Module 1: Entrepreneurs,SBA,Functions of Management,Types of Businesses (Q3)

Question 1

Small Business

Answer 1

A business with growth potential that is small compared to large companies in an industry, has geographically localized operations, is financed by only a few individuals, and has a
small management team.

Question 2

Entrepreneur

Answer 2

A person willing to create value, in either a new or an existing business, while assuming both the risks and the rewards for his/her efforts

Question 3

Three Types of Small Companies

Answer 3

• These categories are based on their growth potential
  1. Microbusinesses
  2. Attractive Small Firms
  3. High-Potential Ventures

Question 4

Microbusinesses

Answer 4

• lifestyle businesses
• A small firm that provides minimal profits to its owner.

Question 5

Attractive Small Firms

Answer 5

A small firm that provides substantial profits to its owner.

Question 6

High-Potential Ventures

Answer 6

• Gazelles
• A small firm that has great prospects for growth.

Question 7

Types of Entrpreneurs

Answer 7

Second Stage Entrepreneurs
Franchisees
Social Entrepreneurs
Entrepreneurial Teams
Intrapreneurs

Question 8

Second Stage Entrepreneurs

Answer 8

An established firm is purchased or taken over by a second-generation family member or another individual who may have been managing the company

Question 9

Franchisees

Answer 9

An entrepreneur whose power is limited by a contractual relationship with a franchising organization
- Franchisor provides support in operating the business
- Franchisee will pay a portion of the company’s profits to the franchisor (and an annual franchising fee)
Ex. Buying a McDonalds

Question 10

Social Entrepreneurs

Answer 10

Entrepreneurial activity whose goal is to find innovative solutions to social needs, problems, and opportunities

Question 11

Entrepreneurial Teams

Answer 11

Two or more people who work together as entrepreneurs on one endeavor

Question 12

Intrapreneurs

Answer 12

An existing corporation involving an employee who
assumes the responsibility for taking a new idea and converting it into a profitable product, service, or a process

Question 13

Small Business Administration

Answer 13

• The U.S. Small Business Administration helps Americans start, build, and grow businesses.
• Offers Local Support to Small Businesses
• Offers Free Business Counseling
• Offers Guaranteed Business Loans
• Helps with Disaster Loans

Question 14

7(A) Loan Guarantee Program

Answer 14

A loan program that helps small companies obtain financing through a guarantee provided by the SBA.
The loan proceeds can be used for working capital, machinery and equipment, furniture and fixtures, land and building, leasehold improvements, and debt refinancing (under special conditions).

Question 15

Certified Development Company
(CDC) 504 Loan Program

Answer 15

• An SBA loan program that provides long-term financing for small businesses to acquire real estate or machinery and equipment.

The borrower must provide 10 percent of the cost of the property.

Question 16

7(m) Microloan Program

Answer 16

• An SBA loan program that provides short-term loans of up to $50,000 to small businesses and not-for-profit child care centers.
• The loan can be used for working capital or the purchase of inventory, supplies, furniture, fixtures, machinery, and equipment.

Question 17

Small Business Investment Companies (SBICs)

Answer 17

Privately owned banks, regulated by the SBA, that provide long-term loans and/or equity capital to small businesses.

Question 18

Small Business Innovative Research (SBIR) Program

Answer 18

An SBA program that helps to finance small companies that plan to transform laboratory research into marketable products.

Question 19

Functions of Management

Answer 19

Planning
Organizing
Directing/Actuating
Evaluating/Controlling

Question 20

Planning

Answer 20

• That function of determining in advance what needs to be accomplished to achieve a particular goal
• Developing a Mission Statement
• Setting Goals
• Setting Objectives

Question 21

Organizing

Answer 21

Using all resources; human resources, materials, processes etc. to meet goals
- Specifics are decided
- Creates team environment

Question 22

Directing/Actuating

Answer 22

• A process in which the managers instruct, guide, and oversee the performance of the workers to achieve predetermined goals.
• This can be achieved by removing obstacles, creating a pleasant environment, and placing the proper resources in place.

Question 23

Evaluating/Controlling

Answer 23

• Compares organizational and individual performance with predetermined standards or expected results

Question 24

Manufacturing Business

Answer 24

A business that makes finished goods from raw materials by hand or machinery

Question 25

Merchandising Business

Answer 25

A business that purchases finished goods for resale

Question 26

Service Business

Answer 26

A business that provides a service as opposed to a product

Question 27

Common Legal Forms of Organization

Answer 27

Sole Proprietorship
Partnership
Corporation
LLC

Question 28

Sole Proprietorship

Answer 28

A business owned by one person, who bears unlimited liability for the enterprise
- AD:Simplest and cheapest way to start a business
- AD: Owner holds title to all firm’s assets and receives all the firm’s profits
- DIS: Owner is subject to claims of creditors
- DIS: Owner must bear all risk, pays all debts
- DIS: Death of owner terminates business
- DIS: Owner bears unlimited liability

Question 29

Partnership

Answer 29

A legal entity formed by two or more co-owners to operate a business for profit
AD: Faster business setup
AD: All aspects of business are shared
DIS: Share profits and losses equally (unless agreed to a different ratio)
DIS: Owners share unlimited liability
DIS: Personal conflicts
DIS: Decision-making may be harder
DIS: Owners must share equal parts

Question 30

Types of Partnerships

Answer 30

Limited Partnership
General Partner
Limited Partners

Question 31

General Partner

Answer 31

A partner in a limited partnership who has unlimited personal liability.

Question 32

Limited Partner

Answer 32

A partner in a limited partnership who is not
active in its management and whose liability is limited to his or her investment.

Question 33

Limited partnership

Answer 33

A partnership with at least one general

Question 34

Partnership Agreement

Answer 34

• A document that states explicitly the rights and duties of partners
• A written agreement should be signed before venture is launched

Question 35

Unlimited Liability

Answer 35

Liability on the part of an owner that extends beyond the owner’s investment in the business

Question 36

Joint and Several Liability

Answer 36

The liability of each partner resulting from any one partner’s ability to legally bind the other partners

Question 37

Corporation

Answer 37

A business organization that exists as a legal entity and provides limited liability to its owners
AD: Continuity in existence
AD: Ease of ownership
AD: Limited Liability
AD: Large Financial Capability
DIS: Legal restrictions on activities
ownership in a corporation is readily
transferable upon death
DIS: Separation of ownership/control
DIS: Lack of personal interest
DIS: Double taxation of earnings

Question 38

Types of Corporations

Answer 38

Legal Entity
C Corporation
S Corporation

Question 39

Legal Entity

Answer 39

A business organization that is recognized by the law as having a separate legal existence.

Question 40

C Corporation

Answer 40

An ordinary corporation, taxed by the federal government as a separate legal entity.

Question 41

S Corporation

Answer 41

• subchapter S corporation
• A corporation that offers limited liability to its owners and passes taxable income or losses on to stockholders.

Question 42

Limited Liability Company

Answer 42

A form of organization in which owners have limited liability but pay personal income taxes on business profits