Chapter 5 - Small Business

Question 1

Small Businesses employ 1/2 of all?

Answer 1

Non-Government Workers

Question 2

Small Businesses have generated what percent of new jobs over the past 2 decades?

Answer 2

65%

Question 3

Small Businesses hire what percent of high tech employees?

Answer 3

43%

Question 4

What percent of the GDP do small businesses produce?

Answer 4

50%

Question 5

Manufacturers must have less than how many employees to be considered small business?

Answer 5

500

Question 6

Small Retailer Businesses produce how much in annual sales?

Answer 6

$7 Million

Question 7

Small Business Wholesalers must employ less than?

Answer 7

100

Question 8

Small Business Farms/Agriculture must generate less than what annually.

Answer 8

$750,000

Question 9

Contributions of Small Businesses (3)

Answer 9

1. Job Creation
2. Innovation
3. Creation of new industries.

Question 10

Why do small businesses fail?

Answer 10

1. Management Shortcomings - Uneducated
2. Inadequate Financing
3. Gov’t Regulations

Question 11

SBA

Answer 11

Small Business Administration

Question 12

SBA established when?

Answer 12

1953 (President Eisenhower’s Admin.)

Question 13

SBA Mission

Answer 13

Assist, Promote, and Develop Small Businesses

Question 14

Initial lending activity of the SBA was known as?

Answer 14

“Lender of Last Resort”

Question 15

Since what year has the SBA operated as a loan guarantor?

Answer 15

1975

Question 16

SBA still makes direct loans to who?

Answer 16

1. Minorities
2. Women
3. Vets
4. Disabled

Question 17

Forms of Private Ownership

Answer 17

1. Proprietorship 72%
2. Partnership 9%
3. Corporations 19%

Question 18

Proprietorship Advantages and Disadvantages

Answer 18

Advantages: Easy to start, Min. Legal Req.,Easy to Dissolve, Right to all Profit.
Disadvantages: All Financial Liability.

Question 19

Partnerships Advantages and Disadvantages

Answer 19

Advantages: Easy to Form, Shared Liability, More Resources, More Access to Capital.
Disadvantages: Exposed to Unlimited Financial Liability, Liable for Partners Actions, More Complicated to Dissolve.

Question 20

Corporations Advantages and Disadvantages

Answer 20

Advantages: Limited Financial Risk, Greater Access to Money
Disadvantages: Double Taxation, takes a lot to Dissolve.

Question 21

C-Corporation

Answer 21

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

Question 22

S-Corporation

Answer 22

A form of business organization in which the entity does not pay corporate taxes on profit; instead profits are distributed to shareholders who pay individual income taxes.

Question 23

LLC Limited Liability Company

Answer 23

A business entity that secures the corporate advantage of limited liability while avoiding double taxation of traditional corporation.

Question 24

Vertical Merger

Answer 24

Combines firms operating at different levels in production and marketing process.

Question 25

Horizontal Merger

Answer 25

Joins firms in the same industry for the purpose of diversification, increasing customer bases, cutting costs, or expanding product line.

Question 26

Conglomerate Merger

Answer 26

Combines unrelated firms with the goal of diversification, spurring sales growth or spending a cash surplus in order to avoid a takeover attempt.

Question 27

Joint Venture

Answer 27

Partnerships between companies formed for a specific undertaking.