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One of the basic concepts taught in almost every introductory marketing course is The Four P's:

Price, Product, Promotion and Place. "Place" refers generally to distribution, i.e., where your
customer evaluates and ultimately receives your product or service. While this may not matter much
for people who work virtually, or who run a business that drop-ships from a third party, it's critical
for restaurants, retailers, and even many service businesses. Ironically, while "place" is often the
most permanent of the four P's, it's also often the most overlooked. Location is about more than just
choosing a building. Perhaps for you, opening your business in your own town, or even your part of
town, is a given. But consider the big picture:

State - Income taxes and sales taxes vary greatly from state to state, as do regulatory
requirements. Is the state you live in friendly to entrepreneurship? To the specific type of business
you want to run? Now might be the time to consider a move if it isn't, or possibly to open your
business in a nearby state if you live near a state line. The Small Business Survival Index ranks the
various U.S. states on how friendly they are to small business.
City - Rent and other costs, availability of labor

, taxes, regulations and government economic incentives can also vary greatly from city to city, even
within the same state. Or maybe a small town is the perfect spot for your business. Entrepreneur
Magazine publishes an annual list of the Best U.S. Cities for Small Business. Under 30 CEO also has a
list of the best cities for young entrepreneurs.
Part of town - What kind of commute is involved? Is the part of town consistent with the image for
your business? Rent varies greatly according to location.
Location relative to streets, parking, and other businesses - Do you need to be visible and/or easily
accessible to pedestrian and automobile traffic? Will being close to businesses that draw a similar
clientele help your business? For example, a sporting goods store or health food store might do very
well next to a gym.
Type of location Do you need office space, retail or warehouse? Retail is generally the most
expensive of the three.

There are many factors to consider in choosing the location for your business. While cost is obviously
a major consideration, you must also think about your various constituencies. Is your location
important to...

You? The space has to work for you, or it won't work. Remember, you're the one has to work
there every day.
Your customers? It also has to work for your customers, or it won't work. No customers = no
business.
Your employees? This issue may not be as critical at first, especially if you don't have any
employees yet. But the ability to attract and keep good employees will be affected by your location.
Strategic partners? While this may not seem like a big issue, the reality is that strategic
partnerships happen more easily when the partners are local to each other. Why do you think that
certain areas become hubs for certain types of business, such as Silicon Valley for the tech industry?
Potential investors or buyers? You may not even be thinking about that yet, but potential
investors looking at the long-term value of the business will see location as an important factor.

Each of these groups has different concerns about the location:

Cost - Most obviously, can you afford it? Also, though, consider whether your customers and
employees can afford it. For example, is there free parking, or is it expensive? Will higher rent cause
you to charge higher prices to your customers? That's not necessarily a bad thing, but a factor to
consider. What about taxes? Income taxes and sales taxes vary greatly from state to state, and if you
buy your own property,
Convenience - Is it easy to find? Is parking close by? Consider your clients. If you're dealing with
pregnant mothers and the elderly, they may have a different concept of "convenient".
Safety - This is an increasingly important issue for both customers and employees. Is the parking
close by? Well lit? Is there security on the premises?
Prestige - Would a downtown address add credibility? Will wealthy clients favor a business in their
own neighborhood? Some places even provide virtual offices with prestigious addresses, such as
Beverly Hills, Silicon Valley, or Manhattan.
Traffic - Retailers and restaurants love it, office workers don't.
Facility requirements - Do you have any special needs, such as high power consumption or
specialized wiring? Do you need meeting space, but only occasionally? You might consider a shared
office suite (often called executive suites) in that case.
Zoning - Many cities have very strict zoning requirements. Make sure your business is even
allowed there before you sign the lease!

