Small Business Management An Entrepreneurial Emphasis (with CD-ROM and InfoTrac)

by Longenecker, Justin G.; Moore, Carlos W.; Petty, J. William; Palich, Leslie E.

• ISBN13: 9780324226126
• ISBN10: 0324226128
• Edition: 13th
• Format: Hardcover
• Copyright: 2005-01-06
• Publisher: South-Western College Pub

Summary

Small Business Management, with its loyal following and great package, is far and away the market leading text in small business and has been for many years. It is a proven text, comprehensive in its approach, with the best fully integrated content, graphics, and resources devoted to business plan development. SBM has always been a step ahead of the competition (first to cover family businesses and first to integrate computer technology for small business) and continues to provide innovative coverage in each new edition. Increasingly adopted in hybrid courses that combine small business management and entrepreneurship and in standalone entrepreneurship courses, SBM shows aspiring business owners not only how to start a business but how to grow one.

Table of Contents

Preface	xiv
About the Authors	xx
Part 1 Entrepreneurship: A World of Opportunity	1	(46)
The Entrepreneurial Life	2	(22)
In the Video Spotlight: Cafe Pilon	2	(1)
Entrepreneurial Opportunities	3	(3)
Three Success Stories	3	(2)
Evidence of Opportunities	5	(1)
Entrepreneurship and Small Business	6	(1)
Who Are the Entrepreneurs?	6	(1)
What Is Small Business?	6	(1)
The Payoff of Entrepreneurship	7	(3)
Make Money (Profit)	8	(1)
Be Your Own Boss (Independence)	8	(1)
Escape a Bad Situation (Freedom)	8	(1)
Living the Dream: Engineers Become Entrepreneurs	9	(1)
Enjoy a Satisfying Life (Personal Satisfaction)	9	(1)
Contribute to the Community (Personal Fulfillment)	9	(1)
The Many Varieties of Entrepreneurship	10	(3)
Founder Entrepreneurs Versus Other Business Owners and Franchisees	10	(1)
High-Potential Ventures Versus Attractive Small Firms and Microbusinesses	10	(1)
Entrepreneurial Teams	11	(1)
Artisan Versus Opportunistic Entrepreneurs	11	(1)
Living the Dream: The Guitar Man	11	(1)
Women Entrepreneurs	12	(1)
The Winning Hand of Entrepreneurship	13	(2)
Customer Focus	13	(1)
Quality Performance	13	(1)
Living the Dream: A Customer-Oriented Body Shop	14	(1)
Integrity and Responsibility	14	(1)
Innovation	14	(1)
Special Niche	15	(1)
Getting Started	15	(2)
Age and Entrepreneurial Opportunity	15	(1)
Living the Dream: A Teenage Entrepreneur	15	(1)
Characteristics of Successful Entrepreneurs	16	(1)
Taking the Plunge	16	(1)
Growing and Managing the Business	17	(1)
Success in Business and Success in Life	17	(7)
Looking Back at an Entrepreneurial Career	17	(1)
Evaluating Accomplishments	17	(1)
Winning the Wrong Game	17	(1)
Crafting a Worthy Legacy	18	(1)
Beginning with the End in Mind	19	(5)
Entrepreneurial Integrity: A Gateway to Small Business Opportunity	24	(23)
In the Video Spotlight: Diversified Chemical	24	(1)
Integrity and Entrepreneurship	25	(2)
What Is Integrity?	25	(2)
Doing the Right Thing	27	(1)
A Framework for Integrity	27	(7)
Promoting the Owners' Interests	29	(1)
Respecting Customers	30	(1)
Living the Dream: The Best Leader Is a Great Servant	31	(1)
Valuing Employees	32	(1)
Social Responsibility and Small Business	33	(1)
Governmental Laws and Regulations	34	(1)
The Challenges and Benefits of Acting Ethically	34	(2)
The Vulnerability of Small Companies	34	(1)
The Integrity Edge	35	(1)
Integrity in an Expanding Economy	36	(2)
