Chapter 5: Small Business Flashcards
1
Q
Characteristics of attractive small-business industry
A
- Low initial capital investment
- Some special skill requirements
- High growth and profit potential
2
Q
Industries that attract small businesses
A
- Distribution (retailing, communications, wholesaling)
- Service (care, repairs, restaurants)
- Production (construction)
3
Q
Characteristics of Entrepreneurs
A
- “Entrepreneurial spirit”
- Desire for independence
- Desire to determine own destiny
- Willingness to find and accept a challenge
4
Q
Motivations towards becoming an entrepreneur
A
- Wanting to be ‘own boss’
- High-tech opportunities
- Lost a job (jobs unavailable)
- New product-idea
- A great new opportunity
5
Q
Advantages of ‘Smallness’
A
- Personal relationships with customers and employees
- Ability to adapt to change
- Simplified record-keeping
- Independence
- Advantages paired with sole-proprietorships
6
Q
Three purposes of a business-plan
A
- Communication
- Management
- Planning
7
Q
Types of Franchises
A
- Brand-name items
- Licenses to sell products
- Brand names, techniques or services offered to franchisee (not real product)
8
Q
Advantages of franchising to the franchisor
A
- Fast and well controlled distribution of its product
- No need to construct and operate its own outlets
- More working capital available for expanded production for advertising
- Franchising agreements maintain product and quality standards
- Motivated workforce of franchisees
9
Q
Advantages of franchising to the franchisee
A
- Opportunity to start a proven business with limited capital
- Guaranteed customers
- Franchisor available for advice and guidance
- Materials for local promotional campaigns and participation in national campaigns
- Cost savings when purchasing in cooperation with other franchisees (Fish-Aways, Steers, Debonairs)
10
Q
Disadvantages of franchising to the franchisor
A
- Failure of the franchisee to operate franchise properly
- Disputes with and lawsuits by franchisees over the terms of the franchise
11
Q
Disadvantages of franchising to the franchisee
A
- Franchisor retains a large amount of control over the franchisee’s activities
- Franchisor opening competing franchises within the franchisee’s market