As you can see, a fully informed decision involves a fairly complex matrix of issues. Determine your
priorities, keep an open mind about your options, do your research, and get ready to make one of
the most important decisions about your business




Chances are, you've heard the term "location, location, location" more than a few times. But if
you're in the throes of creating a spectacular menu for your new restaurant or finding wholesalers
for your first retail store, it might not be the first thing on your mind.
It's time to put location at the top of your to-do list. If you're preparing to open a food or retail
business with a storefront, putting your business in the proper location might be the single most
important thing you do at startup. Of course you need a winning product, too, but how will anyone
know about that product unless you get them through the door?
"In the brick-and-mortar retail world, it's said that the three most important decisions [you'll make]
are location, location and location," affirms Irene Dickey, a lecturer in management and marketing at
the University of Dayton's School of Business in Dayton, Ohio. "Careful determination of new sites is
critical for most retail and consumer service businesses."
Check Your Demographics
Making these determinations can be as simple or as complex as you make it. There are, for instance,
sophisticated location analysis tools available that include traffic pattern information, demographic
and lifestyle data, and competitive analyses. Adds Dickey: "For a price, a retailer can ask such
questions as, 'If I'm looking to add a store to a particular market, what's the optimum level of traffic
as it relates to the specific targeted trade area? What is the overall type of traffic? Once consumers
are in the store, is there any way to measure the traffic patterns in the store?'"
"Do your due diligence," advises Michael Rodelle, director of real estate for the Papa Gino's
Inc./D'Angelo Sandwich Shops franchise, based in Dedham, Massachusetts. "Get a demographic
overview of the area you're looking at-age, income, households, etc."
In addition, you should look at neighborhood traffic generators, such as other retailers that draw
people to the area, industrial or office parks, schools, colleges and hospital complexes. You'll also
want to look at both highway and foot traffic. Carlos Silva, co-founder of Memphis Championship
Barbecue in Las Vegas, learned all about finding a good location when he and his three co-founders
(Dick Hart, Mike Mills and Dan Volland) opened their first restaurant in 1994. "We opened our first
business in the middle of nowhere, and we had to work to get people to go to it," says Silva.
That's not to say it was a bad location-Silva says it fit in terms of the restaurant's theme. But it did
require more of an effort to establish a presence. With three other locations now up and running,
one of them inside a casino, the founders seem to have found their groove. "What we've done in
Vegas is gone to each corner of the city," says Silva, who says the restaurants' sales have grown 25
percent over last year's, with 60 percent growth projected for 2004. "You're able to get to a
Memphis restaurant within 10 minutes."
Look Your Competitors in the Eye
Many experts agree, though, that the answer to where you should locate is more straightforward
than many entrepreneurs make it. "Quite simply, the best place to be is as close to your biggest
competitor as you can be," says Greg Kahn, founder and CEO of Kahn Research Group in
Huntersville, North Carolina, and a behavioral research veteran who's done location research for
Arby's, Buffets Inc., Home Depot, Subway and other major and minor players. "Foot traffic is
obviously important, but landing the 'perfect' customer is far more crucial. By being in close
proximity to your competitors, you can benefit from their marketing efforts."
In other words, your competitors chose their locations based on the ideal demographics of a
particular area, says Kahn. In many cases, they've also devoted large portions of their advertising
budget toward driving traffic to their locations. "Why spend the money when they've already [spent
it] for you?" asks Kahn. "It's that easy."
What's more, being located near your competition can be a boon to business, provided you're
confident enough in your product to outsell your competitors. "Competition is good," concurs Blake
Tartt III, president and CEO of commercial real estate firm New Regional Planning in Houston, known
for his work on major malls and other commercial developments. "It makes the retailer or the
restaurant better-competition breeds more business, more traffic, and that's a positive. If my clients
are good, I tell them to go right up against the competition."
Of course, it's still a good idea to make your own evaluations of a particular property, even if your
