Term
| small manufacturers contain fewer than how many employees? |
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Term
| small wholesalers contain fewer than how many employees? |
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Definition
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Term
| small retailers have fewer than how much money in annual revenues? |
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Term
| small enterprises contain how many people? |
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Term
| medium enterprises contain how many people? |
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Definition
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Term
| businesses with less than 20 employees? |
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Definition
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Term
| businesses with 20-99 people |
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Definition
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Term
| businesses with 100-499 employees |
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Definition
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Term
| businesses with 500 or more people |
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Definition
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Term
| percentage of small businesses in the US today |
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Definition
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Term
| Qualitative factors in describing small businesses |
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Definition
1. management is independent, because he or she owns the business
2. capital is supplied and ownership is held by one or few individuals
3. the area of operation is primarily local, although the market is not necessarily local
4. the business is small in comparison with large competitors. |
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Term
| contributions of small business |
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Definition
1. new jobs - 52% of nation's private sector workforce. 45% total private payroll. service - largest number of people.
2. innovations - 75% service, 65% product and process innovations. 13-14 times the numbe of patents per employee than big business.
3. new opportunities - 6 million businesses and 600,000 corporations every year. 10 percent of people 19-64 entreprenuers |
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Term
| USA been moving from industrial economy to... |
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Definition
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Term
| benefits of owning a small business |
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Definition
1. opportunity to gain control over your own destiny.
2. opportunity to make a difference.
3. opportunity to reach your full potential.
4. opportunity to reap important profits.
5. opportunity to contribute to society and be recognized for your efforts
6. opportuity to do what you enjoy doing. |
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Term
| potential drawbacks of entreprenuership |
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Definition
uncertainty of income
risk of losing your entire invested capital
long hours and hard work
lower qulity of business life until the business gets established.
high levels of stress
complete responsibility |
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Term
| know your business in depth... |
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Definition
get the best education in your business area
read everything you can
develop personal contacts with suppliers, customers, and trade associations. |
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Term
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Definition
| learn what customers have in common so as to serve them better and remain competitive |
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Definition
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Term
| manage financial resources |
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Definition
| most valuable resource is cash |
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Term
| understand financial statements |
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Definition
| to truly know what's going on in your business |
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Term
| learn to manage people effectively, find/keep effective employees |
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Definition
| employees are your most valuable asset |
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Term
| set your business apart from the competition |
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Definition
| convince customers that your product is superior |
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Term
| how long do businesses last |
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Definition
1. less than 10 percent of businesses cease operations in less than 1 year
2. 25 percent will fail in first 2 years
3. 45 percent will fail between 3-5 years
4. only 13 percent of businesses will last more than 21 years |
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Term
| most common causes of business failure |
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Definition
inadequate management
inadequate financing |
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Term
| legal structures of business |
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Definition
| sole proprietorships, partnerships, corporations, limited liability companies, cooperatives |
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Term
| most common form of ownership? |
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Definition
| sole proprietorships - 72 percent |
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Term
percent of businesses that are corporations
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Definition
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Term
| percent of businesses that are partnerships |
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Definition
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Term
| relevant issues to entrpreneurs |
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Definition
| tax considerations, liability exposure, start-up and future capital requirements, control, managerial ability, business goals, management succession plans, cost of formation |
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Term
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Definition
| most popular and simplest to form. owned and managed by one individual |
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Term
| advantages of a sole proprietorship |
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Definition
| simple to create, least costly to establish, profit incentive, total decision making authority - respond quickly to changes, no special legal restrictions, easy to get in, easy to get out |
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Term
| disadvantages of a sole proprietorship |
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Definition
| unlimited personal liability, limited access to capital, limited skills and abilities (many fail because of poor managerial skills), feelings of isolation, lack of continuity for the business |
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Term
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Definition
| association fo two or more people who co-own a business |
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Term
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Definition
| business structure in which the business owners share the management and risk of the operation (most common) |
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Term
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Definition
