cheaply) than you can. Yet, the beauty of the Internet is that it provides a global
audience of potential customers and it never closes.
Your customers will have access to information about your business 24 hours a day 365 days a year. You can add
pictures, audio, video, news, and so much more. Your customer will even be able to buy from you 24 hours a day. So,
your Web site address should be promoted everywhere including your stationery, sales forms and advertisements.
Eddy Chavey
Independent Web Designer
Why is the internet so important to business?
The internet is extremely important to my business because it is my business. I own and
operate www.mrbreakfast.com. The internet is our modern business card. I would say to
anybody who is doing a business not web based that you still need an Internet presence. It's
now the first thing that people see about your business and it's the major source where
people go to find out if they need you and to learn about the service that you provide. So you
can't cut costs when it comes to showing people who you are, what you do. You've got to have
a good-looking presence that represents what you do. You need to be on the Internet
regardless.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Mr.breakfast.com started out more or less as a hobby/fascination with breakfast. We
created the website and I got lucky. People liked the look of the site and thought we did a
good job with it. So I was able to get business from other people so that now my major
income comes from building sites for other people. And I would say that another reason that
the Internet is extremely important is advertising your business. It's a perfect place to
start word of mouth.
Money transactions
There are many ways to complete money transactions online. If you already have an established Web site that your
clients know you will probably want to keep it and add an e-commerce solution into it. If you do not have an e-commerce
Web site you may consider e-commerce solutions offered by major online sites such as Yahoo, Amazon, and Google
with little to no Web design experience needed. (Enter "commerce solutions" in the search box.) Online auction sites
such as eBay, Yahoo, Google and MSN might also offer additional avenues for your business. Consider hiring and or
consulting with an experienced Web designer or firm to set this up for you. Their experience can often save you time,
money, and unnecessary aggravation.
Setting it all up
E-Commerce software often requires setting up a merchant account as well as establishing a payment gateway provider.
A merchant account is a specialized bank account set up by a bank that allows you to accept credit cards. A payment
gateway charges your customers' credit cards via the Internet and sends the funds to your merchant account. The
payment gateway acts as the bridge between the merchant's Web site and the financial institutions that process
transactions. Payment data is collected online from the shopper and submitted to the gateway for real-time authorization.
Several companies such as 2CheckOut.com, Authorize.Net, Cybersource.com, and Verisign.com offer various credit
card transaction packages. A great start would be to try your local bank. Many banks now partner with e-commerce
payment gateway solutions and can help you in most cases.
E-Commerce Considerations



Per Cyber Source Corporation, online fraudsters took $3 billion out of e-commerce in 2006. Most companies
provide at least basic forms of fraud protection.
Be sure to take into account all your costs such as monthly e-commerce fees, packaging costs, shipping costs,
time, etc.
For internet-based orders and shipping you should check with your state's board of equalization office to
determine the appropriate sales tax. Our Small Business Tax Center provides valuable links to tax information
from the IRS.
Alternative methods of online payments:
Cash payments are less advanced but easier to set up. Funds are transferred from the buyer's bank account or credit
card to the seller's account. This is similar to writing someone a check but much more secure and easier to track.
Below is a list of some of the more popular and well-known forms of "cash payment" systems.

PayPal - Owned by Ebay
Setting up a web site
Before you get started you need to answer the following questions:




What types of customers will you attract?
How will these customers interact with your Web site, and how can you make your Web site promote that
interaction?
How many sales do you expect to make each month? What additions would you like to add once you get going?
Do the monthly profits justify the monthly costs?
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Setting up a professional Web presence can be a big project and setting up an e-commerce system on top of that can be
yet another big project. Be sure to consult with professionals in this field who have experience in e-commerce not just
Web design.
Registering Your Domain Name
Each Web site has its own unique name, such as Amazon.com or eBay.com. This is your "domain name." It is a unique
name that identifies you to all of the other computers on the Internet. There are a number of companies, known as
"registrars," that will assist you in registering your Web site's name, including Dotster.com, GoDaddy.com and
NetworkSolutions.com.
Do you have an idea for a unique business name? Most of the common names have already been taken (over seventyseven million names are actively registered). Find out if the name is available by the following search: Click Here To
Check
Find an easy-to-remember ".com" name for your site. Once you've successfully registered your domain name, it will
remain in your name and control for as long as you pay to keep it. People who type www.yourcompanyname.com into
their browsers will be taken directly to your Web site. To completely secure a name, it's not a bad idea to also buy the
.net and .org extensions for it.
Your company name, trademarks, logos and artwork used on your site will require appropriate trademark and copyright
protection under intellectual property laws. Your lawyer should be consulted on this issue in order to avoid unpleasant
surprises (for example, the possibility of being advised that your company slogan belongs to someone else.)
Hosting your Web site
Your online business will need a place to reside. You may choose to buy (by having your own network server) or lease
(by having your site hosted by a Web-hosting service). In most cases, people find it much easier to lease hosting space.
For example at My Own Business, we lease our hosting. For a monthly fee the Web host handles the technical details,
and you are free to spend your time developing content for your Web site.
Hosting services can also provide "user statistics," which track the number of visitors to your site. Resources such as
"thelist.com" and "Cnet.com" offer a list of hosting services.
Building your Web site
You will need to decide whether to hire a professional Web developer to create your Web site or to produce your own
site "in-house." Both choices come with costs and benefits. If you decide to create your Web site, it is advisable to have
an employee who is skilled and experienced with Web design.
If you have a real desire to learn how to create your own site, spend some time with online tutorials on creating your own
site. Your credibility is at stake, and if your site is difficult to navigate, has broken links or images or out-of-date content,
you will not engender trust with your customers.
Tools such as Macromedia Dreamweaver® and Microsoft Expression Web Professional Design Tool® allow you to
create Web site without any (or much) prior knowledge of Web design. These "what you see is what you get" editors are
similar to programs such as Microsoft Word in that you insert text and graphics onto your page and specify the
appropriate links. Pre-defined templates give a consistent look and feel to your entire site and built-in tools allow you to
globally change navigational links throughout your site.
These programs have improved significantly in recent years, but are not a perfect substitute for a professional Web
developer. Advanced features are difficult to implement.
Hiring a professional Web site developer
Before hiring a Web developer, it's important to determine