competitors seem to be thriving in the area. Staying ahead of the game in this regard will help your
business grow should you decide, for instance, that you later want to open another location.
Do You Need Professional Help?
But your job isn't done even when you think you've found a good spot for your business. Negotiating
a lease that works for you and your business is just as important as the location itself. "It's very
important that you have a good lawyer who can negotiate your lease-that's another cost," says
Tartt. Your attorney can help you look at things like the term of the lease, buildout allowance and
the condition of the property.
He or she can also help you talk to the landlord so you ask the right questions. "Interview the
landlord as hard as you look for the location," cautions Tartt. "You're marrying your landlord. There
are a lot of unscrupulous [ones] out there-they tend to have a 'me' mentality."
Making use of a local real estate professional who understands your customers as well as you do is
also a great idea. Depending on whether you're opening a food business or a retail store, you'll want
to discuss things like the type of merchandise your target customers buy or the sort of food they like
to eat. "I believe that in every town, there is some real estate professional who knows his or her city
backward and forward," says Tartt. "The really with-it real estate person is studying all those trends,
traffic patterns and demographics."
Having someone help you with your business plan before you even begin the location search can be
invaluable as well. Entrepreneur.com has a guide to writing a business plan that offers information
and resources to help you in this process, so that's a good place to start. A business coach or
business plan consultant can also help you through this process; ask around in your network of
colleagues for referrals, or check with your local Small Business Development Center for additional
assistance.
"Know what your business plan [says] when you're looking for a location," says Tartt. "Know what
your strategic objectives are."
Being aware of all the location costs involved with starting your business will do wonders for your
ability to weather any storms that might-and likely will-come your way. Underestimating the costs
and the time involved with launching your business-especially when it comes to your location-is one
of the most common startup mistakes, and one you can avoid if you plan properly. If you take into
account everything from broker, attorney, engineering and architect fees to zoning and planning
hearings, you can see that both the costs and the time to startup can vary widely.
The best advice? "Talk to other people in the business-learn from them what they've experienced,
what the pitfalls are, what things to look out for," says Rodelle. "You've gotta do your homework.
You can protect yourself and come out ahead."
Knowing What to Ask
Answering these 22 questions for each of the sites you're considering can help you decide on the
best retail location for your business:
1. Is the facility located in an area zoned for your type of business?
2. Is the facility large enough for your business? Does it offer room for all the retail, office,
storage or workroom space you need?
3. Does it meet your layout requirements?
4. Does the building need any repairs?
5. Do the existing utilities-lighting, heating and cooling-meet your needs or will you have to do
any rewiring or plumbing work? Is ventilation adequate?
6. Are the lease terms and rent favorable?
7. Is the location convenient to where you live?
8. Can you find a number of qualified employees in the area in which the facility is located?
9. Do people you want for customers live nearby? Is the population density of the area
sufficient for your sales needs?
10. Is the trade area heavily dependent on seasonal business?
11. If you choose a location that's relatively remote from your customer base, will you be able to
afford the higher advertising expenses?
12. Is the facility consistent with the image you'd like to maintain?
13. Is the facility located in a safe neighborhood with a low crime rate?
14. Is exterior lighting in the area adequate to attract evening shoppers and make them feel
safe?
15. Will crime insurance be prohibitively expensive?
16. Are neighboring businesses likely to attract customers who will also patronize your
business?
17. Are there any competitors located close to the facility? If so, can you compete with them
successfully?
18. Is the facility easily accessible to your potential customers?
19. Is parking space available and adequate?
20. Is the area served by public transportation?
21. Can suppliers make deliveries conveniently at this location?
22. If your business expands in the future, will the facility be able to accommodate this growth?




















