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Business Fundamentals > Chapter 4 > Flashcards

Chapter 4 Flashcards

1
Q

Define a small business

A

Owner-managed business with below 100 employees; unincorporated businesses with only an owner are sometimes not included in this group

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2
Q

Define a new venture

A

Recently formed organization, opened within a year, selling goods or services

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3
Q

Define entrepreneurship

A

Process of identifying, capitalizing on a marketplace opportunity

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4
Q

Define intrapreneurs

A

Create something new within existing large organization

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5
Q

What is the role of small businesses in Canada?

A

They are the main source of job creation; they are the leaders in innovation and tech; 98% of all employers in Canada are small

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6
Q

How have women entrepreneurs increased in the economy?

A

Approx. half of all new businesses are started by women; rise of “mompreneurs”

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7
Q

What are the steps of the Entrepreneurial Process?

A
  1. Entrepreneur 2.Identify Opportunities + Accessing resources 4. New Venture Startup 5. Growth Stabliity Decline Demise
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8
Q

Define identifying opportunities

A

Generate ideas, screen ideas - does it add or create value? does it provide a competitive advantage? is it marketable and financially viable? does it have low exit costs? - develop opportunity (Business plan)

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9
Q

Define a business plan (10)

A

Cover page; executive summary; table of contents; company description; product or service description; marketing; operating plan; management; financial plan; supporting details/appendix

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10
Q

Define accessing ressources

A

Bootstrapping (doing more with less, preferably external ressources); fianancial ressources (debt, equity); other ressources - Business Dev. Bank of Canada (BDC), incubators, Internet, crowdfunding

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11
Q

Equity vs Debt

A

Equity: personal savings, love money, venture capitalists, private investors (angels)
Debt: financial institutions, suppliers

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12
Q

What are the 3 types of fits?

A

Entrepeur opportunity: is it possible?
Opportunity ressources: can required ressources be acquired?
Entrepreneur ressources: capacity to meet requirements?

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13
Q

What are 3 ways of starting a small business?

A

Buying an already existing business; taking over a family business; buying a franchise

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14
Q

Pros of buying an existing business (5)

A

Established clientele; ease of financing; experienced employees; established lines of credit and supply; less risky than starting from scratchw

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15
Q

What are the cons of buying an existing business? (4)

A

Uncertainty about financial health; location may be poor; pricing strategy may need to be revisited; may have a poor reputation

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16
Q

What are challenges with a family-owned business?

A

Ongoing management: which family members have control, what is the price to be paid, what are family members rights to a job?
Succession: how is successor selected, when, how is he trained?

17
Q

What are benefits of franchising for the franchiser?(6)

A

Attain rapid growth, share advertising cost, increased investment money, development of a motivated sales team, increased revenue, no need to deal with local business issues

18
Q

What are franchising benefits for the franchisee?(9)

A

Expert advice, training provided, lower failure rates, well-developed brand, keep most profits, help with external financing, access to management expertise, economies of sale in buying supplies, no need to build business from scratch

19
Q

What are common reasons for success?

A

Hard work, drive, and dedication; market demand for product or service; managerial competence; luck

20
Q

What are common reasons for failure?

A

Managerial incompetence; neglect; weak control systems; insufficient capital

21
Q

What are 4 forms of business organization?

A

Sole proprietorship; partnership; corporation; cooperative

22
Q

What are the advantages of a sole proprietorship?(4)

A

Freedom; simplicity; low start-up costs; tax benefits

23
Q

What are the disadvantages of sole proprietorships?

A

Unlimited liability; lack of continuity; difficult to raise money; reliance on one indiv.

24
Q

Define a partnership

A

Two+ people agree to combine financial, managerial, technical abilities to run business; often used by professionals

25
Q

What are the types of partnership

A

General and limited partners

26
Q

What are the advantages of partnership? (4)

A

Larger talent pool, larger money pool, ease of formation, tax benefits

27
Q

What are the disadvantages of partnership? (4)

A

Unlimited liability, lack of continuity, ownership transfer is difficult, potential conflict

28
Q

Define a corporation

A

Seperate legal entity from owners, property rights and obligations, indefinite lifespan

29
Q

Define a public corporation

A

Shared widely held and available for sale to general public; IPOs (inital public offering)

30
Q

Define a private corporation

A

Shares held by a few shareholders (not widely available)

31
Q

Define a board of directors

A

Governing body responsible for shareholder interests, in charge of appointing management, setting policies, and making major decisions

32
Q

Define a shareholder

A

Investors owning shares of a company, may share in profits through dividends

33
Q

Define a CEO

A

Chief executive officer, responsable for firms overall performance

34
Q

What are the advantages of a corporation?

A

Limited liability, continuity, professional management, easier to raise money

35
Q

What are the disadvantages of a corporation?

A

Start-up costs, double taxation, regulations, stockholder revolts

36
Q

Define a cooperative

A

Organization formed to benefit owners through reduced prices and distributions of surpluses

37
Q

What are the advantages of a cooperative?

A

Limited liability, owner continuity, one vote per member (equal), income taxed only at indiv. member level

38
Q

What are the disadvantages of a cooperative?

A

No incentive to invest, members simply benefit from usage

39
Q
A

Business Fundamentals (15 decks)

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