DrRayBizBriefBtfy

Title

Article

Money First

Business: It's all about the money.
Whether you have a good heart or you're a greedy person, you're business can only survive by making money.
If you want to do something good for the world but you can't turn a profit, you're good intentions will fail, just like your business.
Making money is not evil. It's necessary.

Types of Businesses

Types of businesses (ownership)

Sole proprietor = 1 person, ends at death
Partnership = two or more persons, ends at death
Firms = a type of partnership; usually a group of professionals like lawyers, accountants, or other type of consultants (marketing consultants, management consultants).
Corporation = A company whose owner’s are stockholders (shareholders). A legal entity acting in the same capacity and with the same legal obligations as an individual. They last forever (unlimited lifetime)

Advantages of each

Advantages

An advantage of a sole proprietor is complete flexibility in running the company.
An advantage of a partnership is to combine the investment and knowledge/expertise of more than one person.
An advantage of a corporation is that if the corporation fails, you do not lose your personal money or property ( personal assets ). You can raise capital with less risk.

Disadvantages of each

Disadvantages

A disadvantage of a sole proprietorship is the lack of initial investment to start a company, and also, if the company fails you may lose your personal assets (the property, money, and things you own). In other words, your personal assets are not protected .
The disadvantage of a partnership is the same as for a sole proprietor. Also, you may not have the same freedom and flexibility in running the company because you have a shared responsibility in decision-making with the other partners.
A disadvantage of a corporation is the lack of flexibility and control that sole proprietors and partnerships have. Steve Jobs, is a great example.

Corporations raise money by selling stock

A share of stock is the piece of paper that gives you ownership and the right to vote in a corporation. You get one vote for each share—if you have 100 shares you can vote 100 times.

A person who owns a share of stock is called a stockholder or shareholder . The shareholders vote to elect the board of directors. Many people buy stocks for investment purposes only and do not exercise their right to vote.

Board of Directors, Chairman, CEO

The board of directors is the group of people (committee) who run a corporation. They make the major decisions for the company, but they don’t run the company on a day-to-day basis. They often have other jobs, or they are rich, so they don’t come to the company everyday. They only meet once a month or just a few times each year.

The head of the board of directors is called the Chairman of the Board , or just Chairman .

The board of directors appoint the CEO (Chief Executive Officer). The CEO runs the company on a day-to-day basis. Only the board of directors can fire the CEO. The CEOis the boss of everyone in the company (except the board members).

an Image

Side Note: A stockbroker is a professional who buys and sells stocks for other people. If I want to make an investment or buy some stocks, I will call a stockbroker.

Products, Customers, Consumers

A company’s product is it’s goods or services (what it makes and sells).

Goods are things you can touch: bananas, computers, cars, cell phones, toys

Services are things you do for people: tourism, restaurants, lawyers, car wash, beauty salons, entertainment, transportation, banks, insurance, consultants . . . .

A customer is someone who shops at a particular store. The word customer is specific to one store. For example:

“ This man is my regular customer, he comes here all the time;”

The word consumer is similar to customer. However, the word consumer is an economic term used to describe all the people in a society who have buying power (the ability to buy). The word consumer is not specific to any one shop, store, or business. For example:

“ The Wall Street Journal reports that consumer spending is down this month” (all the people who could be out shopping are not spending money)

Basic marketing process

Marketing distribution is the process of getting the goods/products to the consumer.

Manufacturers (or the manufacturing industry) are the people who make the products (goods).

Wholesalers (or the wholesale business) are company’s who buy, sell, and ship their products in bulk to the retail stores (like department stores). They store their goods in warehouses.

Retailers (or the retail business) are the final place to sell a product, like a department store.

The basic marketing distribution flow chart is below:

Manufacturer (factory)-------> Wholesalers (warehouse) ------->Retailers (department stores)

Net Income, Profit, Expenses

Note: As language learners, the following words are for general use. In a finance and accounting office, the words will have very specific meanings.

Revenue is equal to a all the money a company takes in. (Money coming in)

Expenses are the money you have to spend or the bills you have to pay—like rent, utilities, and salaries. (Money going out)

Net Income (Profit) = Revenue – Expenses.

Hopefully, the money coming in (revenue) is more than the money going out (expenses).

Side Note: T he money made by an individual that works for a company is called personal income or salary .

Assets = property, cash, and investments

(everything a company own’s or has legal possession of—this includes

land, buildings, machines, vehicles, cash, and investment holdings.)

Liability = a company’s debts (what the company owes to banks and other creditors)

Corporate Structure or levels

A corporation begins as a single company.

When a corporation gets larger, it might buy other companies. So in effect, a corporation can be more than one company.

Large companies can be divided into divisions, sometimes called regional divisions.

Each division is usually divided into departments.

Finally, large departments can be divided into sections.

Corporation
Company
Division
Department
Section

Product Advantage

People purchase products or services for three basic reasons:

To satisfy basic needs.(food, clothing, housing, personal hygiene products)
To make life more convenient (saving time, saving work, or solving problems)
To make themselves feel good. (psychologically and physically: high fashion items, health & fitness, eating out, eating ice cream)

Product advantage

Your asking people to give you their hard-earned money.

What is it about your product that makes it unique and sets it apart from competitors?

Target Market

Target market

Who are you customers? Who are your ideal customers? Who will want to buy your product?

Will you Mass market or Niche market?

Mass Market—to sell to as many people as possible

Niche Market—to sell a special product or service to a small group with special needs or desires

Where do they live?

What is their family structure (number of children, extended family, etc.)?

What is their income?

What do they do for a living?

What is their lifestyle like?

How do they like to spend their spare time?

What motivates them?

Other things to consider:

Age: children, teens, young, middle, elderly
Gender: male, female
Education: high school, college, university
Income: low, medium, high
Marital status: single, married, divorced
Ethnic and/or religious background
Family life cycle: newly married, married for 10 – 20 years, with or without children.
Lifestyle: conservative, exciting, trendy, economical
Social class: lower, middle, upper
Opinion: easily led or opinionated
Activities and interests: sports, physical fitness, shopping, books
Attitudes and beliefs: environmentalist, security conscious.

Example: "My target customer is middle-class women in their 30s or 40s who are married and have children, and are environmentally conscious and physically fit."

Promoting the company's products

Promotion

Promoting your product.

1) Advertising –Will you advertise on the internet, social media, radio, television, loud-speaker truck, newspaper, or magazine? You can do a little of each, but you don’t have an unlimited budget, so which two or three will you use at first, and why?

2) Publicity – Publicity provides free communications for a company through news stories or special activities. You can sponsor special events like a marathon race. You can get free publicity by sending a news release abut the event to your local radio stations, TV stations, newspapers, and magazines. These events cost very little and are very effective.

3) Sales promotion – Sales promotion includes special discounts on your product or service. You can give your product away for free so people can sample them. You can have a buy-one-get-one-free sale (also called two-for-one).

4) Promotional Events – Represent your company at a trade show (exhibition), if you are a restaurant, for example, you can have a special eating contest. Auto dealers can have a special car show at the mall. A clothing store can create a fashion show.