The purpose and budget of your Web site, as well as the ongoing maintenance needs.
Who will provide the content and who will own the copyrights for these materials.
Whether the developer will be responsible for both design and marketing of your Web site.
Look at other Web sites the developer has created and ask for references. Did the developer deliver the product in a
timely manner at the quoted price? Did the developer listen effectively and present a product that matched the
company's vision?
Once you've identified your developer, get a written contract that specifies the responsibilities of the developer, the
timelines for project completion and a complete budget for the total project. This should include arrangements for
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
ongoing maintenance of the site. Keep in mind the developer you choose is someone you will most likely have a longterm relationship with as you add and improve the Web site.
Contracting out your Web site offers several advantages. A professional developer has the technical knowledge to create
a site that works with all browsers and should be fluent with the current technologies. Investing in a professional
developer will allow you to spend more time on creating a successful business and less time learning the new trade of
being your own Web site developer.
Thomas Mix
Internet Entrepreneur
Why should my business have a website?
A website is a great complement and opportunity for any business. With a website your
business is accessible to anyone, anytime, anywhere in the world with an Internet connection.
A website allows your business to compete on a local level, a national level and an international
level, getting you that added exposure that you would not have without a website. A website
works for you even when you are not there. People can go to your website and learn about
your business, your products or services, how to get in touch with you and even purchase your
products or services.
Getting started isn't that difficult and it isn't that expensive. You don't have to start out
with all the bells and whistles. You can start with a simple website with a few pages and add
information, pages and functionality over time. So a website truly represents a wealth of
opportunity for any business and I highly recommend you look into getting one.
Tips for developing a successful site
Make your site easy to use: While it might be tempting to have a cutting-edge Web site - don't forget the basics. You
will fail if a visitor can't navigate successfully through your site. Provide clear, easy-to-understand navigational tools on
each page of your site. Make it easy for a visitor to find your contact information on every page.
Provide useful content: Don't just sell! These days, it's not enough to have a Web site that lists your products and
provides a shopping cart for purchases. If you want your visitors to return, you'll want to provide meaningful content. A
CPA's site could publish tax tips and offer links to IRS forms. A catering service could offer articles on how to host a
successful party.
Encourage customer feedback via online forms and e-mail: Pay attention to the valuable information your customers
can give you. Consider using online surveys such as www.zoomerang.com.
Develop a mailing list: Most consumers resent junk e-mail, also called "spam." A far more appealing strategy is to
develop a mailing list. Invite your customers to "opt in" to receive a newsletter or notices of specials running at your
business. Make this information relevant and useful for your customer. Consider providing a "coupon" that will give them
a discount on their next purchase. And, always give the recipient an easy means to "opt out" of receiving future e-mails.
Online marketing and promotion
There are thousands of well-designed Web sites, but very few are visible on the search engines. Yet, many businesses
are not registered with search engines. Four billion searches are done in the U.S. each month. Search engines have a
great capacity to drive traffic to your site, yet few new entrepreneurs have the know-how to tap into this resource. Top
search engines such as Google and Yahoo! now provide local search. Local search makes it even more important that
you market your Web site effectively.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
In the past, the methods that search engines used to rank pages were primitive and easily deciphered for savvy
Webmasters to manipulate. Times have changed and gaining a high rank on the top search engines has become
extremely competitive. Today, submitting your Web site to a large number of free search engines will only result in your
e-mail address being added to a large number of spam lists. Search engines are now looking to provide quality listings
for their users, but also to turn a profit -- hence "paid listings."
How does your Web site rank?
It is important to monitor your search engine rankings so that you can track changes, monitor the ones that you need to
improve and identify engines with whom you are not listed. If your customers did a search for specific keywords on a
search engine, would they find your site? Are you in the first 10 results or the first 30? The average visitor scrolls through
1.8 page results during a typical search. If your business does not appear in those first 1.8 results, that could translate to
lost business.
What are people searching for?
"Search volume" is the number of times a specific keyword is searched over a period of time. Having knowledge of
search volumes will give you a sense for what is being searched for and what keywords you may want to focus on. The
goal is to find keywords or keyword phrases that you feel would drive qualified traffic to your site. Keep in mind the
amount of competition for each keyword and be creative in finding different keyword combinations that others may not
have tried yet.
How to manage search engine placement
It takes hard work, market research, educated decisions, and even trial and error. There are ways to improve your
rankings - and actions to avoid that will hurt your rankings. While you have the option of hiring a search engine
consultant to manage this important responsibility, you can also do this yourself. Here are the factors that go into search
engine placement and how to better optimize your pages for search engines.
Local Search
With the advent of "Local Search" the playing field has just gotten a whole lot more competitive. Now it is almost
essential that you have an internet presence or you will lose out to your nearest local competitor that does. Do a search
on any of the major search engines and look for a "Local" tab to see how this works. Expect "Local Search" to greatly
expand and improve over the years ahead.
Key components to successful search engine marketing for a Web site