Business Planning Papers:
Devising Business Plan Strategies
Page Contents
1. Avoid Business Failure
2. Characteristics of Successful Businesses
3. Clarify Existing Business Strategies
4. Look into Future SWOTs for Strategies
5. Basic Strategic Planning Approaches
6. Creating Strategic Combinations
7. Compiling Strategic Statements
8. Next Steps towards a Strategic Business Plan
9. Introducing PlanWare
10. Copyright & Legal Stuff

Free Online Strategic Planner
Free Online Strategic Planner for creating a 3-page
strategic plan based on the structure used in this white
paper. Use it to organize your thoughts, structure your
ideas and compile a short but comprehensive strategic plan
for any size and type of organization.
Recommendation: Review the paper on this page before
using the planner.
Click here to see feedback from past users of this planning
tool (opens in a new window) and click here to see a
sample plan (use back button on browser to return to this
page).

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1. Avoid Business Failure
This paper is most relevant to entrepreneurs or management teams that
have a clear vision and mission for their business and are in the process of
developing the primary strategies to be followed. It is closely linked to other
papers in this series, most notably Developing a Strategic Business Plan
which offers a framework for a strategic plan and Getting New Business
Ideas. The development of a suite of strategies is an iterative process and
involves circular thinking on the basis that optimal strategies will evolve
gradually and be very interdependent. Accordingly, the best way to utilize
this paper is to review it in its entirety and then use it as a checklist and basis
for brainstorming and systematic analysis.
A venture is most prone to failure during its first three or so years of
operation - the so-called 'valley of death'. A key to getting through these
early years is to avoid the obvious mistakes. Generally speaking, businesses
fail for significant and substantial reasons which are often very evident to
outsiders. Insiders often fail to see them because of their closeness,
determination and so on.
Basic reasons for failure include the following:
Finance Markets/Sales
Managemen
t
Offerings Operations
Underestimatin
g start-up costs
(for operations
& capital
expenditure).
Misjudging the
size or growth
of the overall
market.
Lack of
relevant
sectorial
experience.
Inability to
supply
profitably
to required
price.
Under-
investment
in equipment
etc.
Insufficient
funds or access
to top-up
finance.
Overoptimistic
estimates of
market
penetration &
shares.
Insufficient
functional
breadth.
Problems
with
maintainin
g quality
standards.
Excessive
overheads
(relative to
scale of
operations).
Wrong mix of
funds (e.g. too
much debt and
gearing too
high).
Delays in
securing or
developing
distribution
channels.
Unresolved
differences
of opinion.
Restricted
range of
offerings.
High
operational
costs and/or
low
productivity.
Over reliance on Underestimatin Unreal Lack of Poor capacity
Strategic Plans







trade credit
(receivables).
g the strength
of competitors.
expectations. innovation
(me-too
offerings).
utilization.
Mistaking profit
for cash flow
(see here).
Misreading
customer
requirements.
No formal or
clear
structures.
Problems
sourcing
supplies.
Inadequate
physical
distribution.
Overoptimistic
projections or
overtrading.
Lack of
promotion &
customer
awareness.
Ineffective
financial &
managerial
control
systems.
Offerings
out of line
with
customer
needs.
Inappropriat
e business
location.
Unable to
withstand
interest rate
increases.
Inability to
handle an
economic
slowdown.


Clearly, there are very many other reasons as to why businesses fail. The key
point is that causes are usually very apparent (especially with hindsight) and
the trick is to anticipate them by executing appropriate strategies at the
outset. Three examples:
Use market research to confirm demand and assess suitability of
proposed offerings.
Create a management team to offset any gaps in experience or
expertise.
Raise equity to reduce exposure to interest rate changes, reduce
gearing etc.
Given that reasons for failure are often both simple and clear, it should (in
theory) be possible to reduce the possibility of failure through prior
experience, forethought and effective planning. Have a look at Quick Insight,
an expert software tool for assessing business proposals.
Top of Page


2. Characteristics of Successful Businesses
A successful emerging growth business is likely to display many of the
following characteristics:
1. Sensibly financed (with prudent mix of equity and debt).
2. Strong cash position (with access to follow-on or contingency funds).
3. Offers above-average profitability (in terms of return on capital
invested).
4. Aims for rapid growth in revenues (with profits lagging but in
prospect).
5. Targets expanding, or otherwise attractive, market segments.
6. Develops a strong franchise or brand.
7. Devotes substantial resources to innovation (R&D, offerings or
market).
8. Competes on non-price issues (e.g. quality, service, functionality).
9. Very close to customers and responsive to their needs.
10. Seeks specialist/leadership image with superior offerings.
11. Well managed with high-grade staff & good people-management.
Behind every characteristic there should be an explicit strategy designed to
increase the chances of success and not simply aimed at reducing the
likelihood of failure. For example:
A growth business needs a cash war chest and not merely "adequate"
debt facilities.
Likewise, its management team must have the capacity to manage the
present business as well as its growth.










