Starting a Business Guide Chapter 1
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Questions and Answers

What is the potential revenue from 100 customers ordering 20 pizzas at $15 each?

  • $40,000
  • $20,000
  • $10,000
  • $30,000 (correct)

    • Direct competitors sell products that are similar to yours.

    False

    What is one vital question to consider about competitors when starting a business?

    Where are other pizza shops located?

    Useful sources for market research include trade journals and __________.

    <p>industry publications</p> Signup and view all the answers

    Match the following types of competitors with their definitions:

    <p>Direct competitors = Sell exactly like your product Indirect competitors = Offer similar or alternative products Market Research = Analysis of competitors and consumer needs Unmet need = A gap in the market that can be filled</p> Signup and view all the answers

    Which of the following is NOT a recommended source for market research?

    <p>Social media posts</p> Signup and view all the answers

    The library is still considered a valuable resource for market research.

    <p>True</p> Signup and view all the answers

    What is one way to identify potential customer dissatisfaction with other pizza options?

    <p>Conduct surveys or interviews</p> Signup and view all the answers

    Which of the following is NOT a common form of personal financial resource?

    <p>Government loans</p> Signup and view all the answers

    Grant funding usually goes directly to businesses or individuals.

    <p>False</p> Signup and view all the answers

    What is a common risk of using personal financial resources to fund a business?

    <p>Loss of personal assets or financial instability</p> Signup and view all the answers

    The myth of free money for startups and small businesses has been around for _____ years.

    <p>decades</p> Signup and view all the answers

    Where can you search for government grants?

    <p>grants.gov</p> Signup and view all the answers

    Match the following financial resources with their descriptions:

    <p>Liquid cash = Money readily available in accounts Home equity = Capital from selling property Credit cards = Borrowed funds for purchases Retirement investments = Funds saved for future use and growth</p> Signup and view all the answers

    What does B2B stand for?

    <p>Business to Business</p> Signup and view all the answers

    Selling a vehicle can be considered a personal financial resource.

    <p>True</p> Signup and view all the answers

    Market research can help determine customer segments.

    <p>True</p> Signup and view all the answers

    What is the primary purpose of industry research for a business?

    <p>To understand the big picture of what’s happening in relation to the business type.</p> Signup and view all the answers

    What can funds received from friends and family be considered?

    <p>Gifts or investments</p> Signup and view all the answers

    A farm might engage in both B2B and ___ sales by selling produce directly to individuals.

    <p>B2C</p> Signup and view all the answers

    Match the following terms with their definitions:

    <p>Market Size = The total population that may buy the product Market Segments = Groups of customers sharing common characteristics Industry Research = Studying the broader trends of a specific business sector Purchasing Frequency = How often customers buy a product or service</p> Signup and view all the answers

    What are government grants funded by?

    <p>Tax dollars</p> Signup and view all the answers

    Which question would be relevant when performing market research for a food business?

    <p>How often do consumers buy food?</p> Signup and view all the answers

    More pizza parlors going out of business suggests a growing market for pizza.

    <p>False</p> Signup and view all the answers

    Government grants do not require stringent reporting measures.

    <p>False</p> Signup and view all the answers

    Name one type of financial institution that provides loans to underserved communities.

    <p>Community Development Financial Institutions (CDFIs)</p> Signup and view all the answers

    What kind of support can Michigan SBDC Consultants provide to businesses?

    <p>Access to secondary research at no cost.</p> Signup and view all the answers

    Community development financial institutions (CDFIs) primarily provide ______ to those who might not qualify for traditional financing.

    <p>loans</p> Signup and view all the answers

    Which of the following is a common requirement for business grants?

    <p>Matching funds or combining with other financing</p> Signup and view all the answers

    CDFIs focus on serving wealthier communities in need of financial assistance.

    <p>False</p> Signup and view all the answers

    What is one consideration lenders have when evaluating loan requests?

    <p>Credit history</p> Signup and view all the answers

    Match the types of funding sources with their descriptions:

    <p>Government Grants = Require strict compliance and reporting CDFIs = Provide loans to underserved communities Local Programs = May require matching funds Nonprofit Organizations = Often provide grant funding</p> Signup and view all the answers

    What is a crucial question to ask when refining your business idea?

    <p>Will investing in my business idea put me in financial jeopardy?</p> Signup and view all the answers

    What is the primary focus of the Michigan Small Business Development Center (MI-SBDC)?

    <p>Assisting businesses in launching and growing</p> Signup and view all the answers

    A business plan is only important for financial projections.

    <p>False</p> Signup and view all the answers

    What might most business owners do after analyzing their financial situation?

    <p>Adjust their original concept.</p> Signup and view all the answers

    The Michigan SBDC provides counseling, training, and research to help only existing businesses.

    <p>False</p> Signup and view all the answers

    Name one resource available for starting and operating a business in Michigan.

    <p>U.S. Small Business Administration (SBA) or Michigan Economic Development Corporation (MEDC).</p> Signup and view all the answers

    A written business plan is required by _______ and investors for financing.