Start with a descriptive domain name: The domain name you choose is important. It is so very important
because the name itself can help your Web site be more relevant to search engines. Pick a domain name that is
easy for your clients to remember.
Submit to the top engines: Submit your Web site for review and indexing only to the top search engines where
people are actually doing their searches such as Google, Yahoo, MSN, etc. Be careful to read the submission
guidelines for each search engine before submitting.
Focus on your homepage: Your homepage is the single most important page on your site. Your homepage
represents your business and its image. Make sure you focus on developing the content and the relevancy to
search engines for this page.
Develop content rich pages: Add content that includes keywords and phrases you are targeting. Many search
engines consider the location of the keywords in your site along with their frequency to assess how relevant
your site is to those keywords.
Keep an eye on your competition: Stay informed of your competition's rankings. Top-ranked pages rank well for
a reason - so see what you can do to be more competitive! Can you offer something they do not offer?
Add new content: Keep your Web site fresh and updated with new content. Your visitors will appreciate it, and
the search engines will look favorably upon it.
Networking with others: Expand your "link popularity" by gaining more inbound links to your site. Get the word
out and let other sites know about your site and how to link to it. The more links coming into your site, the more
doorways you open for visitors to find you.
Title Tags: Make sure the title tags across all the pages on your site are relevant to that particular page. Your
domain name is not a good idea for a title tag.
Pay Per Click Advertising: Consider "pay per click" strategies to enhance your overall marketing strategy. Pay
per click now offers local search options to better reach a targeted audience.
Review your activity logs: "Activity logs" or "server statistics" provide you with statistics on the number of visitors
coming into your site, where the visitors come from and what keywords are used. Some Web servers/hosts
provide this information free. Google also offers this as a new free service called Google Analytics
Outsourcing search engine optimization
If you would like to outsource search engine optimization, ask your professional consultant for the names of
previous clients or "case studies". Speak with these clients to determine what, if any, improvements they
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014



experienced. Make sure that unethical or questionable practices are not used that will be harmful in the long
run.
Targeted e-mail
E-mail allows you to communicate directly with your customers. It is also one of the most abused forms of online
advertising on the Internet. Nobody enjoys receiving unsolicited e-mail touting a business or service. While it is
possible to purchase huge mailing lists of e-mail addresses that can be used for marketing your product, you
are likely to turn off large numbers of potential customers by engaging in this practice.
Instead, opt-in mailing lists are now the preferred method of establishing e-mail lists of customers who are
genuinely interested in your product or service. Consider creating an online newsletter. Make it informative,
useful and worth reading.
Finally, remember that each e-mail should also contain instructions for how the recipient can be removed from
the e-mail list.
Thomas Mix, Internet Entrepreneur
How should a business market their website on the internet?
People are not going to automatically find your website just because it's on the internet. It
takes time, it takes hard work and it takes know-how to effectively market your website. A
good start is to make sure you submit your website to the top search engines. Also,
networking with other websites is important. Talk to your friends and associates who have
websites and create as many doorways into your website as possible. The search engines look
favorably upon this especially if the sites linking to you are sites with similar topics. You may
consider hiring a professional search engine marketing firm because you'll need to dedicate a
lot of time for as long as you have your website. So it may be best to leave it to the
professionals.
Keep an eye on the competition that's ranking high for your category on the search engines.
See what the number one site is doing. Maybe they are doing something you can do or do even
better. Maybe they're not doing something that you can do. If your business is just starting
out on the Internet, you can market your website using pay per click advertising. With pay
per click advertising you only pay when people click on your advertisement and come over to
your website. So it's a great way to get highly targeted leads to your website.
THE TOP TEN DO'S
1.
2.
3.
Create a Web site to complement your business.
Hire a professional to create your Web site.
Use a .com domain name that is descriptive and
easy to remember.
4. Register your domain name and keep account
information in a safe place.
5. Develop a mailing list to better connect with your
visitors.
6. Provide updated, useful content on your Web site.
7. Encourage customer feedback via online forms
and e-mail.
8. Learn how to improve your placements on top
search engines.
9. Monitor your competition's rankings and get
pointers from their sites.
10. Consider eBay as a means of selling your product
and gaining traffic.
THE TOP TEN DON'TS
1.
Assume a Web site will assure you of competing
favorably with established competitors.
2. Turn your customers off with an unprofessional
Web site.
3. Incorporate unique styles or fonts that are difficult
to print or save.
4. Make it difficult to navigate your site.
5. Permit out-of-date content to remain on your site.
6. Rely on graphical buttons.
7. Create a Web site on your own unless you are a
Web designer.
8. Make it difficult for people to find your contact
information.
9. Turn off your customers with unsolicited e-mail
advertising.
10. Weigh your pages down with too much media and
graphics
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Session 13: Opening and marketing
First things first
An opening checklist is a great place to start. Remember that airline pilots are required to use a checklist before they
take off!
Here are items you should have on your opening checklist. Add additional items that would be appropriate for your own
business.
Before you start checklist



















