Mgmt Exam #2 - Ch. 6

Front 1

Small Business

Back 1

Has fewer than 500 employees, is independently owned and operated, and does not dominate its industry.

99% of American business, 87% employ fewer than 20 persons.

Economic advantages = employ many private workers

Front 2

Birth Stage (Entrepreneurship Life Cycle)

Back 2

Struggles to get new venture established and survive long enough to test the viability of the underlying business model in marketplace.

Establishing firm, getting customers, finding money.

FIGHT FOR EXISTENCE AND SURVIVAL

Front 3

Breakthrough Stage (Entrepreneurship Life Cycle)

Back 3

Business model begins to work well, growth experienced, complexity of managing operation expands.

Working on finances, becoming profitable, growing.

COPING WITH GROWTH AND TAKEOFF

Front 4

Maturity Stage (Entrepreneurship Life Cycle)

Back 4

Experiences advantages of market success and financial stability, while also facing continuing management challenges of remaining competitive in changing environment.

Refining strategy, continuing growth, managing for success.

INVESTING WISELY AND STAYING FLEXIBLE

Front 5

Business Plan & What to Include

Back 5

Describes the direction for a new business and the financing needed to operate it.

Executive summary, industry analysis, company decision, products and services description market description, marketing strategy, operations description, staffing description, financial projection, capital needs, milestones

Front 6

Sole Proprietorship (Legal Forms of Ownership)

Back 6

Individual pursuing business for profit.

Simple to start, run and terminate - owner is personally liable for debts and claims - most common form in US

Front 7

Partnership (Legal Forms of Ownership)

Back 7

2 or more people agree to contribute resources to start and operate a business together.

+General = simplest most common form, share management responsibilities

+Limited = general partner and one or more limited partners who do not participate in day to day business managements, share in profits, losses of limited to amount of investment

+Limited Liability = Limits liability of on partner for negligence of another

Front 8

Corporation (Legal Forms of Ownership)

Back 8

Legal entity that exists separately from its owners.
-for profit and non profit
-Advantages:grants the organization certain legal rights, corporation responsible for its own liabilities (separates owner from from personal liability).
-Disadvantage: Cost of incorporating and complexity of documentation.

Front 9

Limited Liability Corp. (Legal Forms of Ownership)

Back 9

Hybrid business form combining advantages of sole prop., partnership, and corporation.
Liability - Like corporation
Tax Purposes - Like partnership/sole prop. (cheaper)

Front 10

Debt Financing

Back 10

Borrowing money that must be repaid over time with interest.

Collateral - Pledges business assets or personal assets

Front 11

Equity Financing

Back 11

Exchanging ownership shares for outside investment monies. (Stocks)

Front 12

Venture Capitalists (Equity Financing)

Back 12

Make large investments in new ventures in return for equity stake.

Motivation: large return of investment

Front 13

Angel Investor (Equity Financing)

Back 13

Wealthy individual willing to invest in return for equity common in early startup stage.