Questions and Answers of Entrepreneurial Small Business

Would you like more information on LLCs? Go to http://nolo.com, click on “legal articles” at the top of the home page and then on “business formation LLCs and Corporations” to learn more.
You may be able to represent yourself on small matters by going to small claims court. These courts of limited jurisdiction have different names in different states. Go to
In most states you can contact the state bar, the state supreme court or a state commission to check on whether a particular attorney has been disciplined for professional conduct violations. To find
Find your state’s Secretary of State’s home page on the Internet. Find information on forming LLCs. Can the form(s) be submitted online? If not, can the form(s) be downloaded or filled in using
Identify a business you want to own. Use the resources of your library and the Internet to identify what insurance you are legally required to carry. Contact an insurance broker to determine how, and
Identify a specific location (street address) where you would like to operate a business. Visit your city's planning and zoning office (or their web site, if they have one) and determine if this site
Suppose you are going to open a consulting business. You are going to finish half of your garage to use as an office. Go to the ADA site and determine what accessibility requirements you
Identify the business you would like to own. Go to the OSHA web site and find out what rules and regulations apply to this business. Create a chart of hazards of this business and the applicable OSHA
Identify the business you would like to own. Make a list of the risks that are specific to that business. Contact an insurance broker to find out what coverages are available, and what they would
Assume that you own a 2005 Ford F750 Super Duty truck. The truck has been driven 32,000 miles. What is a reasonable disposal value for this truck? (Be sure to reducing your estimate of sales price by
Assume that you have a plumbing business that requires the use of a backhoe. Contact equipment rental businesses in your area and find out the rental cost and terms for a suitable machine. Contact
Contact a dealer who sales expensive capital assets, such as earth moving or transportation equipment. Find out the costs of acquiring, owning, operating, and disposing of the asset. Use a
Make a search, using your library, the Internet, and your business contacts to find factors in your area. Interview the factor and determine the terms offered. Ask what things about the receivables
Choose a local business in the industry that you would like to own. Visit the business that you chose, walk about to observe the amounts and types of inventory on display. Interview the owner or
Do a search of Entrepreneur, Inc., and Business Week Small Business websites looking for information about businesses that were successful in obtaining financing. Write a report detailing how the
Make an appointment with a commercial bank loan officer who handles business loans. Ask about the bank's documentation requirements to consider a loan. Determine what commitment, if any the bank has
Find out if your city or county has any tax abatement economic development zones. What must you do to be able to take advantage of the tax abatement?
Find out if your city has an office of economic development. (Almost every city with a population greater than 100,000 does.) Contact the office and inquire about the programs that it supports. As
Contact the owner of a business you would like to own. Arrange an interview. Ask how the owner arranged for startup financing. What sources of financing does the owner use today? Report your findings
Go to the SBA directory of SBIC's. Search through the directory, specifically looking for SBIC's that will invest in businesses in the industry in which you are interested. Make a chart of the
Assume that you are preparing to open a new business. You need both an on-location sign and professional accounting services. Do a web search and examine your local telephone book to find (1) a sign
Use the resources of your library and/or the Internet to identify 5 credit card processing providers. Contact each and determine the following:The cost of equipment to be able to accept credit card
Do a telephone survey of banks in your area. Ask:Do they use electronic check clearing?If they use a clearing bank to manually clear checks, ask what bank they use.Ask what the average period of
Do a Google search, using the name of your city and "online banking." Examine the sites returned to determine:How often is the account balance updated online?Are monthly account statements available
Make an appointment with a loan officer at your bank who handles small businesses. Conduct an interview to find out the following:Will the bank lend to small businesses, using receivables for
Either by yourself or in a group of your fellow students, select a business that you could reasonably expect to be able to start and run right now. (This could be as simple as a T-shirt company.)
If one or more of the accounting software mentioned in the text are available, have students in groups attempt to set up the system for a company and go through an imaginary month’s activities. If
Choose a public business that is in the same industry as the business you would like to own. Go to the company's web site and find "investor relations." Download a copy of the business' most recent
Choose an industry in which you would like to own a small business. Use the Internet, the university library, and the public library to find the names and addresses of industry trade associations.
Assume that you have determined to purchase a computerized small business accounting system. Visit the web site of each of the accounting systems named in this chapter. From the information there
Keep a list of direct marketing you experience for a week. Which messages did you find particularly appealing? Why? Which ones were you more likely to ignore?