Integrity and the Internet	36	(1)
International Issues of Integrity	37	(1)
Building a Business with Integrity	38	(4)
A Strong Foundation	38	(1)
Living the Dream: A Healthy Diet of VeggieTales	39	(1)
Leading with Integrity	39	(1)
A Supportive Organizational Culture	40	(1)
Better Business Bureaus	41	(1)
Environmentalism---Cost or Opportunity?	42	(5)
The Burden of Environmentalism	42	(1)
The Potential of Environmentalism	42	(1)
Living the Dream: Going Green Can Cost You Greenbacks	43	(4)
Part 2 Starting from Scratch or Joining an Existing Business	47	(68)
Getting Started	48	(24)
In the Spotlight: Recycline, Inc.	48	(1)
Identifying Startup Ideas	49	(1)
Creating a New Business from Scratch	50	(2)
Finding Startup Ideas	52	(4)
Types of Startup Ideas	52	(1)
Sources of Startup Ideas	52	(1)
Living the Dream: Reflective Technology Saves Dog	53	(3)
Using Internal and External Analyses to Evaluate an Opportunity	56	(5)
Outside-In Analysis	56	(3)
Inside-Out Analysis	59	(1)
Integrating Internal and External Analyses	60	(1)
Selecting Strategies That Capture Opportunities	61	(5)
Broad-Based Strategy Options	61	(1)
Living the Dream: Frenchman Serves Italian Pizza in China	62	(1)
Focus Strategies	63	(2)
Living the Dream: A Bad Case of Puppy Love	65	(1)
Putting It All Together	66	(6)
Franchises and Buyouts	72	(22)
In the Video Spotlight: Auntie Anne's	72	(1)
The Pros and Cons of Franchising	73	(5)
Advantages of Franchising	73	(1)
Living the Dream: Got Junk?	74	(2)
Living the Dream: Are You Ready to Work?	76	(1)
Limitations of Franchising	76	(2)
Franchising Options and the Structure of the Franchising Industry	78	(2)
Franchising Options	78	(1)
The Structure of the Franchising Industry	79	(1)
Evaluating Franchise Opportunities	80	(5)
Selecting a Franchise	80	(1)
Investigating the Potential Franchise	80	(1)
Living the Dream: College Brothers Are Smoothies	80	(1)
Living the Dream: A ``Diamond'' of a Franchise	81	(3)
Finding Global Franchising Opportunities	84	(1)
Considering Legal Issues in Franchising	84	(1)
Buying an Existing Business	85	(9)
Reasons for Buying an Existing Business	85	(1)
Finding a Business to Buy	86	(1)
Investigating and Evaluating Available Businesses	87	(1)
Valuing the Business	88	(1)
Nonquantitative Factors In Valuing a Business	88	(1)
Negotiating and Closing the Deal	89	(5)
The Family Business	94	(21)
In the Spotlight: Aquascape Designs Inc.	94	(1)
The Family Business: A Unique Institution	95	(4)
What Is a Family Business?	95	(1)
Family and Business Overlap	96	(1)
Competition Between Business and Family	96	(2)
Living the Dream: Family First and Business Second---in a Way That Works	98	(1)
Advantages of a Family Business	98	(1)
The Culture of a Family Business	99	(3)
The Founder's Imprint on the Culture	100	(1)
Cultural Patterns	100	(1)
Culture and Leadership Succession	101	(1)
Family Roles and Relationships	102	(3)
Mom or Dad, the Founder	102	(1)
Husband--Wife Teams	102	(1)
Sons and Daughters	103	(1)
Living the Dream: Kids Will Be Kids---but Not Always Employees	103	(1)
Sibling Cooperation, Sibling Rivalry	104	(1)
In-Laws In and Out of the Business	104	(1)
The Entrepreneur's Spouse	104	(1)
Professional Management of the Family Firm	105	(3)
The Need for Good Management	105	(1)
Nonfamily Employees in a Family Firm	106	(1)
Family Retreats	106	(1)
Family Councils	107	(1)
Family Business Constitutions	107	(1)
The Process of Leadership Succession	108	(7)
Available Family Talent	108	(1)
