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Bus 200 Midterm > Chapter 4 > Flashcards

Chapter 4 Flashcards

1
Q

Small business

A

An independently owned and managed business that does not dominate its market. fewer than 100 employees

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2
Q

New venture

A

has become operational within the previous 12 months, has adopted any of four main organizational forms—sole proprietorship, partnership, corporation, or cooperative—and sells goods or services.

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3
Q

Intrapreneur

A

People who create something new within an existing large firm or organization

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4
Q

Private sector

A

The part of the economy made up of companies and organizations not owned or controlled by the government.

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5
Q

Entrepreneurial process

A

the entrepreneur, the opportunity, and resour-ces.

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6
Q

Sales forcast

A

an estimate of how much of a product or service will be purchased by prospective customers over a specific period

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7
Q

Franchise

A

An arrangement that gives a franchisee (the buyer) the right to sell the product of the franchiser (the seller).

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8
Q

Business plan

A

Document in which the entrepreneur summarizes their business strategy for the proposed new venture and how that strategy will be implemented.

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9
Q

Bootstrapping

A

Doing more with less.

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10
Q

Collateral

A

Assets that a borrower uses to secure a loan or other credit and that are subject to seizure by the lender if the loan isn’t repaid according to the specified repayment terms.

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11
Q

Debt vs equity

A

Debt financing involves the borrowing of money whereas equity financing involves selling a portion of equity in the company

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12
Q

Love money

A

investments from friends, relatives, and business associates

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13
Q

private investors

A

individuals and organizations that invest their own money into a business

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14
Q

angel investor

A

An angel investor usually provides capital in exchange for equity (stock in the company) or convertible debt, which is a loan that can be converted to equity at a later date

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15
Q

Venture capitalist

A

a private equity investor that provides capital to companies with high growth potential in exchange for an equity stake

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16
Q

most common sources of equity

A

personal savings, love money, private investors, venture capitalist

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17
Q

most common sources of debt financing

A

financial institutions, suppliers

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18
Q

debt financing from financial institutions

A

hard to get from a bank to start new venture so usually a personal loan instead of business loan, mortgage a house or borrow against the cash value of a life insurance policy

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19
Q

trade credit

A

suppliers who provide goods (i.e., inventory) or services to entrepreneurs with an agreement to bill them later.

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20
Q

incubators

A

Facilities that support small businesses during their early growth phase by providing basic services, office space, legal advice, and more.

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21
Q

crowdfunding

A

the practice of collecting financial contributions from various individuals through an online platform

22
Q

franchising agreement

A

Stipulates the duties and responsibilities of the franchisee and the franchise

23
Q

reasons for success in small business

A
  1. Hard work, drive, and dedication. 2. Market demand for the product or service. 3. Managerial competence. 4. Luck
24
Q

Reasons for failure in small business

A

Managerial incompetence or inexperience, neglect, weak control systems, insufficient capital

25
Q

capital

A

wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing.

26
Q

forms of business ownership

A

sole proprietorship, partnership, corporation, or cooperative

27
Q

Sole proprietorship

A

Business owned and usually operated by one person who is responsible for all of its debts.

28
Q

unlimited liability

A

A person who invests in a business is liable for all debts incurred by the business; personal possessions can be taken to pay debts.

29
Q

partnership

A

A business with two or more owners who share in the operation of the firm and in financial responsibility for the firm’s debts.

30
Q

general partner

A

A partner who is actively involved in managing the firm and has unlimited liability.

31
Q

limited partner

A

A partner who generally does not participate actively in the business and whose liability is limited to the amount invested in the partnership.

32
Q

corporation

A

separate legal entities with property rights and obligations, and they have indefinite lifespans. They may sue and be sued; buy, hold, and sell property; make and sell products; and commit crimes and be tried and punished for them.

33
Q

shareholders

A

Investors who buy shares of ownership in the form of stock.

34
Q

common stock

A

common stock in a company, you have the right to vote on things like corporate policies and board of director decisions. Common stock is just one type of stock traded on public exchanges

35
Q

board of directors

A

A group of individuals elected by a firm’s shareholders and charged with overseeing, and taking legal responsibility for, the firm’s actions

36
Q

Chief executive officer

A

The highest-ranking executive in a company or organization.

37
Q

public corporation

A

A business whose stock is widely held and available for sale to the general public

38
Q

private corporation

A

A business whose stock is held by a small group of individuals and is not usually available for sale to the general public

39
Q

initial public offering (IPO)

A

when a private company becomes public by selling its shares on a stock exchange

40
Q

dividend

A

payments made by companies to their shareholders based on the number of shares they own

41
Q

private equity firms

A

Companies that buy publicly traded companies and then make them private.

42
Q

income trust

A

a company that holds securities or assets in other businesses. It is designed to distribute income to security holders on a regular basis, usually monthly or quarterly

43
Q

stock

A

A share of ownership in a corporation.

44
Q

Limited liability

A

Investors’ liability is limited to their personal investments in the corporation; courts cannot touch the personal assets of investors if the corporation goes bankrupt

45
Q

double taxation

A

A corporation must pay
income taxes on its profits, and then shareholders must also pay personal income taxes on the dividends they receive from the corporation

46
Q

cooperative

A

An organization that is formed to benefit its owners in the form of reduced prices or the distribution of surpluses at year end.

47
Q

sole proprietorship advantages and disadvantages

A

are owned and operated by one person, are easy to set up, have low startup costs, and get tax benefits, owners enjoy freedom.

they have unlimited liability, a lack of continuity, and limited resources

48
Q

general partnership advantages and disadvantages

A

all partners have unlimited liability. Partnerships may lack continuity, and transferring ownership may be difficult

partnerships can grow by adding new talent and money, partners are taxed as individuals, and banks pre-fer to make loans to enterprises that are not dependent on one individual.

49
Q

Corporation advantages and disadvantages

A

limited liability, continuity, professional
management, and
improved ability to raise money by selling stock.

high startup costs, complexity, and double taxation

50
Q

cooperative advantages and disadvantages

A

democratically controlled, enjoy limited liability and continuity, and are not subject to double taxation

difficulty raising equity

Bus 200 Midterm (5 decks)

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