Small Business Management - Essay Example

If the company decided to open another online store it would not impact the cash position of the company. The firm will be able to absorb the additional cost of opening a new store without hurting the liquidity of the firm. 2. Is My Friend Bookstore a good candidate for franchising? I do not think that My Friend Bookstore is a good candidate for franchising. The firm is currently operating under special circumstances which may not be able to be replicated. The company has no fixed cost because it operates out of a dorm.

The dorm location allows the firm to deliver books to the university students free of charge. The prime location also gives the company an advantage as far as having a great supply of used books since college students have so many books. The used book market is also very risky. Since publishers changed editions almost every year the used textbooks become obsolete very fast. Another disadvantage of franchising the business concept is that it is very easy to duplicate an online bookstore. It might become hard to sell franchises of a product that has such a low barrier of entry. 3. Describe what the owners would have to do to prepare to franchise their business?

There are different steps that must be taken to move a company from a single operation to a franchise. The first step is to determine whether the company is ready to take this huge step. The business concept must be evaluated to determine if the offering is unique and if there is a market for the product or service being offered. The company must be in a good financial condition to absorb the initial cost of the expansion plan such as added infrastructure and marketing expenses. Prior to making the step of choosing the franchise model management must evaluate all other expansion strategies such as joint venture, strategic alliances, licensing, and subsidiaries.

The second big step in forming a franchise is to comply with legal requirements. A business prior to selling franchises in the United States must register a franchise disclosure document with the Federal Trade Commission (Tice, 2011). The firm has to create a plan on how to advertise to sell franchises either domestically or internationally. Once the franchises are sold the firm has to serve the franchises. This includes giving training, selling inventory, and providing advertising. 4. The three partners own the bookstore equally.

What are some of the difficulties they may encounter in sharing management duties equally? It is not uncommon for a business venture to have more than one owner. In this case there are three partners in charge of My Friends Bookstore. The partners might face difficulties dividing the managerial work because there is not a clear division of labor among the partners. It is more ideal to have only one manager in charge of the operation. This way the employees will know exactly which instructions to follow.

When there are several people serving the managerial role the employees might get mixed messages from the managerial staff. Another problem is that the partners might face conflict regarding how to divide the managerial functions. It is possible that under this scenario that one partner might want to take advantage of the other as far as passing on the managerial work to the next person. 5. What processes might the owners put in place to clarify their duties as equal partners? A way that the partners can divide work duties in a more orderly manner is to create