Living the Dream: A Formal Wear Feud	108	(1)
Stages in the Process of Succession	109	(2)
Reluctant Parents and Ambitious Children	111	(1)
Transfer of Ownership	111	(4)
Part 3 Developing the New Venture Business Plan	115	(170)
The Business Plan: Visualizing the Dream	116	(24)
In the Video Spotlight: Jagged Edge	116	(1)
An Overview of the Business Plan	117	(4)
What Is a Business Plan?	117	(1)
Do You Really Need a Plan?	118	(1)
Two Types of Business Plan	119	(1)
Living the Dream: A Lesson from the Internet: Under-Promise and Over-Deliver	119	(1)
Living the Dream: Business Planning on the College Campus	120	(1)
Telling the Story to Others	121	(3)
Attracting Investors	121	(1)
Living the Dream: An Effective Presentation Makes the Difference	122	(1)
Understanding the Investor's Perspective	122	(2)
Preparing a Business Plan	124	(8)
Formatting and Writing a Business Plan	124	(1)
Deciding on the Content of a Business Plan	125	(6)
What Not to Do	131	(1)
Resources for Business Plan Preparation	132	(1)
Computer-Aided Business Planning	132	(1)
Professional Assistance in Business Planning	132	(1)
Keeping the Right Perspective	133	(7)
The Marketing Plan	140	(22)
In the Spotlight: Harvest Ventures	140	(1)
What Is Small Business Marketing?	141	(2)
Marketing Philosophies Make a Difference	142	(1)
A Consumer Orientation---The Right Choice	142	(1)
The Formal Marketing Plan	143	(3)
Market Analysis	143	(1)
The Competition	144	(1)
Marketing Strategy	144	(2)
Living the Dream: Be Flexible	146	(1)
Marketing Research for the New Venture	146	(5)
The Nature of Marketing Research	147	(1)
Living the Dream: Launching Lashpro	147	(1)
Steps in the Marketing Research Process	148	(3)
Understanding Potential Target Markets	151	(3)
Market Segmentation and Its Variables	151	(1)
Marketing Strategies Based on Segmentation Considerations	152	(2)
Living the Dream: Solving the Puzzle	154	(1)
Estimating Market Potential	154	(8)
The Sales Forecast	154	(1)
Limitations to Forecasting	155	(1)
The Forecasting Process	156	(6)
The Human Resource Plan: Managers, Owners, Allies, and Directors	162	(24)
In the Video Spotlight: Tires Plus	162	(1)
Building a Management Team	163	(2)
Living the Dream: Two Heads Are Better Than One	164	(1)
Achieving Balance	165	(1)
Specifying Structure	165	(1)
Choosing a Legal Form of Organization	165	(11)
The Sole Proprietorship Option	165	(1)
The Partnership Option	166	(3)
Living the Dream: When Doing Less Is Worth More	169	(1)
The C Corporation Option	170	(1)
Criteria for Choosing an Organizational Form	171	(1)
Living the Dream: Simplicity Can Be Costly	172	(2)
Specialized Forms of Organization	174	(2)
Forming Strategic Alliances	176	(2)
Strategic Alliances with Larger Companies	176	(1)
Strategic Alliances with Small Companies	176	(1)
Setting Up and Maintaining Successful Strategic Alliances	177	(1)
Living the Dream: Monks Close to Death	177	(1)
Making the Most of the Board of Directors	178	(8)
Contributions of Directors	179	(1)
Selection of Directors	179	(1)
Compensation of Directors	180	(1)
An Alternative: An Advisory Council	180	(6)
The Location Plan	186	(18)
In the Video Spotlight: Nicole Miller Company	186	(1)
Locating the Brick-and-Mortar Startup	187	(5)
The Importance of the Location Decision	187	(1)
Key Factors in Selecting a Good Location	187	(3)
Living the Dream: Staying Home	190	(2)
Living the Dream: From High Tech to Low Tech	192	(1)
Designing and Equipping Physical Facilities	192	(1)