Have I focused on a specific product or service? As a general rule, specialists outperform non-specialists. Think
about this in any field: retailers, real estate and food (where did you buy your last take-out pizza or chicken)?
For example, if you open a doughnut shop, it would not be a good idea to sell ice cream during summer months
when the doughnut business slows down. If you do both, you will lose the identity of being the very best in either
one of them.
Will further specialization or focus improve my prospects for success? The more specialized, the better.
Will my business be home-based? Online? Storefront? Franchise?
Have I acknowledged my competition and limitations? It may be hard to compete with Wal-Mart or Home Depot.
These "category killer" discount chains have powerful buying power and efficiencies of scale. Does your
marketing plan serve a special niche?
Do I understand the difference between finding a market "niche" and going against what the public wants? For
example, if you build a house for sale, stick with a floor plan that most buyers are seeking rather than trying to
be uniquely different.
Do I have a one-year cash flow projection prepared to ensure there will be ongoing liquidity? (Refer to Session
11).
Do I have the necessary e-commerce tools in place? (Refer to Session 12).
Are all insurance policies in force?
If I plan to sell on credit terms, is my credit rating policy in place to avoid taking on customers with poor credit
ratings? The last thing you need is to have customers who don't pay on time, and good customers will respect
you for this policy.
Is my business plan complete and in written format? Does it include pre-opening, first year and long-range
planning? It will play a key role in securing investors and will help uncover any weaknesses in the planning
process. (Review Session 2, The Business Plan and use the free templates to prepare your plan.)
Have I taken the time to gain practical job experience and learn the basics of my business by first working in the
business for someone else? This is probably the best way to discover if you have made a choice that will not
only be successful, but also satisfying to you.
Have I budgeted adequately for prototypes, research, sampling and trials?
Have I successfully test-marketed my product or service? Was the response positive? If not, you need to redesign, re-work and re-test.
Have I focused on selling a great product at a fair price rather than a fair product at a great price? "Great
product" suggests a product or service with pricing power and "fair product" suggests a commodity-type
business more susceptible to competition.
Do I have all the communication, computer and other business tools in place? Do I have the skills to use them?
Has my accountant fully explained the difference between hiring independent contractors and employees and
the importance of compliance with IRS rules? For example, while my landscaper may be an independent
contractor, in most cases, my sales staff will be employees and I must conform to reporting and withholding
requirements.
Are the following elements of my business structure in place:
o Are my premises ready? This includes having a signed lease and my tenant improvements completed.
o Have all permits and licenses been secured?
o Has the business name been registered? Check with my attorney.
o Are computers, telephones, cell phones, fax and utilities operating?
o Are graphics for advertising and promotional materials ready?
o Is the domain name registered and the Web site online?
o Is infrastructure in place for e-commerce, if appropriate?
o Are all security systems in place including protection of premises, shrinkage control and internal
security?
Have I selected and trained the number of employees I will need?
Have I determined my personal work schedule? We recommend you maintain both daily and long term (weekly
or monthly) to-do lists. Also, be sure to maintain an appointment book, such as the "Month At-A Glance" book to
schedule appointments.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014

Have I included my requirements for managers, consultants, independent contractors, agents and sales
representatives?
Maureen Costello
Wholesale Distributor
In your opinion what are some of the worst mistakes entrepreneurs can fall into?
One of the worst mistakes an entrepreneur can fall into is becoming complacent when you're
successful and things are going well. It's easy to sit back and let things just go on autopilot
and maybe not think in terms of the future, especially if you have a very successful business
going on. I think you have to be careful not to have all your eggs in one basket. Not to have
only one big customer because if that customer goes away, your business goes away. Not to
be totally dependent on anyone vendor nor be dependent on any one or two employees so that
if you lose them your business doesn't function. You have to diversify with product, customer
and employees, so that you have a business that is ongoing and won't fall apart if just one of
those things goes away.
Marketing
What it takes to promote sales
Every business has a specific marketing strategy that usually works best and has already been proven by your most
successful competitors. You can benefit from their experience by copying successful marketing plans, including selling
methods, pricing and advertising. Make a list of the most successful businesses that fall within your field of interest and
study them (and even go to work for them). Visit these businesses and be prepared to ask the questions that are most
important to you.
Learn as much as you can about the needs of your customers and how to gain feedback from them. For example, if you
open a restaurant, a displeased patron will probably not complain because it is not a pleasant experience. Instead, he
will not return. So, for example, you must take care to inspect the plates as they are returned to the kitchen.
Will your customers be looking for convenience, pricing, quality and/or service? It will be difficult to make sound
marketing and promotional decisions without being informed on their real wants and needs. If a specific geographical
area defines your market, low cost demographic reports based on the census can be obtained that will furnish
information on population by race, income and home ownership. For resources that provide this information, use
Google.com to search for "demographic data" on the Internet.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
What and how to buy
Since products are changing and improving at a more rapid rate, inventory obsolescence has becomes a greater
business risk. Many products, such as computers, can be obsolete the day they are purchased.
Rapid delivery firms (UPS, FedEx) and just-in-time assembly systems are great tools to use to minimize your inventories.
These expanding technologies have greatly reduced the need for warehousing as well as the risk of obsolescence. And,
the cash you free up can be put to uses that are more productive.
If you are selling a product, you may want to consider having the item manufactured by an outside source rather than
setting up your own production facility. Many start-up entrepreneurs outsource production in order to concentrate on
marketing. There may also be cost considerations because other places might be able to provide the same product more
cheaply.
How to buy checklist





















Buy only what you think you can sell.
Never place an order without knowing price and terms.
Purchase orders must be in writing.
Have complete specifications.
Buy subject to your contingencies.
Have backup sources.
Be loyal to good suppliers.
Have promises and extras verified in writing.
Get price protection.
Try to award to the lowest bidder.
Don't be hesitant to repeatedly contact suppliers to expedite needed merchandise. "The squeaky wheels get the
grease."
Communicate complaints.
Use internal controls for ordering and receiving.
Count and inspect everything as received.
Use an inventory control system.
Ask for and take term discounts.
Pay on time.
Pay only after verification.
Watch your cash flow.
Consider suppliers as a source of financing.
It is better to pull suppliers your way, not push them. Be nice.
How to go about making major one-time purchases such as fixtures, equipment, major repairs or construction needs:




