Chapter 5 Flashcards
Entrepreneurship
the process of creating and managing a business to achieve desired objectives
Microentrepreneur
entrepreneurs who develop businesses with 5 or fewer employees
Social Entrepreneurs
individuals who use entrepreneurship to address social problems
Small Business
an independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people
Small Business Administration (SBA)
an independent agency of the federal government that offers managerial and financial assistance to small businesses
Sharing Economy (Gig Economy)
an economic model involving sharing of underutilized resources
Undercapitalization
the lack of funds to operate a business normally
Business Plan
a precise statement of the rational of the business and a step by step explanation on how it will achieve its goals
Venture Capitalists
persons or organizations that agree to provide some funds for a new business in exchange for an ownership interest or stock
Franchise
a license to sell another’s products or to use another’s name in business or both
Franchiser
the company that sells the franchise
Franchisee
the purchaser of the franchise
Intrapreneurs
individuals in large firms who take responsibility for the development of innovations within the organization
Retailers
retailers acquire goods from producers or wholesalers and sell them to customers.
Wholesalers
provide both goods and services to producers and retailers
High Technology
used to describe businesses that depend heavily on advanced scientific and engineering knowledge
Successful traits of Entrepreneurs
- Intuitive
- Productive
- Resourceful
- Charismatic
- Innovative
- Risk-Taker
- Persistent
- Friendly
Advantages of Small Business
- Independence
- Costs
- Flexibility
- Focus
- Reputation
Disadvantages of Small Business
- High Stress
- High Failure Rate
- Undercapitalization
- Managerial Inexperience
- Inability to Cope with Growth
Equity Financing
the owner uses real personal assets rather than borrowing from outside sources
Collateral
a financial interest in the property or fixtures of the business, a guarantee payment of the debt
Line of Credit
an agreement by which the financial institution promises to lend a business a predetermined sum on demand
Bartering
a business trading their own products for the goods and services offered by other businesses
Trade Credit
suppliers allow the business to take possession of the needed goods and services and pay them at a later date or in installments
Common Advantages Franchisees report
- Management training/support
- Brand Name Appeal
- Standardized quality of goods and services
- National and Local advertising programs
- Financial Assistance
- Proven products and business formats
- Centralized buying power
- Site Selection
- Greater chance of success
Shortcomings Franchisee reported
- Franchise fees and profit sharing with the franchiser
- Strict adherence to standardized operations
- Restrictions on purchasing
- Limited product line
- Possible Market saturation
- Less freedom in business decisions