Challenges in Designing the Physical Facilities	192	(1)
Challenges in Equipping the Physical Facilities	192	(1)
Building Image	193	(1)
Locating the Startup in the Entrepreneur's Home	193	(3)
The Attraction of Home-Based Businesses	194	(1)
The Challenges of Home-Based Businesses	195	(1)
Technology and Home-Based Businesses	196	(1)
Locating the Startup on the Internet	196	(8)
What Is E-Commerce?	196	(1)
Benefits of E-Commerce to Startups	196	(1)
E-Commerce Business Models	197	(2)
Living the Dream: Student Entrepreneur Turns to ``Blogging''	199	(5)
The Financial Plan, Part 1: Projecting Financial Requirements	204	(32)
In the Spotlight: DailyCandy	204	(1)
Understanding Financial Statements	205	(12)
The Income Statement	205	(3)
The Balance Sheet	208	(2)
Living the Dream: Are Your Employee Meetings Like This One?	210	(2)
The Cash Flow Statement	212	(3)
Living the Dream: Want to Succeed? Then Understand Your Financial Statements	215	(1)
Living the Dream: Profits Are Good, but Cash Is Essential	216	(1)
Interpreting the Cash Flow Statement	216	(1)
Financial Forecasting	217	(10)
Forecasting Profitability	218	(1)
Living the Dream: Advice for the Starry-Eyed Entrepreneur: Do Your Homework	218	(1)
Forecasting Asset and Financing Requirements and Cash Flows	219	(3)
Living the Dream: Think About Personal Finances, Too	222	(5)
Good Forecasting Requires Good Judgment	227	(5)
Appendix 10A: Computing Cash Flows for Petri & Associates, Inc.	232	(3)
Appendix 10B: Cash Flow Statements for Cameron Products, Inc.	235	(1)
The Financial Plan, Part 2: Finding Sources of Funds	236	(28)
In the Video Spotlight: We'll Show You the Money	236	(1)
The Nature of a Firm and Its Financing Sources	237	(2)
A Firm's Economic Potential	237	(1)
Company Size and Maturity	237	(1)
Types of Assets	237	(1)
Living the Dream: Can't Get It Done the Traditional Way? Try Bootstrapping	238	(1)
Owner Preferences for Debt or Equity	239	(1)
Debt or Equity Financing?	239	(4)
Potential Profitability	239	(3)
Financial Risk	242	(1)
Voting Control	242	(1)
Living the Dream: Debt or Equity? You Have to Choose	243	(1)
Sources of Financing	243	(21)
Sources Close to Home	244	(1)
Living the Dream: To Raise Money, Invest Money---and Time	245	(2)
Living the Dream: A Risky Source of Financing, but Sometimes Necessary	247	(1)
Bank Financing	247	(1)
Living the Dream: Plastic Can Be Very Expensive	248	(2)
Living the Dream: Buy or Build?	250	(3)
Living the Dream: Beware of Loan Covenants	253	(1)
Business Suppliers and Asset-Based Lenders	253	(1)
Private Equity Investors	254	(2)
The Government	256	(1)
Living the Dream: Mezzanine Financing	256	(2)
Where Else to Look	258	(6)
The Harvest Plan	264	(21)
In the Spotlight: Type A Multimedia Network	264	(1)
The Importance of the Harvest	265	(1)
Methods of Harvesting a Business	266	(7)
Selling the Firm	266	(1)
Living the Dream: Success Means Making a Difference	266	(2)
Living the Dream: A Close Look at an LBO	268	(1)
Releasing the Firm's Cash Flows	269	(1)
Living the Dream: The Employee Learning Curve in an ESOP	269	(1)
Going Public	270	(1)
Living the Dream: Success Means Balancing Work and Family	270	(2)
Using Private Equity	272	(1)
Living the Dream: The Harvest: Easier Said Than Done	272	(1)
Firm Valuation and the Harvest	273	(3)
The Harvest Value	273	(1)
Living the Dream: Success Means Independence	274	(1)
The Method of Payment	275	(1)
Living the Dream: Accepting Stock for Payment Can Be Risky	275	(1)
