OSHA Exam 1 Flashcards
the principle government agency concerned with the financing, operation, and management of a small business
Small business administration
one who organizes, manages, and assumes the risk of a business firm
Entrepreneur
A. Mining/manufacturing (500 to 1500 employees)B. wholesale trade ( up to 500 employees)C. Retail trade (20 to 100 employees)D. Services ( 25 to 300 employees)
Quantative criteria
A. Actively managed by its ownersB. highly personalizedC. Largely local in its area of operation D. Largely dependent on internal sources of capital to finance its growthE. business is not a major force in the particular industry (not dominant)
Qualitative criteria
one which makes finished goods from raw materials by hand or machinery
Manufacturing
one that purchases finished goods for resale
Merchandising
one that provides a service as opposed to a product
Services
A. Interdependence of businessB. CompetitionC. Innovation
Economics contributions of small business in the US
the dependency of business on one another
Interdependence of business
the practice of trying to obtain something that is being sought by others under similar circumstances at the same time
Competition
the introduction of something new; a new idea, method or device
Innovation
-lack of human resource planning -capital shortages, lack of available money-tax burdens-government regulations-consumerism
Problems & risks of business ownershipExternal problems
-capital shortages, lack of available money -securing funds, good interest rates -maintaining cash reserves
External problems
developing a comprehensive strategy for meeting future human needs
human resource planning
the emphasis placed on providing to consumers (families) products and services that are safe, reliable, and honestly advertised; also a social movement that seeks to strength the rights of consumers relative to sellers-caveat emptor vs.caveat vend intro-let the buyer beware vs let the seller beware
Consumerism
-Lack of expertise (mismanagement)-Financial shortages (poor cash flow)-Human resource management
Problems & risks of business ownershipInternal problems
- Why is the business for sale?2. What is profit potential?3. Tangible assets4. Who is competition5. Intangible assets6. human resource forecast
Purchasing an existing firm or start a new one
-book value-replacement value-liquidation value-earnings valuation
Determining the price - valuation of tangible assets
the cost of a fixed asset less accumulated depreciation
book value
the fair market price to purchase similar assets
replacement value -
the anticipated value of an assets that would be realized in case of liquidation
liquidation value (market value)-
the approach centers on estimating the amount of potential income that may be produced by a business in the next year
earnings valuation -
-goodwill -copyrights -patent -trademark
Determining the price - valuation of intangible assets
such as name of the firm–intangible inasmuch as it enables a business to earn a profit in excess of the normal rate of profit by other business of the same kind
-goodwill
the registered right of the creator to reproduce, publish, and sell the work which is the product of the skill and intelligence of that person
-copyrights
the registered right of an inventor to make, use, and sell an invention
-patent
a distinct name, sign or symbol that the federal government grants exclusive rights to use for a specified period of time
-trademark
-cash, owner financing, third party financing
Terms of the Sale
-prior work experience, -personal experience, -hobbies, -accidental discovery, -deliberate search
Sources of new ventures
-a group of potential customers possessing purchasing power and I satisfied needs
Market
-used to determine where potential customers are located
Market survey
-demographics, economic base, population trend, income trend/changes, competition, social & business climate
Market survey
-the statistical study of human populations with respect to their size, density, distribution, composition and income
Demographic
-wealth produced in or near a community that provides employment and income to the local population
Economic base
population trend, income trends of the community, social and business climate, selecting the site
Other important procedures in the selection of the community
-census of population, census of business, census of housing, census of manufacturing
Sources of market data
Sole proprietorship: Partnership: Corporation: Limited Liability Company (LLC)
Legal Forms of Organization
business owned and operated by one person
Sole proprietorship:
business owned by two or more persons
Partnership:
legal entity authorized by a state to operate a business under the entity’s charter or articles of incorporation.
Corporation:
-advantages: –simple to start/minimum legal requirements–minimum capital requirements/low cost–freedom to manage/control in owner’s hands–profit incentive/confidential information
Sole proprietorship:
-disadvantages–unlimited liability/risk–limited management talent–limited size/opportunities –limited life – unstable in terms of longevity
Sole proprietorship:
-advantages:–combined management, talent, and capital–easy to form–efficiency of labor
Partnership:
-disadvantages:–lack of continuity (limited life)–decisions binding on both parties–frozen investments
Partnership:
An artificial being, invisible, intangible, and existing only in the contemplation of law.-is a legal entity with an existence and life separate from its owners. Because of this separation, the owners are not personally liable for the corporation’s debts-corporation are taxable entities
Corporation:
-advantages:–continuity of existence–ease of ownership–limited liability–large financial capacity
Corporation:
-disadvantages:–legal restrictions on activities–separation of ownership & control–lack of personal interest–double taxation on earning
Corporation:
-advantages:–corporate-like limited liability and asset protection–flexibility of partnership–tax status of partnership
Limited Liability Company (LLC)
-disadvantages:–if not properly structured can be taxed like a regular “C” corporation –limited life (usually 30 years)–due to newness case law and IRS rules are not well developed
Limited Liability Company (LLC)