| business structure in which 1 or more of the owners may be granted limited liability. at least one partner must be a general partner |
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Term
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Definition
| law does not require, but it is wise to work with an attorney to develop an agreement |
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Term
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Definition
| document that states all of the terms of operating the partnership for the protection of each partner involved. |
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Term
| without a written agreement... |
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Definition
| a partnership operates according to the rules of the state under Revised Uniform Partnership Act RUPA. settle problems between partners |
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Term
| advantages of a partnership |
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Definition
| easty to establish, complementary skills, division of profits, access to additional capital, tax advantage (owners pay) and no double taxation, minimal regulation, flexibility (more partners = less flexibility), taxation |
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Term
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Definition
| those who take an active role in managing a company and who share in its rewards, liabilities, and responsibilities. |
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Term
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Definition
| financial investors who do not want to participate in the day to day affairs of the partnership and seek to limit their risk. they cannot take an active role in operation of the company and have limited personal liability for the company's debts and obligations. cannot work more than 500 hours a year. |
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Term
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Definition
| not active in the business but generally are known to be members of the partnership |
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Term
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Definition
| neither active nor generally known to be associated with the business |
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Term
| disadvantages of a partnership |
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Definition
| unlimited liability of at least one parter - you can be held liable for the negligence of your partners, capital access, difficulty in disposal of partnership interest without dissolving the entire partnership, lack of continuity |
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Term
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Definition
| requries the selling partner to give the remaining partners the first chance to buy the exiting partners' shares, potential for personality and authority conflicts, taxation |
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Term
| partners are bound by the law of the agency |
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Definition
| each partner acts as an agent for the business and can legally bind the other partner to a business agreement. this agency power requries all partners to exercise good faith and reasoable care in performing their responsibilities. |
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Term
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Definition
| modification of a general partnership, and is composed of at least one general partner and at least one limited partner. |
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Term
| primary disadvantage of a limited partnership |
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Definition
| complexity and cost of establishing this business entity |
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Term
| Master Limited Partnership MLP |
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Definition
| similar to regular limited partnerships except their shares are traded on stock exchanges like a corporation. one main advantage is limited liability, profits are divided among the owners, potentially comprised of thousands of partners. |
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Term
limited liability partnerships LLP
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Definition
| all partners in the business are limited partners, only limited liability. do not pay taxes. professionals (attorneys, doctors, dentists, accountants) |
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Term
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Definition
| most complex form of ownership. autonomous entity that has legal rights of a person that is separate from its owners. ability to sue and be sued, to own property, and engage in transactions |
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Term
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Definition
| conducts business in the state which it is incorporated |
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Term
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Definition
| formed in one state but conducts business in another state |
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Term
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Definition
| a corporation that is formed in other countries and conduct business in the USA |
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Term
| closely held corporations |
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Definition
| have shares that are controlled by a relatively small number of people |
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Term
| publicly held corporations |
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Definition
have a large number of shareholders, and their stock is usually traded on one of the large stock exchanges
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Term
| advantages of the corporation |
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Definition
limited liability of stockholders
ability to attract capital - most effective ownership for accumulating large amounts of capital.
bankers and other lenders regard corporations as being mroe stable than SP and parnterships. corporation can sell its stock to private investors or public
transferable ownership - can sell shares to someone else. closely held corporation - much more difficult |
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Term
| disadvantages of the corporation |
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Definition
cost and time
double taxation - tax at corporate level and at individual level
potential for diminshed marginal incentives - employee stock ownership plan ESOP - a plan in which managers and employees become owners in the company
legal requirements and regulatory red tape
potential loss of control by the founders |
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Term
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Definition
1. prepare articles of incorporation and file them with secretary of state where youare incorporating
2. choose board of directors
3. adobt bylaws
4. elect officers
5. issue stock |
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Term
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Definition
| provides you with the limited liability protection of a corporation while allowing the tax advantages of a partnership - avoids double taxation and no more than 100 shareholders |
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Term
| limited liability company |
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Definition
| offers limited liability protection of corporation and the tax advantages of a partnership without the restrictions of an s corporation. partners not liable for debts or obligations charged to the partnership from negligence from other partner. in order to qualify the firm must carry a high level of liability insurance or other financial security |
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