Developing an Effective Harvest Plan	276	(5)
Manage for the Harvest	276	(1)
Living the Dream: Good Accounting Contributes to a Good Harvest	277	(1)
Expect Conflict---Emotional and Cultural	277	(1)
Living the Dream: Success Means Making Money	278	(1)
Get Good Advice	278	(1)
Understand What You Want	279	(1)
Living the Dream: Harvesting Is About More Than Money	279	(1)
Living the Dream: Success Means Loving Your Work	280	(1)
What's Next?	281	(4)
Part 4 Focusing on the Customer: Marketing Growth Strategies	285	(112)
Customer Relationships: The Key Ingredient	286	(20)
In the Video Spotlight: Texas Jet	286	(1)
What Is Customer Relationship Management?	287	(2)
The Importance of CRM to the Small Firm	288	(1)
Essential Materials for a CRM Program	288	(1)
Creating Transactional Relationships Through Extraordinary Service	289	(5)
Components of Customer Satisfaction	289	(1)
Living the Dream: Gifts Are Good for Business	290	(1)
Evaluating a Firm's Customer Service Health	290	(2)
Handling Customer Complaints	292	(1)
Living the Dream: Outsourcing the Help Desk---Help!	293	(1)
Using Technology to Support Customer Relationship Management	294	(1)
Living the Dream: A Bare-Bones CRM Strategy	294	(1)
Building Customer Profiles for a CRM Program	295	(1)
Customers as Decision Makers	296	(2)
Problem Recognition	297	(1)
Information Search and Evaluation	297	(1)
The Purchase Decision	297	(1)
Post-Purchase Evaluation	297	(1)
Understanding Psychological Influences on Customers	298	(2)
Needs	298	(1)
Perceptions	298	(1)
Living the Dream: A Recipe for Service	299	(1)
Motivations	300	(1)
Attitudes	300	(1)
Understanding Sociological Influences on Customers	300	(6)
Culture	300	(1)
Living the Dream: Customers Love Taco Talk	301	(1)
Social Class	301	(1)
Reference Groups	302	(1)
Opinion Leaders	302	(4)
Product and Supply Chain Management	306	(24)
In the Video Spotlight: Fluker Cricket Farms	306	(1)
To Grow or Not to Grow	307	(1)
Innovation: A Path to Growth	308	(4)
Competitive Advantage and Innovation	308	(2)
Sustainability and Innovation	310	(1)
Living the Dream: Making a Sweet Connection	310	(2)
The Product Life Cycle and New Product Development	312	(2)
The Product Life Cycle	312	(1)
The New Product Development Process	312	(2)
Building the Total Product	314	(4)
Branding	314	(2)
Living the Dream: Developing a Clean Brand	316	(1)
Packaging	316	(1)
Labeling	316	(1)
Living the Dream: Packaging the Right Look	317	(1)
Making Warranties	317	(1)
Product Strategy	318	(4)
Product Marketing Versus Service Marketing	318	(1)
Product Strategy Options	319	(1)
The Legal Environment	320	(2)
Supply Chain Management	322	(8)
Intermediaries	323	(1)
Channels of Distribution	323	(1)
Living the Dream: Boosting a Small Player's Sales with Big Player Distribution	324	(1)
The Scope of Physical Distribution	325	(1)
Living the Dream: Keeping a Promise	325	(5)
Pricing and Credit Decisions	330	(22)
In the Video Spotlight: Calise & Sons Bakery	330	(1)
Setting a Price	331	(3)
Living the Dream: Let's Talk	332	(1)
Cost Determination for Pricing	332	(1)
How Customer Demand Affects Pricing	333	(1)
Applying a Pricing System	334	(3)
Break-Even Analysis	335	(1)
Living the Dream: Pricing by Software	336	(1)
Markup Pricing	336	(1)
Selecting a Pricing Strategy	337	(3)
Penetration Pricing	338	(1)
Skimming Pricing	338	(1)
Follow-the-Leader Pricing	338	(1)
Variable Pricing	338	(1)
Price Lining	339	(1)
What the Market Will Bear	339	(1)
A Final Note on Pricing Strategies	339	(1)
