ch 5

Question 1

small business

Answer 1

one that is independently owned and operated for profit and is not dominant in its field.
small bus:
represent 99% of all employer firms

Question 2

The small business sector

Answer 2

out of the 28.8 million bus in the US, only 18,600 employ more than 500 workers (enough to be considered large.)
-During the last decade, the number of small bus in the U.S. has increased by 49%.
-about 80% of bus started in 2014 survived until 2015, the largest share since 2005
from 2004 to 2014:
Avg of 78% of new bus survived one year
Abt half of all firms survived 5 years or longer
Abt 1/3 of firms survived 10 yrs or longer

Question 3

industries that require only a low initial investment and some special skills or knowledge tend to attract new businesses
Knowledge entrepreneurs choose areas with which they are familiar, and these are most often the more established industries

Answer 3

Industries that attract small bus

Question 4

Ppl in small bus: Entrepenuers

Answer 4

personal factors to why people go into bus for themselves:
-Entrepreneurial spirit
-Independence
-Desire to determine one’s own destiny
-Willingness to find and accept a challenge
-Family background
-Age
-Motivation

Question 5

Women as small bus owners

Answer 5

-Women own at least 36% of all small bus.
-Women own 66% of the home-based bus in this country
About 9.9 million women-owned bus in the US provide almost 8.8 million jobs and generate $1.4 trillion in sales.
More than 40% of a women-owned bus in the US have been in bus for 12 years or more
W-owned bus are financially sound and credit-worthy, and their risk of failure is lower than avg.
Compared to other working women, self-employed women are older, better educated, and have more managerial exp.

Question 6

High-tech teen entrepreneurship is exploding & entrepreneurship among immigrants has been growing

Answer 6

teens and immigrants as small bus owners

Question 7

Why entrepenuers and small bus fail

Answer 7

lack of capital and cash flow problems
Lack of management skills
over expansion

Question 8

Importance of Small Bus in our economy Providing tech innovation

Answer 8

-Small firms produce 2-and-a-half times as many innovations as large firms relative to the number of persons employed.
-Small firms employ 43% of all high-tech workers such as scientists, engineers, and computer specialists
-More than half o the major technological advances of the 20th century originated with individual inventors and small companies.

Question 9

Importance of Small Bus in our economy

Answer 9

Provides employment
Small bus represent 99.7 percent of all employers, employ more than 50% of the private workforce, and provide abt 2/3 of the net new jobs added to our econ.

Question 10

Small bus cause larger, established firms to become more efficient and more responsive to consumer needs

Answer 10

provides competition

Question 11

Small firms provide a variety of goods and serv to each other and too much larger firms

Answer 11

small bus fill the needs of society and other bus

Question 12

Disadvantages of small bus

Answer 12

Risk of Failure
-Limited potential
-Limited ability to raise capital
-Only 2 sources of funding
Angel Investors- private individuals who invest $ in exchange for ownership in the company. Sam individuals hope to sell their ownership stake for a profit.
Crowdfunding - Entrepreneurs post descriptions of their project or bus online and then inv ppl to contribute; contributors typically get a reward based on their contribution level.

Question 12

Disadvantages of small bus

Answer 12

Risk of Failure
-Limited potential
-Limited ability to raise capital
-Only 2 sources of funding
Angel Investors- private individuals who invest $ in exchange for ownership in the company. Sam individuals hope to sell their ownership stake for a profit.
Crowdfunding - Entrepreneurs post descriptions of their project or bus online and then inv ppl to contribute; contributors typically get a reward based on their contribution level.

Question 13

Carefully constructed guide for the person starting a bus
-Communication - Bus plan serves as a concise document that potential investors examine to see if they would like to invest or assist in financing a new venture.
- Management - A bus plan helps track, monitor, and evaluate the prog. Serves to establish. timelines and milestones & allows comparison of growth projections against actual accomplishments
Planning - the bus plan guides a bus person through the various phases of bus.

Answer 13

Bus plan

Question 14

Governmental Agency that assists counsels, and protects the int of small bus in the US.

Answer 14

Smal Bus Administration (SBA)

Question 15

Group of bus ppl. who valunteer their services to small bus through the SBA

Answer 15

Score Association

Question 16

Small Bus Institutes (SBIs)

Answer 16

groups of seniors and. graduate students in bus admin who provide management counseling to small bus

Question 17

Small bus dev centers (SBDCs)

Answer 17

University-based groups that provide individual counseling and practical training to owners of small bus.

Question 18

Money that is invested in small sometimes struggling firms that have the potential to become very successful

Answer 18

Venture capital

Question 19

Small Bus inv companies (SBICs)

Answer 19

priv-owned firms that provide venture capital to small enterprises that meet their investment standards.

Question 20

License to operate an individually owned bus as though it were part of a chain of outlets or stores

Answer 20

Franchise

Question 21

Actual granting of a franchise

Answer 21

franchising

Question 22

Individuals/organization granting a franchise
Provides the franchisee:
-A known and advertised bus name
-Management skills
-The required training and materials
-Method of doing bus

Answer 22

Franchisor

Question 23

A person or org purchasing a franchise
-Supplies labor and capital
-Operates the franchised bus
-Agrees to abide by the provisions of the franchise agreement.

Answer 23

Franchisee

Question 24

Used by sellers of passenger cars and trucks, farm equipment, and shoes

Answer 24

Manufacturer authorizes a number of retail stores to sell a certain brand-name item

Question 25

Most commonly found in the soft drink industry

Answer 25

A Producer licenses distributors to sell a given prod to retailers.

Question 26

used by travel-related companies(hotels) and fast-food restaurants.

Answer 26

A franchisor supplies brand names, techniques, or other services instead of a complete prod.

Question 27

The success rate for businesses owned and operated by franchisees is significantly higher than the success rate for independently owned small bus

Answer 27

Are franchises succesful

Question 28

Franchises aren’t guarantees of success for either franchisees or franchisors

Answer 28

Too rapid expansion, inadequate capital or management skills, and a host of other probs ca cause failure for both franchisee and franchisor

Question 29

-Gains fast and well-controlled distribution of its prod w/o incurring the high cost of constructing and operating its own outlets
-Has more capital available to expand prod and to use for advertising
-Can ensure, thru the franchise agreement, that outlets are maintained and operated according to their own standards
-The franchisee is likely to be very motivated to succeed, which translates into more sales, and thus higher royalties for the franchisor

Answer 29

Advantages to franchisors

Question 30

-Opportunity to start a bus w limited capital and to make use of the bus experience of others.
-Receives advice from the franchisor, often free of charge
-Receives materials to use in local advertising and can take part in national promotional campaigns sponsored by the franchisor
-May be able to minimize the cost of advertising, supplies, and various business necessities by purchasing them in cooperation with other franchisees

Answer 30

Advantages to the franchisee