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Chapter 6 Intro. to Business

Sole Proprietorship
a business owned by one person
Advantages of a Sole Proprietorship
easy to start, run company without needing approval from someone else, keep all profits, income taxes usually lower than a corporation’s
Disadvantages of a Sole Proprietorship
unlimited liability, hard to get bank loans, many fail, may not have a skills necessary to succeed
Partnership
a business owned by 2 or more people
Advantages of a Partnership
easy to start, easier to get bank loans, each partner gives money to start business, only taxed once, each partner brings different skills
Disadvantages of a Partnership
all partners share business risk, problems occur if partners don’t get along or if one leaves, unlimited liability
Corporation
a company that is registered by a state and operates apart from its owners
Advantages of a Corporation
limited liability, raise moeny through stock, does not end if owner dies
Disadvantages of a Corporation
taxed twice, government regulates more, difficult and costly to start
Cooperative
an organization that is owned and operated by its remember
Nonprofit organization
a type of organization that focuses on providing a service, but not to make a profit
Franchise
a contractual agreement to use the name and sell the products or services of a company in a designated geographic area
Entrepreneur
Someone who takes a risk starting a business to earn a profit
Entrepreneurship
The process of starting, organizing, managing, and assuming the responsiblity for a business.
Venture Capital
Money provided by large investors to finance new products and new businesses that have a good chance to be very profitable.
Innovation
An invention or creation that is brand new.
Improvement
A designed change that increases the usefulness of a product, service, or process.
Small Business
An independent business with fewer than 500 employees.
Small Business Administration (SBA)
A government agency that helps small business owners develop business plans and obtain financing and other support for their companies.
the 3 types of businesses
sole proprietorship, partnership, corpporation
a sole proprietorship is owned by __________ person
one
about ____ of all businesses in the us are a sole proprietorship
72%
About __ of the revenue comes from a sole proprietorships
5%
an advantage of a sole proprietorship is that proprietors keep all the _______
profits
an advantage of a sole proprietorship is that __________ are lower than corporations
taxes
an advantage of a sole proprietorship is that it’s ______ to start
easy
an advantage of a sole proprietorship is that proprietors are in _______
charge
a disadvantage of a sole proprietorship the owner has ________liability and is responsible for the company’s __________.
unlimited; debts
a disadvantage of a sole proprietorship is that there is a limited access of
credit
a disadvantage of a sole proprietorship is that the company may run out of _______
money and supplies
a disadvantage of a sole proprietorship is that the owner may not have the necessary __________
skills
a disadvantage of a sole proprietorship is that the business ______ when the owner dies
ends
owned by two or people people who share the risk
partnership
a partnership is owned by ____ or more people show share the ________
2; risk and rewards
partnerships need a
partnership agreement
an advantage of a partnership is that it’s _____ to start
easy
an advantage of a partnership is that it’s easier to obtain________
capital and credit
an advantage of a partnership is that it’s not dependent on a _______ person
sole
an advantage of a partnership is that it’s only taxed
once
an advantage of a partnership is that there is ___________ in skills
diversity
a disadvantage of a partnership is that business ______ is shared
risk
a disadvantage of a partnership is that __________ legal and financial liability is shared
unlimited
a disadvantage of a partnership if one partner makes a mistake all partners are
responsible
a company that is registered by a state and operates apart from its owners
corporation
A corporation is a company that is ________ by a state and _________ apart from its woners
registered; operates
Where must the company obtain the charter
state where the main office is located
to form a __________________ the owners mus get a corporate charter from the state where their main office is located
corporation
Which of the ones stated above isn’t processed?
organic vegetables
an advantage of a corporation is that there is _______ liability
limited
an advantage of a corporation is hat owners are responsible for no more than the ______ that they have invested in it
capital
an advantage of a corporation is that there is ability to raise money by selling
stocks
money made off of stock
dividen
an advantage of a corporation is that the business __________- when the owner dies
doesn’t end
a disadvantage of a corporation is that there is _______ taxation
double
a disadvantage of a corporation is that ________ is taxed
income
a disadvantage of a corporation is that stockholders pay taxes on _______ issued to them
profits
a disadvantage of a corporation is that there are many
regulations
a disadvantage of a corporation is that it’s _____ to start
difficult and costly
A cooperative is an organization that is ________ by its members
owned and operated
an organization owned and operated by its members
cooperative
Purpose of cooperative
to save money on the purchase of certain goods and services; makes the marketing of goods and services more efficient and profitable
A nonprofit organization focuses on providing a __________, but not making a profit
service
focuses on providing a service, but not making a porfit
nonprofit organization
nonprofit organizations don’t pay ______ bc they’re not making a profit
taxes
nonprofit organizations must ______ with the government
register
most common type of business
sole properitorship
A franchise is a contractual agreement to use the _________and ____________ the products or services of a company in a designated geographic area
name; sell
contractual agreement to use the name and sell products of a company in a designated geographic area
franchise
to run a franchise you have to _________ money and pay ___________ or share the profits
invest; franchise fees
a business that gathers raw goods
producers
agriculture,mining, fishing, or forestory
producers
business that changes raw materials into more finished products
processors
turn crude oil into gasoline
processor
a business that makes finished products out of processed goods
manufactureres
cars and computers
manufactuerers
a business that moves goods from one business to another
intermediary
an intermediary ______ goods, ______ them, and then _____them
stores; sells, resells
business that distributes goods
wholesaler
another name for wholesaler
distributer
a business that purchases goods from a wholesaler and sells them to consumers
retailer
convenience store
retailer
perform tasks rather than provide goods
service businesses
service business employ about ___________ of the workforce and are rapidly increasing in numbers.
