Entrepreneurship and Innovation

Topics: Management, Strategic management, Business Pages: 6 (1204 words) Published: April 14, 2014

Assignment 5: Business Succession Planning
Professor William Laing
BUS 521
Strayer University

Business Succession Planning
A business succession plan is an important part of planning a business. Without a succession plan the business can fail. A business succession plan is when a business owner has an exit plan. Having this in place secures the future of the business as well as securing the owner a plan in case things turn for the worse. This plan is not something that is planned over night, but takes time and thought that requires strategic planning. Business Start Up Success and Failure Rate in the U.S. Market

There are currently over 27 million businesses in the United States. “Between 60% and 80% of all new jobs created in our country can be attributed to small businesses,” (Small Business, 2011). There were 627,200 new businesses, 595,000business closures and 43,546 bankruptcies (Guide, 2010). Seven out of ten new employer firms survive at least two years and about half survive the first five years. According to the Small Business Administration, roughly half of all startups go out of business within four years due to improper planning, undercapitalization, poor money management and indebtedness (SBA, 2009). These numbers show the importance of small businesses in the U.S. economy. Although many firms could not be save some could have been reversed by being bailed out, wit smaller losses if they had recognized and responded to early waning signs. Red Flags for a Small Business Failure and Bankruptcies

One of the main reasons why businesses fail is because of the lack of planning. Being able to understand what Good Eats Bakery has to offer the public and also being able to understand the customers. Businesses also fail because the lack of resources to effectively analyze and create financial plans. Financial planning can be challenging and is important to allow to properly estimating expenses and sales. Good Eats bakery has a financial plan that is reviewed by an accountant on a quarterly basis.

At the beginning of a new venture it can be easy for a business to over promise and under deliver. Marketing strategies can be too extreme and aggressive which in turn can be a turn off for potential customers. If the company does a great job at marketing their products but does not have the resources such as additional finances, skills supplies and employees to fulfill the needs the company can easily fail. Precautions Owner and Management will take to Ensure Success

To ensure success for Good Eats Bakery we have taken the time to review all available resources and have decided that the staff hired will have a probationary period and if necessary changes are not made after first year of employment termination or demotion will be one of the options discussed during the annual review. There will also be quarterly meetings with management to discuss results and changes from the accountant’s review that needs to be made or adjusted to ensure that plans are on track. Raises and annual bonuses for management and employees will be based on performance. If the co-owner of the bakery decides to want out they will leave with what they put in and earned. This agreement will be written and signed prior to opening business. We are equal partners and he will still have to be responsible for half of whatever loans that are taken out to open the business. The documents will be explained in detail so the responsibilities of the owner that chooses to be investing with the company. As a result, when an owner decides to leave there are no conflicts. Protection for Lenders and Investors

When going into business and money is involved lenders want to lend knowing that the funds loaned are protected especially if anything goes wrong. There are programs that help with lender and investor protection. In order to improve this some lenders require borrowers to participate...

References: Hirsch, P. R., & Shepherd, D. (2010). Entrepreneurship (8th ed.) New York: McGraw Hill.
Small Business Administration. (2011). Marketing a new business. Retrieved from http://www.sba.gov/content/developing-marketing-plan
Small Business Guide (2010). retrieved December 10, 2010 from
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