SBANC Newsletter
July
5,
2005
Issue
379-2005
QUOTE
"Before you can really start setting financial goals, you need
to determine where you stand financially."
-- David
Bach
FEATURE
PAPER
Recovery
Prior to Succession: A Case Study of a Family Business Facing
Unexpected Turmoil
This
paper was presented by A. A. Tavakoli and Ray L. Benedicktus from
Fayetteville State University at the 2004
Annual National SBI Entrepreneurship and Small Business Educators
Conference in Clearwater, Florida.
ABSTRACT
Jonathan Parker, 62, is the owner of Soak & Swim, Inc., a local
pool and spa retail company located in North Florida. He bought the
company from its founder in the early 70’s and has taken great
pains to build the stores revenues in order to pass on the company
to his son, Joe. Since the beginning of Jonathan’stenure, there
has not been a year in which same store sales did not exceed the
previous years. However, last summer the company began a critical
sales slump, in which revenues have dropped nearly 19% from the annual
$3 million dollar sales goals set by the father-son management
duo. In addition, increasing operating costs have been forcing the
company’s profits closer and closer to the break-even point.
Furthermore, the aptitude for this summer’s sales seems less
and less promising, with weather forecasts of constant showers and
tropical storms, couples with a still struggling national economy.
Read the Entire Paper...
TIP
OF THE WEEK
Breakeven
Analysis
Business owners have numerous alternatives to starting a new venture
and a breakeven analysis of the projected position of the company
will go a long way toward determining the best path for the entrepreneur
to embark upon. A breakeven analysis is the judgment of when the
firm will reach breakeven after the business is begun.
The breakeven analysis recognizes that the growth in sales does
not occur all at once. Instead, the sales of the business will
grow incrementally once the firm starts. However, many of the expenses
of the firm will start months before the first sale. Specifically,
some fixed costs (for example: rent, utilities, equipment, leases,
etc.) must be paid regardless of the sales level. There are also
variable costs that will fluctuate according to how many goods
are produced. For example, if a manufactured product is packaged
in plastic bottles then costs will increase as more product is
produced since more bottles will be needed.
The traditional Fortune 500 approach to breakeven analysis would
suggest that once revenues exceed the total of the fixed costs
plus the variable costs, then the firm has reached breakeven.
In this approach, the profit margin from each sale adds to
the operating
profit for the firm. For firms operating in a project by project
environment, this type of analysis is relatively effective. These
firms are simply trying to compare investment in one project
versus investment in another.
However, entrepreneurial ventures operate in a fundamentally
different manner and breakeven is calculated using cash flow
rather than
profit. The initial investment in the new venture is not
normally included in most corporate cash flow analyses. Accounting
for
the initial investment allows the new firm to discuss the
true economic
rents, or economic benefits, from the venture. As the new
firm begins operations, it is using cash (both from a fixed
as well
as variable cost standpoint) and reporting a negative net
cash flow. Depending upon the venture and the industry in which
it is operating, this negative cash flow can go on for some
time.
However,
at some point a successful business turns the corner and
begins
producing positive cash flows. This might be considered the
point of breakeven for the company; however, until the new
venture's
positive cash flows exceed the initial investment, true breakeven
has not been achieved. Taking the issue of time value into
consideration can further enhance this analysis. There are
other uses for investment
dollars and raw time. Calculating the time value of money
gives the initial investment line an upward slope and creates
an
entrepreneurial breakeven point that is further out, but
infinitely more realistic
from an investor point of view.
Bamford, Charles E., and Garry D. Bruton. Small
Business Management: A Framework for Success. Mason: Thomson/South-Western, 2006. 120.
CONFERENCES
9th World Multi-Conference on Systemics, Cybernetics and
Informatics (WMSCI)
The 9th World Multi-Conference
on Systemics, Cybernetics and Informatics will be held in Orlando,
Florida on July 10-13, 2005. This conference is organized by the
International
Institute of Informatics and Systemics.
For more information, visit: http://www.iiisci.org/sci2005/website/default.asp
Internationalizing Entrepreneurship Education
and Training Conference
The
University of Surrey School of Managements will hold its Internationalizing
Entrepreneurship Education and Training Conference (IntEnt) in Guildford,
Surrey, at the University of Surrey's new School of Management in
the United Kingdom on July 10-13, 2005.
For
more information, visit: http://intent05.som.surrey.ac.uk/system/index.asp?menuid=1&id=4
7th Annual NIH SBIR/STTR Conference
The National Institutes of Health and the Small Business Innovation
Research (SBIR) will hold
its 7th Annual NIH SBIR/STTR Conference in Bethesda, Maryland on
July 28-29, 2005.
For more information, visit: http://grants.nih.gov/grants/funding/SBIRConf2005/index.htm
Research
Symposium on Marketing and Entrepreneurship 2005
The The University of Illinois at Chicago will
hold its Research Symposium on Marketing and Entrepreneurship 2005.