Living the Dream: Value Pricing	339	(1)
Offering Credit	340	(3)
Benefits of Credit	340	(1)
Factors That Affect Selling on Credit	340	(1)
Living the Dream: Give Me Credit	341	(1)
Types of Credit	342	(1)
Managing the Credit Process	343	(9)
Evaluation of Credit Applicants	343	(1)
Living the Dream: It's Collection Time	344	(1)
Sources of Credit Information	345	(1)
Aging of Accounts Receivable	345	(1)
Billing and Collection Procedures	346	(1)
Credit Regulation	347	(1)
Living the Dream: Stick to a Friendly Reminder	347	(5)
Promotional Planning	352	(20)
In the Spotlight: Highland Park Curves	352	(1)
The Communication Process in Promotion	353	(2)
Determining the Promotional Budget	355	(1)
Allocating a Percentage of Sales	355	(1)
Deciding How Much Can Be Spared	355	(1)
Spending as Much as the Competition Does	355	(1)
Determining What It Will Take to Do the Job	355	(1)
Personal Selling in the Small Firm	355	(4)
The Importance of Product Knowledge	356	(1)
The Sales Presentation	356	(1)
Living the Dream: Owner Ties Sales Force to Product	357	(1)
Customer Goodwill and Relationship Selling	358	(1)
Cost Control in Personal Selling	358	(1)
The Compensation Program for Salespeople	358	(1)
Advertising Practices for Small Firms	359	(7)
Advertising Objectives	359	(1)
Types of Advertising	359	(1)
Obtaining Assistance with Advertising	359	(1)
Frequency of Advertising	360	(1)
Where to Advertise	360	(1)
Web Advertising	361	(1)
Living the Dream: The Audience Can Bear to Listen	362	(1)
Living the Dream: You Can't Eat Technology	363	(3)
Sales Promotional Tools	366	(6)
Specialties	367	(1)
Trade Show Exhibits	367	(1)
Living the Dream: If the Shoe Fits, Wear It	367	(1)
Publicity	368	(1)
When to Use Sales Promotion	368	(1)
Strategic Alliances and Sales Promotion	369	(3)
Global Marketing	372	(25)
In the Spotlight: Ice Age Ice	372	(1)
Small Businesses as Global Enterprises	373	(2)
The Forces Driving Global Businesses	375	(7)
Expanding the Market	376	(2)
Living the Dream: Brightstar Shines in the Cell Phone Universe	378	(1)
Gaining Access to Resources	379	(1)
Living the Dream: Opportunity Knocks, but Not Necessarily at Home	380	(1)
Cutting Costs	381	(1)
Capitalizing on Special Features of Location	381	(1)
Strategy Options for Global Firms	382	(4)
Exporting	382	(1)
Importing	383	(1)
Living the Dream: The Internet Can Make a World of Difference	384	(1)
Foreign Licensing	384	(1)
International Franchising	385	(1)
International Strategic Alliances	385	(1)
Locating Facilities Abroad	386	(1)
Challenges to Global Businesses	386	(3)
Political Risk	386	(1)
Economic Risk	387	(1)
Managerial Limitations	388	(1)
Living the Dream: Currencies Can Cut Both Ways	388	(1)
Assistance for Global Enterprises	389	(8)
Analyzing Markets and Planning Strategy	389	(1)
Connecting with International Customers	390	(2)
Financing	392	(5)
Part 5 Managing Growth in the Small Business	397	(82)
Professional Management in the Entrepreneurial Firm	398	(22)
In the Spotlight: Online Business Services, Inc.	398	(1)
Entrepreneurial Leadership	399	(2)
What Is Leadership?	399	(1)
Leadership Qualities of Founders	399	(1)
What Makes an Effective Leader?	400	(1)
Leadership Styles	400	(1)
Distinctive Characteristics of Small Firm Management	401	(3)
Professional-Level Management	401	(1)
Limitations of Founders as Managers	401	(1)
Managerial Weakness in Small Firms	402	(1)
Constraints That Hamper Management	402	(1)
Firm Growth and Managerial Practices	402	(1)
