Small Business
an independent entity with fewer than 500 employees that is not
dominant in its market.
Small manufacturers employees
fall in 500 worker range.
Wholesale employees
fewer than 100 workers.
Most likely to be a Small Firm?
Home builders, florists, hair salons, auto repair, and funeral homes.
Less Likely to be a small firm?
Hospitals, nursing homes, paper mills, electric utilities.
Small Business Jobs Act
may help give a further boost to these job numbers by raising the
dollar amount of small business loans available to companies.
Management Shortcomings
lack of people skills, inadequate knowledge of finance, inability to
track inventory or sales, poor assessment of the competition, or
simply lack of time.
Small Business Administration(SBA)
principal government agency concerned with helping small US firms.
Microloan
small-business loan often used to buy equipment or operate a business.
Business incubator
company that helps new and startup companies to develop by providing
services such as management training or office space.
Sole Proprietorship
business ownership in which there is no legal distinction between the
sole proprietors status as an individual and his or her status as a
business owner.
Partnership
association of two or more persons who operate a business as
co-owners by voluntary legal agreement.
C Corporation
a form of legal organization with assets and liabilities separate
from those of its owners.
S Corporation
a form of business organization in which the entity does not pay
corporate taxes on profits, instead, profits are distributed to
shareholders, who pay individual income taxes.
Limited-Liability Company
business entity that secures the corporate advantage of limited
liability while avoiding the double taxation characteristic of a
tradition corporation.
Employee Ownership
business arrangement in which workers buy shares of stock in the
company that employs them.
Not-For-Profit Corporation
organization whose goals do not include pursuing a profit.
Collective ownership
also known as a cooperative, where the owners join forces to operate
all or part of the activities in their firm or industry.
Cooperatives....
allow small businesses to pool their resources on purchases,
marketing, equipment, distribution, and more. They can share equipment
and expertise.
Domestic Corporation
a firm operating in the state that it was incorporated.
Foreign Corporation
When a company does business in states other than the one where it
has filed incorporation papers.
Alien Corporation
A firm that is incorporated in one nation that operates in another nation.
Stockholders
owner of a corporation due to his or her purchase of stock in the corporation.
Board of Directors
sets overall policy, authorizes major transactions, and hires the CEO.
Top Management
CEO, COO, and CFO. Manage overall operations, make major decisions,
and introduce major savings.
Middle Management
Branch managers, plant managers, division heads/directors. Manage
operations, and serve liaisons between top management and other levels.
Supervisory Management
Supervisors, and department heads. Coordinate day-to-day operations,
supervise employees, and evaluate staff performance.
Preferred Stock
shares that give owners limited voting rights, and the right to
receive dividends or assets before owners of common stock.
Common Stock
shares that give owners voting rights but only residual claims to the
firm's assets and income distributions.
CEO and CFO's
make the most corporate decisions, and are bound by strict
regulations such as verifying in writing the accuracy of their firm's
financial statements.
Merger
agreement in which two or more firms combine to form one company.
Acquisition
agreement in which one firm purchases another.
Vertical Merger
agreement that combines firms operating at different levels in the
production and marketing process.
Horizontal Merger
agreement that joins firms in the same industry for the purpose of
diversification, increasing customer bases, cutting costs, or
expanding product lines.
Conglomerate Merger
agreement that combines unrelated firms, usually with the goal of
diversification, spurring sales growth, or spending a cash surplus in
order to avoid a takeover attempt.
Joint Venture
partnership between companies formed for a specific undertaking.
Entrepreneur
a person who seeks a profitable opportunity and takes the necessary
risks to set up and operate a business.
Business Plan
a written document that provides an orderly statement of a company's
objectives, methods, and standards.
Seed Capital
initial funding used to launch a company.
OPM
money an entrepreneur raises from others to help start or expand a business.
Debt Financing
borrowed funds that entrepreneurs must repay.
Equity Financing
funds invested in new ventures in exchange for part ownership.
Venture Capitalists
a business organization or group of individuals that invests in early
stage, high-potential, and growth companies.
Angel Investor
a wealthy individual who invests money directly in new ventures in
exchange for equity.
Crowd Funding
a source of financial support involving groups of individuals, often
connected through the internet, that pool small sums of money to
support new businesses as well as philanthropic causes and artistic endeavors.
Classic Entrepreneur
a person who identifies a business opportunity and allocates
available resources to tap that market.
Serial Entrepreneur
person who starts one business, runs it, and then starts and runs
additional businesses in succession.
Social Entrepreneur
a person who recognizes societal problems and uses business
principles to develop innovative solutions.
Franchising
contractual business arrangement between a manufacturer or other
supplier and a dealer, such as a restaurant operator or a retailer.
Franchisee
individual or business firm purchasing a franchise.
Franchisor
firm whose products are sold to costumers by the franchisee.
Intrapreneurship
Process of promoting innovation within the structure of an existing organization.
Skunkworks
project initiated by an employee who conceives an idea, convinces top
management of its potential and then recruits human and other
resources from within the company to the idea into a commercial project.
Advantages of Sole Proprietorship:
owner retains all profits, easy to form and dissolve, owner has flexibility.
Advantages of Partnership:
easy to form, can benefit from complementary management skills, can
expand financial capacity.
Advantages of a Corporation:
limited financial liability, specialized management skills, expanded
financial capacity, economies of large-scale operations.
Disadvantages of Sole Proprietorship:
unlimited financial liability, financing limitations, management
deficiencies, lack of continuity.
Disadvantages of Partnership:
unlimited financial liability, interpersonal conflicts, lack of
continuity, difficult to dissolve.
Disadvantages of Corporation:
difficult and costly to form and dissolve, tax disadvantages, legal restrictions.
Characteristics of an Entrepreneur:
vision, high energy level, need to achieve, self-confidence and
optimism, tolerance for failure, creativity, tolerance for
ambiguity(unclear), and internal locus of control(self control).
Advantages of Entrepreneurship:
unsatisfied with traditional work world, want more flexible schedule,
want to turn vision into a profitable business, be their own boss, and
achieve financial success.
Franchising benefits:
opportunity for expansion, managing a larger business with few employees.
Franchising disadvantages:
for the franchisor, if its franchisees fail in any way, the failure
affects the brand as well as bottom line, and the firm can be
mismanaged at the top level.