Chapter 5 Forms of Business Ownership and Organization

Question 1

Home-based businesses make up what percent of American small businesses?

Answer 1

52%

Question 2

How does the SBA small Business Administration define small business?

Answer 2

having fewer than 500 employees

Question 3

What percent of small businesses close after 10 years?

Answer 3

82%

Question 4

What are the 3 main causes of small-business failure?

Answer 4

management shortcomings
inadequate financing
complying with government regulations

Question 5

What are the 5 main sections of a business plan?

Answer 5

Executive summary
Introduction
Financial section
Marketing section
Resumes of principals

Question 6

What is the difference between a franchisor and a franchisee?

Answer 6

a franchisor permits a franchisee to market and sell its products under its brand name, in return for a fee

Question 7

What is CORPORATION?

Answer 7

legal organization with assets and liabilities separate from those of its owners

Question 8

What is PUBLIC OWNERSHIP?

Answer 8

a unit or agency of government owns and operates an organization

Question 9

What are the 5 main levels of corporate ownership and management?

Answer 9

stockholders
board of directors
top management
middle management
supervisory management

Question 10

What are the different kinds of mergers?

Answer 10

vertical
horizontal
conglomerate

Question 11

What is PREFERRED STOCK?

Answer 11

shares that give owners limited voting rights, and the right to receive dividends or assets before owners of common stock

Question 12

What is COMMON STOCK?

Answer 12

shares that give owners voting rights but only residual claims to the firm’s assets and income distributions

Question 13

What are the 3 key ways in which small businesses contribute to the economy?

Answer 13

new jobs
new industries
provide innovation

Question 14

SMALL BUSINESS INVESTMENT COMPANIES (SBIC) are run by how?

Answer 14

Venture Capitalists