Living the Dream: Finding People Who Can Manage	403	(1)
Managerial Tasks of Entrepreneurs	404	(5)
Planning Activities	404	(1)
Creating an Organizational Structure	405	(1)
Understanding Informal Groups	406	(1)
Delegating Authority	407	(1)
Controlling Operations	407	(1)
Living the Dream: Delegating Difficulty	407	(1)
Communicating	408	(1)
Negotiating	409	(1)
Personal Time Management	409	(2)
The Problem of Time Pressure	409	(1)
Time Savers for Busy Managers	410	(1)
Outside Management Assistance	411	(9)
The Need for Outside Assistance	411	(1)
Sources of Management Assistance	411	(3)
Living the Dream: Networking and Incubators	414	(6)
Managing Human Resources	420	(18)
In the Video Spotlight: Orange Tree Imports	420	(1)
Recruiting Personnel	421	(4)
The Need for Quality Employees	421	(1)
The Lure of Entrepreneurial Firms	422	(1)
Sources of Employees	422	(1)
Living the Dream: Luring Employees to an Entrepreneurial Firm	422	(2)
Living the Dream: Searching for Seasonal Applicants	424	(1)
Diversity in the Workforce	424	(1)
Job Descriptions	424	(1)
Evaluating Prospects and Selecting Employees	425	(2)
Step 1: Using Application Forms	425	(1)
Step 2: Interviewing the Applicant	425	(1)
Step 3: Checking References and Other Background Information	426	(1)
Step 4: Testing the Applicant	426	(1)
Living the Dream: Testing a Promising Candidate	426	(1)
Step 5: Requiring Physical Examinations	427	(1)
Training and Developing Employees	427	(3)
Purposes of Training and Development	427	(1)
Orientation for New Personnel	427	(1)
Training to Improve Quality	428	(1)
Training of Nonmanagerial Employees	428	(1)
Development of Managerial and Professional Employees	428	(2)
Compensation and Incentives for Employees	430	(2)
Wage and Salary Levels	430	(1)
Financial Incentives	430	(1)
Living the Dream: More Than Minimal Wages	430	(1)
Fringe Benefits	431	(1)
Employee Stock Ownership Plans	432	(1)
Special Issues in Human Resource Management	432	(6)
Employee Leasing	432	(1)
Legal Protection of Employees	432	(1)
Labor Unions	433	(1)
Formalizing of Employer-Employee Relationships	433	(1)
The Need for a Human Resource Manager	434	(1)
Living the Dream: Using Employee Committees	434	(4)
Managing Operations	438	(24)
In the Video Spotlight: Wahoo's Fish Taco	438	(1)
Quality Goals of Operations Management	439	(6)
Quality as a Competitive Tool	439	(1)
The Customer Focus of Quality Management	440	(1)
Living the Dream: Great Quality Leads to Cult Status	441	(1)
Organizational Culture and Total Quality Management	442	(1)
Tools and Techniques of Total Quality Management	442	(2)
International Certification for Quality Management	444	(1)
Living the Dream: Quality and Social Responsibility	444	(1)
Quality Management in Service Businesses	445	(1)
The Operations Process	445	(4)
The Nature of the Operations Process	445	(1)
Managing Operations in a Service Business	445	(2)
Living the Dream: Getting the Details Right Makes for Happy Customers	447	(1)
Types of Manufacturing Operations	447	(1)
Operations Planning and Scheduling	448	(1)
Plant Maintenance	448	(1)
Competitive Strength Through Improved Productivity	449	(2)
The Importance of Improving Productivity	449	(1)
Reengineering for Improved Productivity	449	(1)
Upgrading Information Systems	450	(1)
Operations Analysis	450	(1)
Living the Dream: Improved Productivity in Trucking	450	(1)
Purchasing Policies and Practices	451	(4)
The Importance of Purchasing	451	(1)
Purchasing Practices and Profitability	451	(2)
