Chapter 5 Assignment
Family-owned companies must be closed corporations.
Family-owned companies are an example of a not-for-profit corporation.
Only a small percentage of family-owned businesses survive into the second or third generation.
Family-owned companies must submit a written agreement to the state in which it organizes.
they do not have to pay taxes on their profits.
government agencies offer benefits designed to help small businesses compete with larger firms.
incorporation is easier for them.
banks are more likely to grant them loans.
About 25 percent
About 50 percent
About 75 percent
Less than 25 percent
provide fertile ground for new ideas
employ highly intelligent, motivated people
have the funds to turn new ideas into large-scale, profitable ventures
hire only family members or friends.
understand their own limitations.
become an expert in legal, financial, marketing, and other related business areas.
incorporate their business.
marketing training is lacking
staffs are overworked
overall business training is lacking
financial training is lacking
credit card companies
a statement of the company’s goals
a detailed time frame for achieving goals
projections of money flows
a time frame for selling stock to investors
Small Business Investment Companies (SBICs)
advice from retired executives
access to venture capitalists
an advertising specialist
a business incubator
Franchisees are able to negotiate better pricing than franchisors.
Franchisees determining their own pricing and marketing.
Franchises are becoming less expensive to fund.
More franchises are opening outside the United States.
franchisor; does not work
franchisee; does not work
profits subject only to a single tax
ease of formation
ease of liquidation
there might be family squabbles
choosing work assignments
how to limit liability
unlimited financial liability
limiting liability of partners to the value of their interests in the company
greater financial resources
He doesn’t have to worry because, according to law, everyone is responsible for his/her own debts.
Business creditors will expect Devon to pay at least half the debt since he owns 50 percent of the business.
Business creditors will pursue Keith alone since his signature authorized payments.
Business creditors will expect full payment from Devon.
sole proprietorships, corporations
sole proprietorships, partnerships
guaranteeing the payment of cash dividends every year
electing its own officers
authorizing major transactions of the corporation
hiring the corporation’s chief executive officer
CEOs and CFOs
city sewer system
employee ownership and collective ownership
foreign corporations and public ownership
employee ownership and foreign corporations
public ownership and collective ownership
It is independently owned and operated and is not dominant in its field.
It operates at a loss for many years until it is a large business.
Small businesses grow slowly.
Small businesses are sole proprietorships.
A nursing home
A construction company
An auto repair shop
Customers are not willing to pay competitive prices for home-based services.
Funds that are not being used to pay rent can be directed into the business.
Owners work more hours because their office is their home.
There is an increase in the owner’s quality of life.
difficulty dealing with government regulations.
all of these answers are correct.
the vision of the founder(s) and its mission.
all of these answers are correct.
a description of potential competitors.
a description of what makes the company unique.
to charter the new business with the state in which it is located.
to document the founding history of the business.
to obtain financing for the business.
to outline the qualifications of the new business owner(s).
commercial bank loans.
home equity loans.
Credit card companies do not care if you are using the credit card for business or personal reasons as long as the balance is paid.
Interest rates on credit cards are less than banks charge for business loans.
Banks only lend to corporations, not sole proprietorships.
Small business owners usually do not know how to apply for bank loans.
A franchisor can make better buying deals because of quantity purchases.
A franchisor employs fewer direct employs.
A franchisor can handle a larger, more complex business.
A franchisor is in control of the daily operations of a much larger business.
incurs no risk in the transaction.
guarantees profits to the purchaser.
provides building plans, site selection help, managerial programs and other services for a fee.
is the small business person who purchases the franchise.
Ease of formation
Expanded financial capacity
Limited liability for the owners
having full control of business operations.
double taxation on income.
financially benefitting from own ideas/efforts.
Acquisitions allow a company to enter new markets and improve competitiveness.
Acquisitions are always less expensive than creating new products.
Governments regulate acquisitions less than they do mergers.
Mergers guarantee future profitability.
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