    <p>lenders</p> Signup and view all the answers

    Match the steps in starting a business:

    <p>Refine and Reevaluate Your Idea = Assess feasibility and risk Write Your Business Plan = Communicate your business strategy and secure funding Financial Analysis = Adjust concept based on costs and revenue</p> Signup and view all the answers

    The Michigan SBDC provides support in areas such as __________, management, and marketing.

    <p>hiring</p> Signup and view all the answers

    Match the following types of assistance with their description:

    <p>Counseling = One-on-one help for business owners Training = Programs to develop business skills Research = Providing data to support business decisions Resources = Tools and materials for entrepreneurs</p> Signup and view all the answers

    Why is financial analysis important before launching a business?

    <p>It justifies the financial risk with potential value.</p> Signup and view all the answers

    What does MI-SBDC suggest regarding the legal and financial aspects of starting a business?

    <p>It is an informational resource, not a substitute for professional advice.</p> Signup and view all the answers

    Ideas and thoughts stored in your head can be considered a formal business plan.

    <p>False</p> Signup and view all the answers

    What is often adjusted in a business concept after financial consideration?

    <p>The scale of the idea.</p> Signup and view all the answers

    The information provided by the Michigan SBDC can change over time due to revisions in law and administrative policies.

    <p>True</p> Signup and view all the answers

    What type of online resource is available for periodic updates from the Michigan SBDC?

    <p>Learning Management System (LMS)</p> Signup and view all the answers

    Study Notes

    Starting a Business

    • Helping businesses launch and grow is a focus of the Michigan Economic Development Corporation (MEDC) and the Michigan Small Business Development Center (MI-SBDC).
    • The MI-SBDC offers counseling, training, and research to help businesses launch, grow, transition, and innovate.
    • This guide outlines steps, responsibilities, issues, and challenges facing entrepreneurs.
    • Information is general and Michigan-specific.

    Personal Assessment

    • Self-assessment is to determine personal, professional, and financial readiness for self-employment.
    • Questions to ask yourself:
      • Reasons for starting a business
      • Desired business type and justification for sustainability
      • Education, skills, and experience for success in the industry, and any required qualifications
      • Purpose and goals in this business
      • Financial goals, financing needs, and financial history
      • Personal and professional strengths and weaknesses
      • Physical, mental, and emotional health, and stamina
      • Required knowledge and skills for business functions
      • Industry technology, and competitor analysis
      • Sacrifices and risks for success
      • Balancing work and personal life
    • No right or wrong answers, but answers to these questions should be detailed.

    Steps to Starting a Small Business

    • Perform a Self-Assessment
    • Select a Business Idea
    • Perform Market Research
    • Refine or Reconsider Your Business Idea
    • Analyze Your Startup Costs
    • Refine or Reconsider Your Business Idea
    • Write Your Business Plan
    • Complete the Startup Checklist
    • Secure Financing for Your Business
    • Start Your Business

    Select a Business Idea

    • Questions to consider:
      • What are you good at?
      • What do you love to do?
      • What skills do you have?
      • What problems can you solve?
      • How can you meet unmet needs?
    • Create a list of 5-10 business ideas, evaluate them based on the personal assessment, and research markets.

    Perform Market Research

    • Research market potential for your business idea including size, trends, and customer analysis.
    • Identify primary customer segments.
    • Understand B2C (Business-to-Consumer) and B2B (Business-to-Business) companies.

    Market Research Checklists

    • Industry Research: Industry size, growth potential, trends, professional associations, related industries, opportunities, and threats.
    • B2C Customer Research: Population size, demographics (age, gender, ethnicity, education, income), homeownership status, family, media preferences, purchasing frequency and habits.
    • Market Research: Best opportunity (B2B, B2C, or combination), total number of buyers, segment analysis, and market trends.)
    • B2B Customer Research: Industries, products, number of employees, length of time in business, geographic location, purchasing patterns, purchasing process, outsourcing, economic factors, and government regulations.
    • Competition Research: Direct competitors, indirect competitors, potential future competitors, financials, marketing strategies, distribution channels, strengths, weaknesses, opportunities.

    Refine and Reevaluate Your Business Idea

    • Determine if the business idea is viable given the market research and financial assessment.
    • Questions to consider:
      • Is there a need?
      • Who are your customers?
      • What is your value proposition?
      • Can you justify financial risks?
      • Project business revenue to offset costs.

    Write Your Business Plan

    • Business plan is a framework to organize and synthesize all information, as well as for simulation.
    • Includes: strengths, shortcomings, and economic factors.
    • Plan will include:
      • Market analysis
      • Identifying markets
      • Logistics
      • Operations management

    Complete the Startup Checklist

    • Purchase an existing business or proceed to other steps if viability is determined.
    • Develop a brand and image for the business.
    • Choosing a legal business structure.

    Secure Financing for Your Business

    • Evaluate personal finances and assets.
    • Explore financing options and visit lenders.

    Start Your Business

    • Congratulations! The journey starts.

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    Starting a Business Guide PDF

    Description

    This quiz helps aspiring entrepreneurs assess their readiness for starting a business. It covers essential steps for launching, growing, and innovating within a business context, specifically emphasizing Michigan resources. Through personal assessments, participants will explore their motivations, skills, and financial readiness for self-employment.

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