three-quarters
companies benefit when the five business functions
work together
manufactureres
finished goods
franchise offers well known
product
the process of creating, expanding, manufacturing or improving goods and services
production
buying and reselling of goods and services that have already been produced
procurement
the process of planning, promoting, pricing, promotion, selling, and distributing ideas, goods and services
marketing
Marketing involves getting consumers to _______ something
buy
advertising is used to _______- consumers to buy one product or service over another
influence
process of achieving company goals of planning, organizing, directing, controlling, and evaluating the effective use of resources
mangament
business or art of money mangament
Finance
analyzing financial statements to make future decisions
finance
maintaining and checking records, handling, and preparing financial reports for businesses.
accounting
requires attention to detail and accuracy
accouting
raw materials
prodcuers
changes raw materials
processorers
the functional areas of a business ______- on each other
depend
the functional area of a buisiness can ________ with each other
conflict
a furniture makers sales are __________. The ________ and ________ department notice decreasing sales. If the furniture is too highly price more _____ procedures will have to be implemented. A new _____________ is created. The accounting and finance department will ___________ the effects of new marketing efforts.
decreasing; accounting, financing; efficient; marketing plan; monitor
difference between financing and accouting
Finance is analyzing future decisions. Accounting is maintaining and checking records.
Biggest Advantage of a corporation
limited liability only loose investment
3 industries that produce raw goods
forestry, mining, agriculture, fishing
5 functions involved with running a business
production and procurement; marketing; management; financing; accounting
business plan
A written description of the business idea and how it will be carried out, including all major business activities.
entrepreneur
someone who organizes a business venture and assumes the risk for it
entrepreneurship
the process of starting, organizing, managing, and assuming the responsibility for a business
improvement
a designed change that increases the usefulness of a product, service, or process
venture capital
money provided by large investors to finance new products and new businesses that have a good chance to be very profitable
innovation
something newly introduced or created
small business
an independent business with fewer than 500 employees
Small Business Administration
an independent agency of the United States government that protects the interests of small businesses and ensures that they receive a fair share of government contracts
start-up financing
the amount of money needed to open the business
short-term financing
the money needed to pay for the current operating activities of a business
long-term financing
money needed for the main resources of a business that will last for many years
Planning
Involves activities such as setting goals.
Organizing
Involves activities such as creating an organizational chart determining the relationships and responsibilities of employees.
Staffing
Involves activities such as finding, selecting, hiring, training, appraising, and rewarding employees.
Leading
Involves activities such as directing employees, and requires good communication skills.
Controlling
Involves activities of evaluating business strategies and operations.
Corporation
A business owned by a number of people and operated under written permission from the state.
Sole Proprietorship
A business owned by one person.
Dividend
Part of profits that each shareholder receives.
Articles of Partnership
Written agreement that provides the details of how a partnership will operate.
Board of Directors
A group with responsibility to guide the procedures of a corporation.
Organizational Chart
Shows work relationships and responsibilities between employees.
Stockholder
A.K.A. Shareholders: Owners of a Corporation
Franchise
A written contract granting permission to sell someone else’s product or service.
Certificate of Incorporation
Written permission to operate a corporation.
Franchisor
The parent company that grants the franchisee the franchise.
Partnership
A business owned and managed by a small group of people.
business plan
a detailed written statement that describes the nature of the business, the target market, the advantages against the competition, resources and qualifications of the owners
enterprise zones
specific geopgraphic areas to which governments try to attract private business investment by offering lower taxes and other gov. support
entrepreneurship
accepting the risk of starting and running a business
incubators
centers that offer new business low cost offices with basic business servies
intrapreneurs
creative people who work as entrepreneurs within corporations
market
people with unsatisfied wants and needs who have both the resources and the willingness to buy
micropreneurs
entrepreneurs willing to accept the risk… of a business that remains small to keep a balanced life
service corps of retired executives (SCORE)
an SBA office with volunteers from industry, trade associations and education who concel small businesses at no cost… except expenses
small business
a business that is independently owned and operated, not dominant.. meet certain size
small business administration (SBA)
a US goverenment agency that advises and assists small businesses by providing management training and financial advice and loans
small business investment company ( SBIC) program
program which private investment companies licensed by the SBA lend money to small businesses
venture capitalists
individuals or companies that invest in new businesses in exchange for partial ownership
entrepreneurial team
a group of experienced people from different areas of business who join to form a managerial team with the skills needed to develop, market, and make a new product
Entrepreneurship
Accepting the risk of starting and running a business.
