A business plan helps the entrepreneur anticipate the different situations that may occur.
E-mail promotion provides a low-cost way to pinpoint customers and achieve response
rates higher than those for banner ads.
The accounting system of a small business need not have the capacity to provide
financial statements for use by banks and prospective creditors.
You Make the CallSituation 1
The Amigo Company manufactures motorized wheelchairs in its Bridgeport, Michigan,
plant, under the supervision of Alden Thieme. Alden is the brother of the firm’s founder,
Allen Thieme. The company has 100 employees and does $10 million in sales a year.
Like many other firms, Amigo is faced with increased liability insurance costs.
Although Alden is contemplating dropping all coverage, he realizes that the users of the
firm’s product are individuals who have already suffered physical and emotional pain.
Therefore, if an accident occurred and resulted in a liability suit, a jury might be
strongly tempted to favor the plaintiff. In fact, the company is currently facing
litigation. A woman in an Amigo wheelchair was killed by a car on the street. Because
the driver of the car had no insurance, Amigo was sued.
Question 1 Do you agree that the type of customer to whom the Amigo Company sells
should influence its decision regarding insurance?
Question 2 In what way, if any, should the outcome of the current litigation affect
Amigo’s decision about renewing its insurance coverage?
Question 3 What options does Amigo have if it drops all insurance coverage? What is
your recommendation?
Temptations and pressures to act unethically are thought to be greater in big business
than in small business.
Entrepreneurs who follow a win-win strategy are taking an approach that ensures that
their own firm will achieve the outcomes that are best for their own firm.
Similar to a caste system, a genuine social class system does not allow for upward
mobility.
List and explain the attractions and challenges of operating a home-based business.
Developments in the technological segment of the general environment have created
significant opportunities for many new and creative small businesses.
Unexpectedly stumbling across a business opportunity could be considered a
precipitating event.
Total asset requirements must equal total sources of financing.
Entrepreneurs are essentially like the general population in their personal
characteristics.
Discuss how well founders function as managers.
What options are available to the aspiring franchisee to assist in the evaluation of a
franchising opportunity?
The entrepreneur who enters into a franchising agreement does not acquire the right to
use the franchisor’s trademark or brand name.
You Make the CallSituation 2
Harrison Stevens, second-generation president of a family owned heating and air
conditioning business, was concerned about his 19-year-old son, Barry, who worked as
a full-time employee in the firm. Although Barry had made it through high school, he
had not distinguished himself as a student or shown interest in further education. He
was somewhat indifferent in his attitude toward his work, although he did reasonablyor
at least minimallysatisfactory work. His father saw Barry as immature and more
interested in riding motorcycles than in building a business.
Stevens wanted to provide his son with an opportunity for personal development. As he
saw it, the process should begin with learning to work hard. If Barry liked the work and
showed promise, he might eventually be groomed to take over the business. His father
also held a faint hope that hard work might eventually inspire him to get a college
education.
In trying to achieve these goals, Stevens sensed two problems. The first problem was
that Barry obviously lacked proper motivation. The second problem related to his
supervision. Supervisors seemed reluctant to be exacting in their demands on Barry.
Possibly because they feared antagonizing the boss by being too hard on his son, they
allowed Barry to get by with marginal performance.
Question 1 In view of Barry’s shortcomings, should Harrison Stevens seriously
consider him as a potential successor?
Question 2 How could Barry be motivated? Can Stevens do anything more to improve
the situation, or does the responsibility lie with Barry?
Question 3 How could the quality of Barry’s supervision be improved to make his work
experience more productive?
What are the advantages and disadvantages of using salary and commission as methods
of compensating salespeople?
To evaluate a firm’s liquidity, an investor can either compare the firm’s assets that are
relatively liquid in nature with the debt coming due in the near term or examine the
timeliness with which liquid assets are being converted into cash.