If possible, it is best to stick with suppliers within your community. Search for suppliers through the "local"
feature of search engines rather than responding to large ads placed in yellow page directories. If you're looking
for an electrician, enter "electricians" in a search engine and enter your zip code for a "local" search.
Clearly spell out in writing the scope of the work to be performed or exact description of what you are seeking to
purchase.
Let potential suppliers know that you are required to take bids on all purchases over a stated limit, say for
example, $500.
In some cases, a supplier may be a source of financing such as in the purchase of electrical signs, fixtures or
office equipment.
Marketing tools
Your business name will announce who you are and what you stand for. A memorable logo also adds to your
marketability. It will establish your name and brand recognition. It will enhance the image you wish to create. Your logo
can be used on all company materials including stationery, business cards, brochures, Web site, gift boxes and shipping
containers.
A good name:



Is easy to remember.
Is simple to spell and pronounce.
Clearly says what you do.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014





Stirs customer interest.
Doesn't confuse you with a similar business.
Has a positive ring to it.
Evokes a visual image.
Doesn't limit you to a geographic location or to a product.
Promotion and advertising
Your advertising plan becomes your blueprint for marketing. It will include your objectives, budget, media plan and
creative approach. A basic rule in promotion and advertising is, "Do what you do best, and hire for what you don't."
Discuss your advertising plan with your vendors. They may provide you with co-op money if you follow their rules and
make proper application for the money. Even the smallest advertiser can get up to half of their advertising costs
reimbursed.
There are many types of paid media to deliver your message. Here are a few of the most commonly used:







Print (newspapers, magazines and newsletters)
Radio
Television, including cable
Internet
Yellow Pages
Direct mail
Trade shows
Every entrepreneur learns through experience that there is a most efficient way to spend advertising dollars. This can be
hit or miss for the beginner and very costly. So, once again, learn from the previous mistakes of your competitors. Find
out and follow how your most successful competitors advertise and promote their products or services.
Whatever advertising media you decide to use, become knowledgeable regarding the Do's and Don'ts of advertising in
that particular medium. For example, if direct mail works best for you, there are books in your library devoted to this
subject. They will provide huge insights that can save you from wasting advertising dollars.
Media publicity is free and helps to create a positive image for you business. Newspapers could be interested in writing a
feature story about you because of the widespread interest in entrepreneurship and the fact that you are a successful
start-up. Local newspapers, even the free ones, are very effective. Your "press release" must have news value that can
be turned into a bit more of a feature story, as opposed to an announcement. This will make it more interesting and
relevant to the reader. Editorial space is much more valuable to you than display space…and it's free!
Mailing lists
Now, before your start your business, is the right time to begin developing a database of future customers you wish to
target. This list can be used for direct mail, invitations and newsletters. Your database could include specific individuals,
companies and groups by location. Begin now to:




Join the Chamber of Commerce.
Collect business cards.
Collect names or mailing lists from your church, school, organizations and community groups.
Get involved in your industry and community affairs.
To manage your mailing lists, we strongly suggest you use a good mailing utility. They are generally free to try. One that
we like a lot and use ourselves is Vertical Response – they will give 500 free emails to MOBI users. Another popular
service is Constant Contact, which is also worth a look. Send a few emails with both services and compare which one
you feel more comfortable with.
Marketing on "Local" Search Engines
A new marketing tool that is a huge benefit to local businesses is now available: the "local" button on search engines. To
demonstrate the power of this tool, please go to a search engine such as Google or Yahoo and enter “Flower Shops”.
Then, click on the “local” link at the top of the page and enter you zip code. Presto: local flower shops will be displayed
on a map along with links to their Web site. Savvy businesses today are taking advantage of this marketing tool.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Eddy Chavey
Independent Web Designer
What would your top recommendations be for people just starting out in business?
A huge part about starting a business, and I wish I would have corrected this early on, is
letting people know that you started a business. So promotion early on is very important. I
wish I had done some promotional things even before the business was started. Case in point;
business was going just steady, I wasn't shouting out I've got a business but then I did this
thing. My site is "breakfast" my whole business revolves around breakfast, so we got these
silly putty eggs and having these eggs as a promotional gimmick giving them out to people who
visited the site and contributed to the site increased traffic just immensely, it increased
profits. I would have to say out of a $1000 investment in a whole bunch of eggs, I think I
probably got back 20 times the return. So promotion, announce that you got that business.
Most common mistakes made in opening a business: your checklist to avoid pitfalls.
















Haste
Lack of focus: specialize, specialize, specialize
Lack of on-the-job experience
Inadequate research and testing: test market first
Lack of a well thought-out business plan
Lack of working capital
Unprofessional decor, theme, logo, stationery, attire, packaging, ads and Web site
Not opening quietly to work out the shortcomings
Poor signs: signs should be big, clear and readable - simple is good
Untrained staff
Poor relationship with vendors
Unfocused marketing plan
Not using the advertising media that works best for your specific business
Skimping on insurance
Ignoring possible problems
Not recognizing your limitations
Suggested Activities