CPA REVIEW SCHOOL OF THE PHILIPPINES
M a n i l a
AUDITING THEORY
Overview of Auditing
Related PSAs :
PSA 100, 120, 200 and 6101. Certain fundamental beliefs called "postulates" underlie auditing theory. Which
of thefollowing is not a postulate of auditing?a. No long-term conflict exists between the auditor and the
management of the enterpriseunder audit.b. Economic assertions can be verified.c. The auditor acts
exclusively as an auditor.d. An audit has a benefit only to the owners.2. In all cases, audit reports musta. Be
signed by the individual who performed the audit procedures.b. Certify the accuracy of the quantitative
information which was audited.c. Communicate the auditors finding to the general public.d. Inform readers of
the degree of correspondence between the quantifiable information andthe established criteria.3. The auditor
communicates the results of his or her work through the medium of thea. Engagement letter c. Management
letter.b. Audit reportd. Financial statements.4. As used in auditing, which of the following statements best
describes "assertions"?a. Assertions are the representations of management as to the reliability of the
informationsystem.b. Assertions are the auditor's findings to be communicated in the audit report.c. Assertions
are the representations of management as to the fairness of the financialstatements.d. Assertions are found only
in the footnotes to the financial statements.5. The expertise that distinguishes auditors from accountants is in
thea. Ability to interpret generally accepted accounting principles.b. Requirement to possess education beyond
the Bachelors degree.c. Accumulation and interpretation of evidence.d. Ability to interpret ASC Statements.6.
The framework for auditing and related services as addressed by PSA excludesa. Review c.
Compilationb.Tax servicesd. Agreed upon procedure7. It refers to the level of auditors satisfaction as to the
reliability of an assertion being made byone party for use by another party.a. Confidence levelc. Assurance
levelb. Reasonableness level d. Tolerable level8. Indicate the level of assurance provided by audit and related
services.ab c d

AuditHighHigh Negative Absolute

ReviewModerateNone Moderate High

Agreed-upon proceduresNoneNone None Limited

CompilationNoneNone None None9. Which of the following is true of the report based on agreed-upon-
procedures?a. The report is restricted to those parties who have agreed to the procedures to beperformed.b. The
CPA provides the recipients of the report limited assurance as to reasonableness of the assertion(s) presented in
the financial information.c. The report states that the auditor has not recognized any basis that requires revision
of financial statements.d. The report should state that the procedures performed are limited to analytical
proceduresand inquiry.10. Which of the following is an objective of a review engagement?a. Expressing a
positive opinion that the financial information is presented in conformity withgenerally accepted accounting
principles.b. Expressing a limited assurance to users who have agreed as to procedures that will beperformed
by the CPA.c. Reporting whether material modifications should be made to such financial statements tomake
them conform with generally accepted accounting principles.d. Reporting that the financial statements, in all
materials respects, fairly present thefinancial position and operating results of the client.11. According to
Philippine Standard on Auditing, the procedures employed in doing compilationare:a. Designed to enable the
accountant to express a limited assurance.b. Designed to enable the accountant to express a negative
assurance.c. Not designed to enable the accountant to express any form of assurance.d. Less extensive than
review procedures but more extensive than agreed-upon procedures.12. Any services in which the CPA firm
issues a written communication that express aconclusionwith respect to the reliability of a written assertion that
is the responsibility of another party isa (n)a. Accounting and bookkeeping servicec. Attestation
serviceb. Management advisory service d. Tax service13. The three types of attestation services are:a. Audits,
review, and compilationsb. Audits, compilations, and other attestation servicesc. Reviews, compilations, and
other attestation servicesd. Audits, reviews, and other attestation services14. Which of the following is not
primary category of attestation report?a. Compilation reportb. Review reportc. Audit reportd. Special audit
report based on a basis of accounting other than generally acceptedaccounting principles.15. The primary goal
of the CPA in performing the attest function is toa. Detect fraudb. Examine individual transactions so that the
auditor may certify as to their validityc. Determine whether the client's assertions are fairly statedd. Assure the
consistent application of correct accounting procedures

