Ch 19 Klicker Flashcards
Small business
A business that is independently owned and operated and not dominant in its field.
Entrepreneur
One who organizes, manages, and assumes the risk of the business firm
Number of employees
Manufacturing: 500-1500
Wholesale trade: 500
Retail trade: 20-100
Services: 25-300
Qualitative sales criteria
Actively managed by owners, highly personalized, largely local in its area, largely dependent on internal sources of capital to finAnce its growth, not dominant in the industry
Manufacturing
Business that makes finished goods from raw materials by hand or machinery
Merchandising
Business that purchases goods for resale
Services
Business that provides a service as opposed to a product
Economic contributions of small businesses
Interdependence of business
Stimulating economic competition
Innovation
Sole proprietorship
One person conducting a business. Held personally liable for all his/her acts and staff.
Advantages: ease of starting, low cost, freedom to manage, profit incentive
Disadvantages: unlimited risk, limited size, life, and management ability
General partnership
Two or more people as co-owners. Personally liable for the obligations of the business
Limited partnership
General partners and partners with a limited interest. Liability is limited to the amount of capital invested.
Advantage and disadvantages of partnerships:
Advantages: combined management, talent and capital, easy to form, efficiency of labor
Disadvantages: lack of continuity, decisions binding, frozen investments
Corporations
Legal entities established under state law.
Profit corporations have shareholders and are formed under the states business corporation act.
Advantages: continuity in existence, ease of ownership, limited liability, large financial capability.
Disadvantages: legal restrictions, separation of control, lack of personal interest, double taxation of earnings
Economic contributions of small businesses
Interdependence of business
Stimulating economic competition
Innovation
Sole proprietorship
One person conducting a business. Held personally liable for all his/her acts and staff.
Advantages: ease of starting, low cost, freedom to manage, profit incentive
Disadvantages: unlimited risk, limited size, life, and management ability