Develop a mailing list NOW.
Watch for growth possibilities and plan growth direction.
Join your trade association and subscribe to trade magazines (stay current).
Continue to review, develop and update your business plan, stating how you will market your product or service.
Continue to develop your budget, including proposed expenses for displays, signs, advertising, promotions and Web site marketing.
Begin a file for merchandising and marketing ideas.
Take seminars and classes.
Read current trade magazines, papers and books. Attend openings and promotions of businesses like yours.
Develop and maintain an employee handbook.
Talk to anyone and everyone in your field and collect business cards.
Prepare a plan for growth possibilities.
List potential problems and possible solutions.
Become personally involved in selling your product or service.
Keep your skills and knowledge current.
Keep a journal to record your business experiences.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Top Ten Do's and Don'ts
THE TOP TEN DO'S
1.
2.
3.
4.
5.
6.
7.
8.
Use a "before you start" checklist.
Focus on selling a great product or service at a fair price.
Specialize. Specialists outperform non-specialists.
Train your employees thoroughly in marketing skills.
Consider outsourcing the manufacture of your product to a low cost producer.
Minimize inventories by a just-in-time delivery and ordering system.
Consider your suppliers as a source of financing.
Now, before you start, develop a database of future customers.
9. Open quietly to work out the bugs before you schedule the grand opening promotion.
10. Include the Internet in your marketing plans with an appealing Web site.
THE TOP TEN DON'TS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Order from a vendor without a written purchase order outlining all terms.
Hesitate to repeatedly contact suppliers to expedite needed merchandise.
Launch a new product or service without test marketing it first.
Be satisfied with unprofessional décor, logo, name, attire packaging or advertising.
Open unless your cash flow projection is positive for the first 12-month period.
Be in a hurry to open.
Compete with discount chains unless you efficiently serve a specialized need.
Fail to meet IRS rules regarding employment practices.
Be afraid to say "no" to poor credit risks.
Depend on your customers to complain; they just won't come back.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Session 15: Expanding and handling problems
Rules to follow before expanding
Once your business has started, you will face the challenge of making it grow. In this session, you
will learn about some basic rules to follow before expanding.
Before even thinking about growing your business, you must first have a stable platform from
which to take off. You must work out the bugs in your initial operation, including making it
profitable.
Your readiness to expand will improve if you can gain experience in all aspects of your start-up
unit. Whether you have started an Internet business or opened a restaurant, become personally
involved in all the functions of your business. Then you can detect weaknesses that can be
remedied early on, where changes can be made rapidly and at less exposure to loss.
Another reason to become personally involved in every aspect of your business is that later on,
after expansion plans are implemented, you will be depending on others to whom you must
delegate responsibilities. Because you will have had personal experience in running things
yourself, no one will be able to mislead you.
Remember that after you expand, you will no longer be the person at the cash register. You must
have systems in place to prevent employee theft and shrinkage (shoplifting). Your competitors
have probably already figured out the loss-prevention systems that work best for your particular
business. So, check out and implement systems already being used in your industry. (If you're
going to open a convenience store, go to work for 7-Eleven beforehand to learn its systems that
work!)
Try to avoid giving your personal guarantee on leases or creditor obligations. As much as possible,
separate your business liabilities from your personal assets. While banks will most likely require
your personal guarantee on business loans, exposure of your personal assets can be mitigated by
drawing the line against this practice whenever possible.
For example, a potential landlord for your second store may ask you to personally guarantee the
lease. Your exposure in a five-year lease of $3,000 per month would be $180,000. This amount
could far exceed the initial capitalization of your business. Yet, because of the desire and
enthusiasm to add more stores, it will be tempting to incur such potentially overwhelming liabilities.
Instead, by practicing discipline in limiting your liability, you might insist on negotiating a one-year
lease with options for additional periods of time. Your liability in this case would be reduced to
$36,000.
Starting with a pilot operation
There are some understandable reasons why many entrepreneurs overlook the importance of
having a successful pilot operation in place before expanding.
Entrepreneurs by definition are self-confident: The problem is that too often we are overconfident
either in ourselves or our product or service. This overconfidence can propel us into expansion
programs without carefully working out the wrinkles, including getting to the point of having a
proven and profitable pilot plant (model) from which to expand.
One reason for overconfidence is that many wealthy entrepreneurs have enjoyed success in an
unrelated field: A wealthy tycoon who had a successful career, for example, might start a new
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
business in a field that he or she doesn't know or understand and might meet with failure because
he or she assumed his/her expertise would transfer.
Another enemy is haste: Entrepreneurs who start multi-unit businesses will experience some
deficiencies in their first unit. Many will lose money at the beginning. This is the time to work out
the bugs and produce a positive income statement. If you can't, this may be time to abandon the
idea. But, if you are starting a restaurant chain and in haste open six of them with problems, your
losses could become overwhelming.
Problems in an Expanded Business Not Present In A Start-up
There will be controls needed in your expanded business that have not been present in your startup mode. It will take careful preparation to break the do-it-yourself mode. For example, your
business will need accounting and cash flow controls that measure performance of individual units
within your overall operation. These reports will be required on a frequent basis. In many
businesses, weekly income statements are used to prevent small problems from growing into
bigger ones that may become unmanageable. Your accountant can help you set up unit financial
reporting.
Delegation of responsibility and authority
Your expanding business will require delegation of responsibility and authority. New skills in
recruitment, evaluation and training will be needed. The greatest leap of expansion for most
businesses is growing from the first unit to the second one. Once you have made the big step from
one to two, you are now a chain! From then on, it can become a continually improving cookiecutter operation.
Sometimes it is difficult for the beginning entrepreneur to delegate authority. There are many ways
to do so without relinquishing certain functions that you will want to keep for yourself. For example,
you should be the only person signing checks and deciding on capital allocations, yet you might
want to delegate the training of employees to your managers.
But without giving up these functions, you can still motivate key employees in two ways:
recognition and reward. Recognition means much more than bestowing an impressive title. The
most important recognition is to let it be clear that your key people are in positions of authority as
well as responsibility. While delegating authority will mean that your managers will be making some
mistakes, their mistakes will be limited to their spheres of responsibility. Also, frequent financial
reporting will minimize adverse financial impact of their mistakes.
Delegation of authority can be accomplished by:


Financial motivation of key employees
Creation of profit centers
Monetary incentive plans
Good managers are motivated by monetary incentive plans that are tied to their individual success:
The incentive compensation of your management team should be, therefore, compartmentalized
for each manager, so that a manager's bonus is based solely on what he or she has accomplished
and not diluted by how other parts of the business are doing. For example, if you develop a chain
of stores, each store manager's incentive compensation should be based only on the profit of his
or her store.
If you are uncertain as to how to set up such a profit sharing plan, you might get ideas from your
most successful competitors, who have already gone through the trial-and-error process of refining
such systems.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Ways to Motivate Key Employees: Reward and Recognition
Let's first set a definition of recognition: It is creating a business structure where your key
employees are given authority and responsibility, which is tied to profit and accountability. This
becomes a "profit center" that the key employee manages. Each profit center has separate profit
and loss accountability, which is determined frequently. (Many fast food stores operate on weekly
profit and loss statements!) The idea is to create an atmosphere where your key people feel they
have entrepreneurial decision-making authority, and are paid incentive compensation based on
their own center profits. But, they are not given authority in two non-delegated roles, which remain
your sole responsibility:
1. Capital expenditures
2. Signing checks
This suggests that your key people will be given enough latitude in operating their profit centers
that they might make some mistakes.
By the two restrictions stated above, plus frequent financial reporting, you can recruit wellmotivated managers and at the same time limit your exposure to big losses.
Obviously, the incentive plan must be tailored to each business situation and be based on the profit
and loss report of the individual's separate responsibility.
By rewarding managers through profit participation, you create the engine that will drive your
managers to success. And, the greater their success (and reward), the more your overall business
will benefit.
Here are three types of plans (there are many) that have been used to structure a manager's
incentive:
Leveraged profit sharing plan
Managers receive all, or a large part of, unit earnings over a fixed target. This has been used
successfully by fast food chains that are company owned and operated (rather than franchised
units). Here is an example of a simplified weekly income statement of a doughnut shop that is
operated by a company employee-manager. This plan is "leveraged" because every penny saved
becomes a penny going into the manager's bonus check.
Sales
Wages
$1,500
Purchases
$1,500
All other expenses (including co. profit)
$1,500
Total expenses
$4,500
Weekly profit and manager bonus:
$5,000
$4,500
$500
Unleveraged profit sharing plan
In this case, your manager receives a percentage of earnings of his or her profit center. Here is an
example:
Sales
Wages
Purchases
All other (actual) expenses
Total expenses
Net profit
$5,000
$1,500
$1,500
$500
$3,500
Manager bonus @ 10%:
$3,500
$1,500
$150
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
Commission plan
In this plan, the manager receives a percentage of sales for the accounting period. Assuming, as
above, that sales for the period are $5,000 and the commission is 5%, the compensation would be
$250. In many instances, commission incentive is not appropriate because it does not include
provisions for expenses. Your manager could get rich while you go broke. But commission
incentive can work well when the manager does not control pricing. Salespersons in a retailclothing store would be a good example of a commission structure.
Key Elements for Creating Successful Profit Centers
Let's review some of the basic rules that apply in the creation of profit centers:





Create a separate profit center for each expansion unit. This means separate profit and loss statements that are
compartmentalized for each manager.
Make the accounting periods very short. When there are not big fluctuations in inventories or other costs, even weekly profit and
loss statements work well. But, if possible, don't wait for six or twelve months to reward managers. Rewards are best when received
early!
Keep your profit sharing incentive plan simple and clear. It will avoid misunderstandings and misinterpretations. Use simple words
and simple accounting.
Have all your profit sharing agreements in writing. It will avoid innocent differences of interpretation. A ball painted half black and
half white is going to look differently depending on where you are viewing the ball!
Check out how your best competitor motivates their managers. Your competitors may have already come up with a system that is
most appropriate for your particular business.
Phil Holland
Founder, My Own Business
What hurdles do people face in growing a business?
One thing you have to remember in growing a business is that as you grow you are going to
need management skills that are not required when you first began. For example, when I was
running the first Yum Yum donut shop, clearly I had to know how to run a donut shop. But as
we grew and built additional stores, the need for entirely new sets of management
requirements arose. For one thing it required real estate negotiating skills. It required legal
help with respect to leases. It required knowing how to delegate authority because you can't
be in multiple locations at one time. One good way of learning delegation techniques is to go to
work for a large company which is in the same business that you intend to start and you can
pick up a lot of do's and don'ts that they have learned the hard way that you don't have to
learn by trial and error.
Important Overall Considerations in Starting Your Business









Save money.
Stay in a field you love.
Know your business before you start (work for someone else in it).
Copycat the winners in your business.
Specialize, even to a single product.
Find a product or service that is needed or desired and not subject to price regulation.
Set a cap on your liability.
Learn computer skills.
Learn communication skills.
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014










Have a lawyer, accountant, and insurance agent before you start.
Prepare a business plan.
Prepare the site criteria model for your particular business.
Do "for and against" lists for major decisions.
Buy when everyone is selling (and vice versa).
Deal with those you like, trust and admire.
Learn accounting.
Create your own internal control plan.
Keep going to school in subjects important to you.
Give back to the community.
Pitfalls to avoid:






Never sign a lease without your lawyer's review.
Don't rush: there is no such thing as the last good deal.
Avoid a "commodity" business (one without pricing power).
Don't burn bridges of job security to start a business if you can help it.
Don't become a business zombie: take time off.
Don't compete with category killers (Wal-Mart or Toys-R-Us) unless you have a special niche.
Long-range financial planning
Before expanding your business, you should consult with your lawyer, accountant and insurance agent to develop benefits for your future
employees as well as for yourself. The goal is to provide benefits sufficient to recruit and maintain outstanding managers. Provisions can be
considered for retirement plans, health insurance and vacation and holiday benefits. These costs should then be included in your budget.
It is also important to make plans for times when you're not actively running your business. When you die, become incapacitated, or simply go on
a much-needed vacation, will those you have left in charge know how to maintain the momentum of your business? It is a good idea to have a
guide prepared for your employees which contains critical information (what to do, who to call, where to find it). This will help assure the
consistency of your business in your absence.
Phil Holland
Founder, My Own Business
I think the most common mistake made by entrepreneurs is not picking the right
business to begin with.
I'm Phil Holland and I'm the founder of this course that you're now taking, My Own Business.
People fail in business by making avoidable mistakes. So, if you are aware of these pitfalls
before you start, you can enhance your chances of success enormously and avoid unnecessary
grief.
Here are some pitfalls to keep in mind. I think the most common mistake made by
entrepreneurs is not picking the right business to begin with. Take your time and do
something you love and are good at, and select a product or service that has pricing power.
Pricing power means that your customers will be willing to pay a fair price based on your
unique benefits.
Another common mistake is that people go into business without knowing how to keep score.
So, if you don't know accounting, take a course, perhaps at your local community college.
Don't go into business without having a good business lawyer at your side. You're going to
need one for all kinds of reasons such as partnership agreements, leases and business
contracts.
Also, it's not uncommon for people to go into business without preparing a written business
plan. Don't bypass this important step, and after you're in business, update your plan on a
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
regular basis. Your business plan will not only become your compass to keep you in the right
direction, but it will also be a valuable tool to gain valuable advice.
Provided that you are adequately prepared before you start, you will find that going into
business can become one of the most satisfying and rewarding experiences of your lifetime.
And I hope you will let us at My Own Business know how you're doing.
Common Business Problems
Now let's identify some of the common mistakes made when businesses begin to grow. These mistakes can be deadly, so benefit from the
others who have gone before you!








Uncontrolled cash flow: People fail because they run out of money. When you run out of cash, you crash. So, prepare your cash
flow projections for expansion very conservatively. Review "Cash Flow" in Session 11. In projections, be sure to:
1.
Forecast income (sales) very low
2.
Forecast expenses very high
3.
Provide for unanticipated contingencies
A drop in sales or insufficient sales: If this happens, your income and cash flow will be impacted. Immediately take the necessary
remedial steps by ruthlessly cutting costs.
Higher costs: Can you increase volume of sales? Can you offset with higher prices?
New competition: The reality of the entrepreneur's life! Can you learn from them? Can you neutralize their opening impact?
Business recessions: You will need to promptly cut costs to maintain earnings and cash flow.
Incompetent managers or employees: Act swiftly to rid yourself of them.
Dishonesty and theft. Study the ways your most successful competitor controls all forms of dishonesty that your business is exposed
to, including shrinkage (shoplifting) and employee dishonesty. Each business will be different.
A combination of any or all of the above
Basic rules for Handling Serious Business Problems








Identify and acknowledge your problems with brutal honesty.
Immediately reduce your losses by unemotionally cutting your costs to maintain a positive cash flow and profitability. This is the first
and most important action to take.
Don't switch horses. Stay with the business you know unless its future is fatally defective.
Take the initiative to explain to your creditors what your problems are and why slow or smaller payments will be necessary. Never
write post-dated checks or send late payments without an explanation.
Don't cut value or quality of your products or services. Make them even better.
Improve every aspect you can of your performance and image.
Look for opportunity in adversity. Sometimes there will be bargain opportunities during business slumps.
Remember that businesses have cycles. So, hang in there and ride out the adverse periods.
Phil Holland
Founder, My Own Business
What are your recommendations for people when they encounter serious business
problems?
Someday, as your business grows, you're going to encounter some really serious problems
which will require keeping certain things clearly in mind. The first thing to tackle is to
reappraise your cash flow for the next period of months to be absolutely certain that you
maintain a cash balance in your bank account. In order to accomplish this you may have to
drastically cut some costs. I am not suggesting you cut quality. Instead, your product quality
should be improved rather than cut. Obviously you will want to make an overall appraisal of
Lingua Inglese . Prof. Domenico Torretta
Corso di Laurea magistrale in Economia e Management – a.a. 2013-2014
your business to detect if your business has any major flaws that need to be cured in order
to succeed.
During business downturns you may wish to jump ship; to look for opportunities far removed
from your own business. Usually it's better to stick with what you know best and tough it out
through the difficult periods. In fact, adversity may produce opportunities within your field,
where you can gain an advantage from an adverse situation. For example, if you operate
apartment buildings and find yourself in a period of a real estate slump when apartment
buildings are going into foreclosure, it might be a good idea to look for opportunities to buy
foreclosed apartments. So be prepared for periods of adversity and when they happen,
maintain your liquidity, reduce your cost, maintain your quality and look for opportunities.
Suggested Activities




Review case histories of the most successful businesses in your field.
Review the case histories of failed businesses to determine their mistakes. Was it inadequate testing, planning and experience?
Identify a typical business problem in your intended business and plan a solution.
Identify a combination of problems in your business and plan a solution.
Top Ten Do's and Don'ts
THE TOP TEN DO'S
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Motivate your managers with monetary incentives tied to their individual success.
Copycat the successful marketing and policies of your large, successful competitors.
Identify, acknowledge and attack your problems with brutal honesty.
Look for opportunities, including bargains, in hard times.
Stick with what you do best during downturns in business cycles.
Compartmentalize your expanding business into profit centers.
Copycat the internal controls used by your successful competitors.
Prepare monthly financial statements of your individual profit centers.
Act swiftly to rid yourself of incompetent or dishonest employees.
Take the initiative to keep creditors informed of your problems and needs.
THE TOP TEN DON'TS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Think about your second store before the first one is reliably profitable.
Sign long-term leases, (Instead ask for short-term plus options.)
Open the second store before delegation controls are in place.
Let self-confidence overcome prudent and calculated decision-making.
Give your personal guarantee wherever asked.
Let commissioned salespersons set prices.
Fail to promptly cut cost to maintain positive cash flow.
Pursue a "commodity" business (one without pricing power).
Cut the value or quality of your product or service.
Delegate signing checks (any amount) or making capital expenditures.