Living the Dream: Outsourcing the Production Process	453	(1)
Relationships with Suppliers	454	(1)
Inventory Management and Operations	455	(7)
Objectives of Inventory Management	455	(1)
Inventory Cost Control	456	(1)
Inventory Record-Keeping Systems	457	(5)
Managing Risk	462	(17)
In the Spotlight: RD Systems	462	(1)
What Is Risk?	463	(1)
Risk Management	464	(2)
The Process of Risk Management	464	(1)
Risk Management and the Small Firm	465	(1)
Classifying Business Risks	466	(4)
Property Risks	466	(1)
Liability Risks	467	(1)
Living the Dream: A Quick Reaction to a Catastrophic Event	467	(2)
Personnel Risks	469	(1)
Insurance for the Small Business	470	(9)
Living the Dream: Working Without Coverage	471	(1)
Basic Principles of a Sound Insurance Program	471	(1)
Common Types of Business Insurance	472	(7)
Part 6 Understanding the Numbers	479	(122)
Managing Assets	480	(24)
In the Spotlight: House and Garden Party, Ltd.	480	(1)
The Working-Capital Cycle	481	(6)
The Timing and Size of Working-Capital Investments	482	(1)
Examples of Working-Capital Management	483	(4)
Managing Cash Flows	487	(3)
The Nature of Cash Flows Revisited	487	(1)
The Cash Budget	487	(1)
Living the Dream: Batten Down the Hatches	488	(2)
Managing Accounts Receivable	490	(3)
How Accounts Receivable Affect Cash	490	(1)
The Life Cycle of Accounts Receivable	491	(1)
Living the Dream: How to Collect from Anyone (Even Enron)	491	(1)
Accounts Receivable Financing	492	(1)
Living the Dream: Factoring Can Make the Difference	492	(1)
Managing Inventories	493	(1)
Reducing Inventory to Free Cash	493	(1)
Monitoring Inventory	493	(1)
Controlling Stockpiles	493	(1)
Managing Accounts Payable	493	(2)
Negotiation	493	(1)
Living the Dream: Just-In-Time Inventory: Good for Small Firms, Too	494	(1)
Timing	494	(1)
Capital Budgeting	495	(9)
Capital Budgeting Techniques	496	(2)
Capital Budgeting Analysis in Small Firms	498	(6)
Evaluating Financial Performance	504	(97)
In the Spotlight: Zingerman's Delicatessen	504	(1)
Accounting Activities in Small Firms	505	(4)
Basic Requirements for Accounting Systems	506	(1)
Alternative Accounting Options	507	(1)
Internal Accounting Controls	508	(1)
Evaluating the Firm's Financial Performance	509	(17)
Living the Dream: Using Internal Controls to Avoid a Costly Lesson	509	(2)
Living the Dream: A Cheap CEO	511	(1)
Can You Pay Your Bills?	511	(2)
Are You Making a Good Return on Your Assets?	513	(1)
Living the Dream: Facing the Music to Stay Profitable	513	(4)
How Much Debt Are You Using?	517	(1)
Living the Dream: Managing by the Numbers	517	(1)
Are You Getting a Good Rate of Return on Your Investment?	518	(8)
Cases
Boston Duck Tours	526	(2)
Diversified Chemical Technologies	528	(2)
Biolife LLC	530	(1)
Auntie Anne's	531	(1)
The Brown Family Business	532	(2)
AdGrove.com, Inc.	534	(2)
Specialty Cheese	536	(1)
Silver Zephyr Restaurant	537	(3)
The Chocolate Farm	540	(1)
Stegmart	541	(2)
Calvert Toyota	543	(5)
Tires Plus	548	(2)
Every Customer Counts	550	(2)
Lotus Chips' Recipe for Success	552	(2)
Waco Composites I, Ltd.	554	(1)
Solid Gold Health Products for Pets	555	(2)
Sunny Designs, Inc.	557	(2)
Douglas Electrical Supply, Inc.	559	(2)
Gibson Mortuary	561	(2)
Texas Nameplate Company	563	(2)
Fox Manufacturing Inc.	565	(2)
Barton Sales and Service	567	(3)
Artho, Inc.	570	(3)
Appendixes
A Sample Business Plan	573	(16)
B Valuing a Business	589	(4)
C Useful URLs	593	(8)
Endnotes	601	(10)
Glossary	611	(10)
Index	621