business ownership Flashcards
Entrepreneurs
interested in taking on new business opportunities, formulates and grows business with innovative ideas
Small Business Owners:
Not always interested in taking on new business opportunities, key objective is to generate profits and usually sticks to their current business plan
Franchise
the owners licenses their operation, products, services, branding, and knowledge for a franchise fee, requires a previously agreed upon amount in sales revenue to be paid to the owner, higher upfront cost but less risky
S Corporation
provided with a special tax advantage that allows the company to pass its income, losses, deductions, and credits through its shareholders, doing this results in low taxation
Disadvantage
very strict qualification requirements must be met to become and S corporation, no more than 100 shareholders, only one class of stock, strict stipulations on who is allowed to be a shareholder
C Corporation
taxes the corporation separate from its owners, the company’s profits are taxed when earned, the shareholders dividends are taxed after they are distributed (ideal for international businesses bc they do not have to file a US income tax return) (limited liability)
Limited liability company (LLC)
offers the same limited liability as a corporation but costs less to create, similar to S corporation and allow the owners to pay taxes on their profits or losses through their own taxes using a personal tax rate
Sole proprietorship:
easy to create due to lack of government regulation, there is no line between business and the owner, the owner is responsible for all of the business’s debts, whereas a partnership share the responsibility for financial banking between the partners
Non-profit entity
no owner, given tax exempt status that does not require the entity to pay any federal taxes
Owner of a Large Company
Works with the CEPO, CFO, and COO to make strategic decisions
Owner of a Small Business
Shoulders some or all of the CEO, CFO, and COO responsibilities
Stakeholders
individuals or groups that have an interest in the success of a company ex: investors, customers, suppliers, employees, directing management, financing, budgeting
Partnership
one or more partners share the business financial responsibilities
Stockholders
ensure standards for management, must own one share of company stock
Employment contract
outlines the employees and the employer’s obligations and the terms of employment: compensation, duration of employment, benefits, responsibilities
Piece work
an employee is compensated for each piece of work they complete
Equity
a non-cash compensation commonly offered to employees in place of cash or in addition to a lower salary: may include an investment vehicle like ownership in a company, restricted stocks, or shares
Existence Stage 1
a business is up and running
Survival stage 2
- a business regularly takes on a new customers and starts to generate a consistent income (owners can cover loans and start paying themselves)
Success stage 3
a business is economically healthy: entrepreneurs look for avenues to leverage their company’s growth and pass operational duties on to others
Take-off Stage 4
owners decide if they want a big business and determine the best solution to finance rapid growth
Resources Maturity stage 5
owners separate financially and operationally from a business
Pivot or Persist 6
a business with its current strategy pivots to a new strategy if needed
Exit plan stage
owners make a profit from selling their ownership in a successful company
Design thinking
a learning process focused on customers and their needs, used to develop user-friendly products
Design thinking elements
empathize, define, ideate, prototype, test
Empathize stage
observe, engage, and empathize with customers to understand their experiences and needs, involves learning about customer challenges
Define stage
analyze observations and information gathered during the empathize stage, define the core problem as as problem statement
Ideate stage
the design team develops solution ideas to spark new ways of thinking, they keep the most realistic and innovative ideas that will provide the best customer satisfaction
Minimum Viable Product (MVPs)
basic functioning products that address the users core problem, used to test the problem solutions developed in the ideation
Self Reliance
an entrepreneur cannot rely on others ,you are responsible for the success of your business
Forward thinking mentality
thinking about and planning for the future
Opportunity recognition
the way you approach new ideas and ventures
Grit
tackling goals with courage and perseverance even when its challenging
Personal agency
the ability to work toward achieving a goal without someone directing and ensuring that it is getting done
Ethical practices
decision making based on moral and doing the right thing
Social responsibilities
preventing and removing any corruption and unethical behavior that could harm your business, the community, or the environment
Business idea
researched, refined, revised, shaped, reshaped tested
Business opportunity
an investment that lets the buyer start a business, the initial buyer fee is at least $500, the seller is required to help the buyer find an ideal location for the business
Franchise
buyers agree to buy and sell the products developed by the seller or owner of the license
—Strict stipulations on
where a franchise
location can be opened
— Higher start-up costs
—Offer ongoing support
and training
Network marketing
network marketers recruit other marketers who work under them to create a distributed network
Licensing
anytime you want to use a brand name on your products, you must obtain a license
Business opportunity viability
market size, relationships, managing cash flow, management skills, passion
Lean canvas
a short written document discussing your business plan, one page long, discuss key information (BMC: Problems, solutions, costs, value propositions, marketing channels, revenue, key metrics)
Executive summary
establishes the first impression of a business, summarizes intended accomplishments, products and services sold, financial outlook, funding needed, the business goals, the business achievements
Marketing plan
identify competitors along with their strengths and weaknesses, describe potential customers and a plan to reach them
Copyrights
used to protect creative works - art, literature, music
Patent
used to protect an invention from being copied - grants exclusive rights to an inventor for a limited time - allows an inverter to profit from their invention without competing for sales
Trademark
used to protect brand names, logos, and business names
