Vocabulary
What government agency is concerned with helping small businesses?
Small Business Administration (SBA)
What is a corporation?
a legal organization with assets and liabilities separate from those of its owner(s)
What is a small business?
a firm that is independently owned and operated and is not dominant in the field
What is franchising?
contractual business arrangement between a manufacturer or other supplier, and a dealer such as a restaurant operator or retailer
What is the oldest and most common form of business ownership?
Sole proprietorship
Define acquisition.
procedure in which one firm purchases the property and assumes the obligations of another
Which corporation does not have the goal of pursuing a profit?
Not-for-Profit Corporation
Name three contributions of small businesses.
Create New Jobs, Account for 30% of U.S. Exports, Offer Customized Services, Create New Industries, Encourage Innovation
What is the difference between the franchisee and the franchisor?
The franchisee is the individual or business firm purchasing a franchise. The franchisor is the firm whose products are sold to customers by the franchisee.
What is public ownership?
ownership in which a unit or agency of government owns and operates an organization
What are local programs designed to provide low-cost shared business facilities to small start-up ventures called?
Business Incubators
What is the corporation in which the stockholders are the employees?
Employee Ownership Corporation
Name two reasons why small business fail.
Management Shortcomings, Inadequate Financing, Government Regulation
Name two advantages of franchising.
Prior Performance Record, Recognizable Company Name (Brand), Proven Business Model, Tested Management Program, Savings through Volume Purchases
Which form of private ownership has unlimited number of shareholders and is difficult to form?
Corporation
Who acquires stock in exchange for ownership and what are the types of stock?
Stockholders
Types - Preferred Stock and Common Stock
Which corporation does not pay corporate taxes on their profits?
S Corporation
What is a business plan?
Written documentation that provides orderly statement of goals, methods, and purpose; Discusses the company’s mission and vision; Analyzes unique advantage, customers, and competition
Name three disadvantages of franchising.
Franchise Fees, Future Payments (Royalties), Linked to Reputation and Management, Franchise Agreement Restrictions, Tight Control
Name one advantage and one disadvantage of a sole proprietorship.
Advantages - owner retains all profits, easy to form and dissolve, owner has flexibility
Disadvantages - unlimited financial liability, financing limitations, management deficiencies, lack of continuity
Define merger and name the three types of mergers.
Merger - agreement in which two or more firms combine to form one company
Types - Vertical, Horizontal, Conglomerate
What is a limited-liability corporation?
a corporation that secures the corporate advantage of limited liability while avoiding the double taxation characteristic of a traditional corporation
Name three characteristics of home-based businesses.
52% of small businesses, Allows for more control of business, Allows for more control of personal time, Keeps start-up and operating expenses low, Owner can feel isolated and business has less visibility to customers
How often does a new franchise open?
every eight minutes
What is the liability of a partnership?
personal assets of any operating partner are at risk from business creditors