Business Chapter 5 and 6

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1

Small Business

an independent entity with fewer than 500 employees that is not dominant in its market.

2

Small manufacturers employees

fall in 500 worker range.

3

Wholesale employees

fewer than 100 workers.

4

Most likely to be a Small Firm?

Home builders, florists, hair salons, auto repair, and funeral homes.

5

Less Likely to be a small firm?

Hospitals, nursing homes, paper mills, electric utilities.

6

Small Business Jobs Act

may help give a further boost to these job numbers by raising the dollar amount of small business loans available to companies.

7

Management Shortcomings

lack of people skills, inadequate knowledge of finance, inability to track inventory or sales, poor assessment of the competition, or simply lack of time.

8

Small Business Administration(SBA)

principal government agency concerned with helping small US firms.

9

Microloan

small-business loan often used to buy equipment or operate a business.

10

Business incubator

company that helps new and startup companies to develop by providing services such as management training or office space.

11

Sole Proprietorship

business ownership in which there is no legal distinction between the sole proprietors status as an individual and his or her status as a business owner.

12

Partnership

association of two or more persons who operate a business as co-owners by voluntary legal agreement.

13

C Corporation

a form of legal organization with assets and liabilities separate from those of its owners.

14

S Corporation

a form of business organization in which the entity does not pay corporate taxes on profits, instead, profits are distributed to shareholders, who pay individual income taxes.

15

Limited-Liability Company

business entity that secures the corporate advantage of limited liability while avoiding the double taxation characteristic of a tradition corporation.

16

Employee Ownership

business arrangement in which workers buy shares of stock in the company that employs them.

17

Not-For-Profit Corporation

organization whose goals do not include pursuing a profit.

18

Collective ownership

also known as a cooperative, where the owners join forces to operate all or part of the activities in their firm or industry.

19

Cooperatives....

allow small businesses to pool their resources on purchases, marketing, equipment, distribution, and more. They can share equipment and expertise.

20

Domestic Corporation

a firm operating in the state that it was incorporated.

21

Foreign Corporation

When a company does business in states other than the one where it has filed incorporation papers.

22

Alien Corporation

A firm that is incorporated in one nation that operates in another nation.

23

Stockholders

owner of a corporation due to his or her purchase of stock in the corporation.

24

Board of Directors

sets overall policy, authorizes major transactions, and hires the CEO.

25

Top Management

CEO, COO, and CFO. Manage overall operations, make major decisions, and introduce major savings.

26

Middle Management

Branch managers, plant managers, division heads/directors. Manage operations, and serve liaisons between top management and other levels.

27

Supervisory Management

Supervisors, and department heads. Coordinate day-to-day operations, supervise employees, and evaluate staff performance.

28

Preferred Stock

shares that give owners limited voting rights, and the right to receive dividends or assets before owners of common stock.

29

Common Stock

shares that give owners voting rights but only residual claims to the firm's assets and income distributions.

30

CEO and CFO's

make the most corporate decisions, and are bound by strict regulations such as verifying in writing the accuracy of their firm's financial statements.

31

Merger

agreement in which two or more firms combine to form one company.

32

Acquisition

agreement in which one firm purchases another.

33

Vertical Merger

agreement that combines firms operating at different levels in the production and marketing process.

34

Horizontal Merger

agreement that joins firms in the same industry for the purpose of diversification, increasing customer bases, cutting costs, or expanding product lines.

35

Conglomerate Merger

agreement that combines unrelated firms, usually with the goal of diversification, spurring sales growth, or spending a cash surplus in order to avoid a takeover attempt.

36

Joint Venture

partnership between companies formed for a specific undertaking.

37

Entrepreneur

a person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business.

38

Business Plan

a written document that provides an orderly statement of a company's objectives, methods, and standards.

39

Seed Capital

initial funding used to launch a company.

40

OPM

money an entrepreneur raises from others to help start or expand a business.

41

Debt Financing

borrowed funds that entrepreneurs must repay.

42

Equity Financing

funds invested in new ventures in exchange for part ownership.

43

Venture Capitalists

a business organization or group of individuals that invests in early stage, high-potential, and growth companies.

44

Angel Investor

a wealthy individual who invests money directly in new ventures in exchange for equity.

45

Crowd Funding

a source of financial support involving groups of individuals, often connected through the internet, that pool small sums of money to support new businesses as well as philanthropic causes and artistic endeavors.

46

Classic Entrepreneur

a person who identifies a business opportunity and allocates available resources to tap that market.

47

Serial Entrepreneur

person who starts one business, runs it, and then starts and runs additional businesses in succession.

48

Social Entrepreneur

a person who recognizes societal problems and uses business principles to develop innovative solutions.

49

Franchising

contractual business arrangement between a manufacturer or other supplier and a dealer, such as a restaurant operator or a retailer.

50

Franchisee

individual or business firm purchasing a franchise.

51

Franchisor

firm whose products are sold to costumers by the franchisee.

52

Intrapreneurship

Process of promoting innovation within the structure of an existing organization.

53

Skunkworks

project initiated by an employee who conceives an idea, convinces top management of its potential and then recruits human and other resources from within the company to the idea into a commercial project.

54

Advantages of Sole Proprietorship:

owner retains all profits, easy to form and dissolve, owner has flexibility.

55

Advantages of Partnership:

easy to form, can benefit from complementary management skills, can expand financial capacity.

56

Advantages of a Corporation:

limited financial liability, specialized management skills, expanded financial capacity, economies of large-scale operations.

57

Disadvantages of Sole Proprietorship:

unlimited financial liability, financing limitations, management deficiencies, lack of continuity.

58

Disadvantages of Partnership:

unlimited financial liability, interpersonal conflicts, lack of continuity, difficult to dissolve.

59

Disadvantages of Corporation:

difficult and costly to form and dissolve, tax disadvantages, legal restrictions.

60

Characteristics of an Entrepreneur:

vision, high energy level, need to achieve, self-confidence and optimism, tolerance for failure, creativity, tolerance for ambiguity(unclear), and internal locus of control(self control).

61

Advantages of Entrepreneurship:

unsatisfied with traditional work world, want more flexible schedule, want to turn vision into a profitable business, be their own boss, and achieve financial success.

62

Franchising benefits:

opportunity for expansion, managing a larger business with few employees.

63

Franchising disadvantages:

for the franchisor, if its franchisees fail in any way, the failure affects the brand as well as bottom line, and the firm can be mismanaged at the top level.