This chapter does not begin to cover the vast number of sales forecasting methods, but only attempts to bring in a few. Should time and interests allow, other methods may be discussed and
Pick a small business with which all the class is familiar. Discuss what are the customer benefits that the business is trying to offer. Could they do a better job if they chose some other benefit?
Look at hamburger restaurants. How do they pursue imitative status and when do they offer innovation.
a. Is it possible to sell products on eBay without having an online store? What would be the advantages and disadvantages of doing so?b. How would you use multi-channel marketing to promote your
When talking about codes of ethics, you were encouraged to do a Google search. One of the sites that may have turned up is the Center for the Study of Ethics in Professions at the Illinois Institute
Decide on three areas of the general environment you do not usually consider. Put together a profile of sources (online, print, of both) that you would use to do environment scanning in those three
For students in your class thinking about (or in the process of) starting their own business, find out which items on the BRIE checklist they have completed. Ask them which items they expect they
Write a job description for your mother.
How did the small businesses find the following employees?Wendell was happy to help out his brother on weekend until he could afford to hire extra help.Milton lived in Nebraska but worked in
Lenny’s Used Book Store is doing pretty well. Lenny has been the sole employee as well as the owner since it started a year ago. At this point, he limits the hours he is opened and simply shuts the
What are creative ways that you can retain your first employee and ensure you are meeting his/her needs? Consider how you can meet or exceed the employee’s “psychological contract.”
What specific training guidelines would you incorporate into your business? What inexpensive techniques (on-the-job training) can you use after you make the first hire? Did the owner of the business
While a smaller firm can actually outperform large businesses in attracting high quality employees, how can you communicate to the job market the multiple benefits of working within your firm? How
Major League baseball was developing their own iPhone application and filed a cease-and-desist against Vivid Sky. Tim knew that Vivid Sky conformed to all copyright issues and were legally within
Complete the following table:What it coversLength of time in effectHow establishedPatentTrade secretCopyrightTrademarkTrade name
What sorts of contracts or clauses do we have or need here?a.Crystal knew she couldn’t handle all the sewing for the huge order of bridesmaids’ dresses she just received – especially in the
Elvira has found that her customer’s claim might very well have been discrimination. What are two arguments that Elvira could claim in order to get her “off the hook?” What are her choices of
Loretta was going to have to renegotiate her rent contract for her warehouse next month and she was beginning to give it some thought. “What I really want more than anything is to not have my rents
The following entrepreneurs were seated at the same table for a local small business awards night. Throughout dinner, they discussed the businesses they had started and were surprised to see that
“I think I’m in trouble,” Elvira confided to her husband, Curtis. “I had a customer in today who complained that one of my clerks had discriminated against her and that she was going to sue.
How would you go about finding a lawyer for your business?
Kimberly has an idea of a new type of hazardous waste recycling company. Due to the liability issues of hazardous waste, she is a little leery of getting into this business without some protection
After coming up with his plan to manage risks, Shawn called his insurance agent, Dixie. “Dixie,” he said, “I want to have insurance that will cover everything I may ever
Property, personnel, or customer and others? Can you put the event in the correct category?Rhonda’s Roadside Assistance experienced a fire.Brad’s Barbeque Grills hasn’t yet been paid for the
It’s been a bad day for the following entrepreneurs and they have all been exposed to different sorts of business risk. Can you identify the risks they have had?Wendy just couldn’t believe
One of your partners has special skills that would be very difficult to replace. His great joy in life is single track bicycle racing. How can you protect yourself from the probability that he will
Which is easier to steal, money from an employer's bank account, or a secret business processes? Why?
The text discusses methods to protect against weather. What might a business do to protect itself against earthquake?
How does disaster planning help a small business cope with risk?
How are the risks from personnel affected by government business regulation?
What are the risks to small businesses caused by personnel issues?
George McElroy of Quality Sign Company in Visalia, California needs to buy a crane and is considering several options to do so.Examine the financial information provided, and prepare a recommendation
Nancy Birkner is a dentist. She has just been to a SBA seminar and learned about implicit and explicit services, supporting facilities and supporting goods. Help her see how those terms apply to her
Zeno called his mentor, Geri to discuss last quarter’s results. “Geri,” Zeno complained, “you know I’m a photographer and not an accountant. Each month last quarter I sold 50 portraits, but
Sandy has a third option: to rent a toaster. Under what circumstances would it make sense for him to rent this asset? When should he consider buying it?