16. Which of the following criteria is unique to the independent auditors attest function?a. General
competenceb. Familiarity with the particular industry of each clientc. Due professional cared. Independence17.
Assurance engagementa. Is an engagement in which a practitioner is engaged to issue, or does issue, a
writtencommunication that expresses a conclusion about the reliability of a written assertion thatis the
responsibility of another party.b. Is a systematic process of objectively obtaining and evaluating evidence
regardingassertions about economic actions and events to ascertain the degree of correspondencebetween
those assertions and established criteria and communicating the results tointerested users.c. Is an engagement
in which the auditor provides a moderate level of assurance that theinformation subject to the engagement is
free of material misstatement.d. Is an engagement intended to enhance the credibility of information about a
subjectmatter by evaluating whether the subject matter conforms in all material respects withsuitable criteria,
thereby improving the likelihood that the information will meet the needsof an intended user.18. The single
feature that most clearly distinguishes auditing, attestation, and assurance isa. Type of service. c.Scope of
services.b. Training required to perform the service d. CPAs approach to the service19. Identify the following
as financial audit (FA), compliance audit (CA), and operational audit(OA).

A supervisor is not carrying out his assigned responsibilities.

A companys tax return does not conform to income tax laws and regulations.

A municipalitys financial statements correctly show actual cash receipts anddisbursements.

A companys receiving department is inefficient.a. CA, CA, FA, OAc. OA, CA, FA, OAb. OA,
CA, CA, OA d. CA, CA, FA, CA20. The criteria for evaluating quantitative information vary. For example, in
the audit of historicalfinancial statements by CPA firms, the criteria are usuallya. Generally accepted auditing
standards.b. Generally accepted accounting principles.c. Regulations of the Internal Revenue Service.d.
Regulations of the Securities and Exchange Commission.21. Which of the following types of audit uses as its
criteria laws and regulations?a. Operational audit c. Financial statement auditb. Compliance auditd. Financial
audit22. An operational audit is designed toa. Assess the efficiency and effectiveness of managements
operating proceduresb. Assess the presentation of managements financial statements in accordance
withgenerally accepted accounting principlesc. Determine whether management has complied with applicable
laws and regulationsd. Determine whether the audit committee of the board of directors is effectively
dischargingits responsibility to oversee managements operations23. A review of any part of an organizations
procedures and methods for the purpose of evaluating efficiency and effectiveness is classified as a
(n)a. Audit of financial statementsc. Operational auditb. Compliance audit d. Production audit24. Which
one of the following is more difficult to evaluate objectively?a. Efficiency and effectiveness of operations.b.
Compliance with government regulations.c. Presentation of financial statements in accordance with generally
accepted accountingprinciples.d. All three of the above are equally difficult..25. Independent auditing can
best be described as aa. Branch of accountingb. Discipline that attests to the results of accounting and other
operations and datac. Professional activity that measures and communicates financial and business datad.
Regulatory function that prevents the issuance of improper financial information26. A financial statement
audit:a. Confirms that financial statement assertion are accurate.b. Lends credibility to the financial
statements.c. Guarantees that financial statements are presented fairly.d. Assures that fraud had been
detected.27. Which of the following best describes the objective of an audit of financial statements?a. To
express an opinion whether the financial statements are prepared in accordance withprescribed criteria.b.
To express an assurance as to the future viability of the entity whose financial statementsare being audited.c.
To express an assurance about the managements efficiency or effectiveness inconducting the operations of
entity.d. To express an opinion whether the financial statements are prepared, in all materialrespect, in
accordance with an identified financial reporting framework.28. Because an external auditor is paid a fee by a
client company, he or shea. Is absolutely independent and may conduct an auditb. May be sufficiently
independent to conduct an auditc. Is never considered to be independentd. Must receive approval of the
Securities and Exchange Commission before conducting anaudit29. Which of the following is responsible for
an entitys financial statements?a.The entitys managementc. The entitys audit committeeb. The entitys
internal auditors d. The entitys board of directors30. The best statement of the responsibility of the auditor with
respect to audited financialstatement is:a. The audit of the financial statements relieves management of its
responsibilitiesb. The auditors responsibility is confined to his expression of opinion about the auditedfinancial
statements.c. The responsibility over the financial statements rests with the management and the

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