The symposium allows distinguished researchers from around the world
present new discoveries and ideas about marketing in entrepreneur-led
businesses and new ventures, teaching innovations and discuss the
impact of the latest technologies on marketing and entrepreneurship..
The meeting will take place in San Francisco at the downtown campus
of co-host Ohrenschall Center for Entrepreneurship at San Francisco
State University on
August 1-3, 2005.
For
more information, visit: http://www.uic.edu/cba/ies/symposia.html
Entrepreneurial
Leadership and Business Advantage (ELBA)
The
Entrepreneurial Leadership and Business Advantage (ELBA) World
Entrepreneurship Conference will be held on the beautiful
California State University, Chico campus from August 4-10, 2005.
This is truly an international entrepreneurship conference. The ELBA
conference
will include presentations by U.S. policymakers,
venture
capitalists and successful entrepreneurs.
For more information, visit: http://www.elba-conference.org
CALL
FOR PAPERS
First Annual
Business and Leadership Symposium
The
College of Business and Leadership at Fort Hays State University
will hold the First Annual Business and Leadership Symposium
at Hays, Kansas on September 28 - 29, 2005.
The best proposals in the
Symposium are eligible for publication consideration in the Journal
of Business and Leadership: Research, Practice, and Teaching.
Submission Deadline: July 17, 2005.
For more information, visit: http://www.fhsu.edu/cob/mdc/blsguidelines.doc
USASBE/SBI
The
USASBE/SBI will hold its USASBE/SBI 2006 Joint Conference at the
W Marriott Starr Pass Resort & Spa, Tucson, Arizona on January
12-15, 2006. The conference will focus on "The
Changing Entrepreneurial Landscape."
Submission Deadline: July 15, 2005
For more information, visit: http://www.usasbesbi2006.org
IPSI-2005 NEW YORK
The IPSI BgD conference will be held at the
Hotel Beacon in New York, New York. One
of the main topics of this conference is "E-education
and E-business with Special Emphasis on Semantic Web and Web Datamining."
The conference is being held on January 5-8, 2006.
Submission Deadline: August 1, 2005.
For more information, visit: http://www.internetconferences.net/newyork2006/index.html
Small Business Institute (SBI)
The
Small Business Institute (SBI) will hold the 2005 Small Business
Institute Annual Eastern Conference at The Omni William Penn Hotel
in Pittsburgh, Pennsylvania on September 16-17, 2005. This conference
is open to all those with an interest in small business and entrepreneurship,
and it is not limited to members of the SBI
Eastern region.
Submission Deadline: August 1, 2005
For more information, visit: http://www.duq.edu/sbdc
College
Teaching Methods & Styles (CTMS)
The College Teaching Methods & Styles (CTMS) will hold the
International College Teaching Methods & Styles Conference at
Silver Legacy Hotel Casino in Reno, Nevada on September 19-21, 2005.
Submission Deadline: August 7, 2005
For more information, visit: http://www.ctmsconference.com/call_for_papers.htm
ANNOUNCEMENTS
Job Openings:
The Hanna Family Chair in Entrepreneurship
Krannert School of Management
Purdue University
West Lafayette, IN
For more information, visit: http:/business.AcademicKeys.com/redirect.php?3981-BU0305063
Small Business & Entrepreneurship
with Multicultural Emphasis, Sr. Assist, Assoc. or Full Professor
Business School
University of Washington
Seattle, WA
For more information, visit: http://business.AcademicKeys.com/redirect.php?3770-BU03050630
The SBANC Newsletter
is provided as a service to the members of our affiliates: Academy
of Collegiate
Marketing Educators
(ACME), Association for Small Business& Entrepreneurship
(ASBE), Decision Sciences Institute (DSI), Federation of Business
Disciplines (FBD), International Council for Small Business
Congress (ICSBC), Institute
for Supply Management, The International Small Business
Congress (ISBC), Marketing Management Association (MMA),
Small Business
Administration (SBA),
Service Corps of Retired Executives, Small Business Institute
(SBI), Society for Marketing Advances (SMA), United States
Association
for Small Business & Entrepreneurship
(USASBE), U.S. Department of Veterans Affairs and Western Decision
Sciences Institute (WDSI). If you are interested in membership
or would like further
information on one of our affiliates, please see our web site
at http://www.sbaer.uca.edu
SBANC
STAFF
Main Office Phone: (501) 450-5300
Dr. Don B. Bradley III, Executive
Director of SBANC & Professor
of Marketing
Direct Phone: (501) 450-5345, E-mail: donb@uca.edu
Esther
Mead, Graduate Research, E-mail: esthermead@gmail.com
Ashley
Ford, Development Intern, E-mail: ASHatsbanc@hotmail.com
Brad Lawrey, Development Intern, E-mail: bradlawrey@hotmail.com
Olivia Johnson, Development Intern, E-mail: reneeatuca_2003@hotmail.com
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