What are the reasons why people take the entrepreneurial challenge?
1. Opportunity
2. Profit
3. Independence
4. Challenge
What does it take to be an entrepreneur?
1. Self-directed
2. Self-nurturing
3. Action-oriented
3. Highly energetic
4. Tolerant of uncertainty
Why is an Idea is a good opportunity?
1. It fills customers needs
2. You have the skills and resources to start a business
3. You can see the product or service at a reasonable price and still profit
4. You can get your product or service to customers before the window of opportunity closes
5. You can keep the business going
Entrepreneurial Team
A group of experienced people from different areas of business who join to form a managerial team with skills to develop, make, and market a new product.
Micropreneurs
Entrepreneurs willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle.
Affiliate Marketing
An internet based marketing strategy in which a business rewards individuals or other businesses (affiliates) for each visitor or customer the affiliate sends to its website.
Intrapreneurs
Creative people who work as entrepreneurs within corporations.
Enterprise Zones
Specific geographic areas to which governments try to attract private business investment by offering lower taxes and other government support.
Incubators
Centers that offer new businesses low-cost offices with basic business services
Small Business
A business that is independently owned and operated, is not dominant in its field of operation, and meets certain standards of size (set by the Small Business Administration) in terms of employees or annual receipts.
Advantages of small over big business
More personal customer service and the ability to respond quickly to opportunities
Disadvantages (failures) of small over big business
Owner closing a business to start another, changing forms of ownership, and retirement
Business Plan
A detailed written statement that describes the nature of the business, the target market, the advantages the business will have in relation to competition, and the resources and qualifications of the owner(s).
Angel Investors
Private individuals who invest their own money in potentially hot new companies before they go public.
Venture Capitalists
Individuals or companies that invest in new businesses in exchange for partial ownership of those businesses.
Small Business Administration (SBA)
A U.S. government agency that advises and assists small businesses by providing management training and financial advice and loans.
Small Business Investment Company (SBIC) Program
A program through which private investment companies licensed by the Small Business Administration lend money to small businesses.
Market
People with unsatisfied wants and needs who have both the resources and the willingness to buy.
Service Corps of Retired Executives (SCORE)
An SBA office with volunteers from industry, trade associations, and education who counsel small businesses at no cost (except for expenses).
business plan
a written descripitions of buss. ideas how it will b carry out in including all other majors business
enterpreneur
someone who takes a risk in starting a business to earn a profit
improvement
a desgined change that increases the usefulness of a product,service,or process
innovations
an inventions or creations that is brand new
long term financing
the money needed for the main resources of a business that will last 4 many years
short term financing
the money needed to pay for the current operating activities of a business
small business
an independent business with fewer than 500 employees
small business admainistrations
a government agency that helps small business owners develop buss. plans
start-up financing
the amount of money needed to open the business
venture capital
money provided by largeinvestors to finance new products and new business
entrepreneurship
the process of starting,organizing,mg,and assuming the responsibility for a business
entrepreneur
is someone who takes a risk in starting a business to earn a profit, desire to be own boss, has good initial plan, many are teens
entrepreneurship
is the process of starting, organizing, managing, and assuming the responsibility for a business
venture capital
is money provided by large investors to finance new products and new businesses that have a good chance to be very profitable
innovation
is an invention or creation that is brand new
improvement
design change that increases the usefulness of a product, service or process
SBA (small business administration)
a government agency that helps small business owners develop business plans and obtain financing and other support for their companies (also Chambers of Commerce helps)
business plan
a written description of the business idea and how it will be carried out, including all major business activities
general description, credentials, description of service, business and financial plans
updated annually
start-up financing
the amount of money needed to open the business (building, equipment, inventory)
short-term financing
the money needed to pay for the current operating activities of a business (less than a year)
long-term financing
money needed for the main resources of a business that will last for many years
unique skills, new ideas, confidence, understanding of the business process
What it takes to be an entrepreneur
employment
40% have no help
60% have one or more employees
entrepreneurship and the economy
10% of 18-64 involved in entrepreneurship
500,000 new businesses made each yr
closing=openings
financing
most money from him and family
1 in 5 have invested in one
or venture capital
productivity
produces lots of goods and services
single owners make a ton of money for economy
responsible for half of GDP
risks
lack of capital
low sales
higher expenses
competition
management problems
lots of time
small business
has fewer than 500 employees, almost all are small
owner=manager (usually)
few locations
small market
not dominent
greatest number
starts with idea and research (competitors, regulations)
choosing team is important
small business employment
employ 50% of all US workers
many are professional and technical
advantages of small business
specialized help, direct info and help, unique services= special interest in customer
small business problems and failures
not accurate records, not enough start up money, no management experience, poor location
business ideas
from hobbies, interests, business experiences, opportunities
research, game plan, sections of plan written
steps for business plan

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