Sandy of Sandy’s Submarine Sandwiches was considering two different types of sandwich toasters. The first option costs $80,000, had a ten-year life and a $1,000 salvage value. The second
Frank is considering purchasing a new pick-up truck for his construction business. He assumes that the truck will last 8 years and has accumulated the following lists of costs. From this list, can
Tyrus bought a trailer two years ago in which to transport his bronco horses to rodeos and other events. The trailer, which had no salvage value, cost him $20,000 and was depreciated by the
The following entrepreneurs use different inventory systems. Based on the information given, can you determine which system they use?1. Lucille counts the jars of baby food in her warehouse once a
“Hmmmm, that clears up one problem, Roy,” Grant continued, “but while I’ve got you on the phone, let me tell you my second big headache. It all has to do with inventory. When I buy
“Well, okay, then,” Grant conceded. “Maybe I won’t discontinue credit, but what can I do to take care of the problems I’m having?” What can Roy tell Grant?
Grant called Roy, a fellow small business owner and Grant’s mentor, at the end of a long day, “Roy, I’ve decided to quit offering credit to my customers. It gives me cash flow problems
Under what circumstances is documenting of processes not necessary?
What are the reasons for documenting the processes of your business?
Under what circumstance might you be more profitable by outsourcing production?
How would you estimate the whole life costs of an expensive capital asset, such as an executive airplane?
At this point Time Hayden had done as much as he could with his personal credit cards and using his own cash. Now he needs $1 million to go to the next phase. He was able to get half of that through
The following entrepreneurs are at various stages in their business’s life. Can you identify which stage based on their financial needs?Donna wants to make sure that her personal assets and
Miguel wants his weighted average cost of capital to be 10%. He can borrow at 7% but all his equity investors are looking for a return of 20%. What should his debt/equity ratio be?
Ahmad has two sources of capital for his business – equity at a cost of 15% and debt at a cost of 10%. Figure his weighted average cost of capital at 75/25 equity/debt, 50/50 equity debt, and
Stephanie thinks she’ll need $60,000 to start her business and expects it to make $40,000 the first year.a. If she financed that $60,000 totally from her own contributions, what would be her return
“There are good reasons to use equity and there are good reasons to use debt,” Victoria said. “You said that you thought Brenda would want about 20% return on her investment. Currently interest
“Well, Victoria, I’d prefer a gift,” Stephanie said, “but since I don’t have any rich relatives who can give me a ton of money, it’s not an option for me.” Victoria interrupted,
“Hmmm,” Stephanie muses, “Maybe going with a bank is a better idea, because I know that Brenda would want to be actively involved and she and I don’t always have the same
“Do you remember Brenda who used to be my boss?” Stephanie queried. “She once said that she’d invest in my business if I was really going to do it, so it looks like I can get some equity
Stephanie had long dreamed of opening a decorating business and had even gone as far as to put together a business plan. Recently she had helped her friend, Victoria, decorate her house and
Many small business owners prefer to borrow money rather than sell equity. Why is this so?
Explain how a sole proprietorship differs from a corporation.
Hal Carrier is experiencing the classic small business cash flow problem. Sales look good and the book balances is always positive, but checks are bouncing.What is causing Hal's cash flow
Stan was trying to get a short term loan from his banker to cover a temporary cash flow problem. What are other sources he should consider?
Which of the techniques to prevent cash flow problems are each of these entrepreneurs using?Jeb contacted three customers who where behind on their payments.Kathy got one of her suppliers to allow
Claude pays for 30% of his direct material, all of the manufacturing overhead and GSA, and 75% of the direct labor in the month it’s purchased. He pays all balances the following month. Assume that
Claude, at Basic Industries (from Chapter 13), is ready now to do his cash budget. In Claude’s case, his sales were fixed at $600,000 per month, but he does anticipate landing another contract for
Renda is really confused. “I’ve got three different numbers here and I don’t know what is right. My records show that I have $35,463 in the bank, but the bank statement says $37,428. When I
Stan was at his banker’s trying to get a short term loan. “I need about $10,000 for three months, just until I get things straightened out. This is my situation: I got this nice order last
Cash or cash equivalent? What does each of the small business owners have?Stephen has 3 ten-dollar bills and 5 singles in the register.Ben owns 100 shares of AT&TEunice owns a number of
Discuss five methods commonly used to increase cash inflows.
What are the relationships among planning, budgeting and forecasting?
How do the economic and accounting definitions of cash differ?

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