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137 Cards in this Set
- Front
- Back
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Organizations made up of professonalsin a specific inustry
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Trade assocition
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a form of business owershp which has one individual who runs the busness
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Sole-prorietorship
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the area from which a business expects to attract customers
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Trade Area
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a business run out of your home
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Home -based business
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a form of business ownership with two or more owners
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Partnership
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business done over the internet using your own personal company web site
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e-commerce
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promotes and offers assistance to local business’s an area
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Chamber of Commerce
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a legal agreement that gives the individual the right to market another companies products or services in a particular area
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Franchising
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a facility dedicated to a business whether retail, wholesale, or manufacturing
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Brick and Mortar business
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a form of business ownership that has many owners who own shares of stock in the business
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Corporation
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A section of land that is zoned for industrial businesses only
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Industrial park
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companies that sell products and services to businesses
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Vendors
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the area from which a business expects to attract customers
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trade area
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an estimate for how much you will pay for merchandise and services
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quote
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the person who owns or rents out buildings or space
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landlord
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a lease in which the tenant pays rent each month for the space occupied, and the landlord covers all property expenses for that space
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gross lease
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a lease in which the landlord pays building insurance, and the tenant pays rent, taxes, and any other expenses
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net lease
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areas that suffer from lack of employment opportunities
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enterprise zones
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the person who pays rent to occupy space owned by someone else
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tenant
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a predetermined level of inventory that signals when new stock should be ordered
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reorder point
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People who work for someone else are called
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employees
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What are the 2 highest costs associated with most businesses?
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Payroll and Rent
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According to the CEO Of Caribou Coffee, what are the only 2 ways to increase profits?
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Increase sales and cut costs
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What do we call expenses that vary from month to month?
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Varialbe expenses
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What do we call expenses that remain constant from month to month?
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Fixed expenses
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In what type of business is the intent to resell inventory to the consumer?
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Wholesale and retail
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What is the intent of inventory in a manufacturing business?
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To be used as parts in the production process
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What type of business does not always need inventory before it can open for business?
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Service business
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A lease in which the landlord receives a portion of the tenant's revenue each month in addition to a base rent.
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Percentage lease
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Why do most entrepreneurs lease space rather than buy?
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they can't afford to purchase the property
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Where are industrial usually located?
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where land is inexpensive usually not near housing or retail business
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A key factor in determining where an industrial business locates itself is ______?
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the availability of good employees
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When is the location of a service business important?
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When customers visit the business site
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What are 3 characteristics of anchor stores
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1. are major tenants in shopping centers
2. include department stores, large supermarkets, and large drugstores 3. they adveritse heavily |
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What do you call a specialized magazine that is devoted to a particular industry?
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Trade magazine
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What do you call a partner whose liability is limited only to the amount they invested in the business?
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Limited partner
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What do you call the liability where an owner is responsible for all losses even including his personal assets like home and car?
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Unlimited liability
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In what type of business is an attractive layout or floor plan most important?
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Retail business
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What do most stand alone stores rely on to be successful?
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Drive by traffic
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Local governments control the types of buildings that can be built in different areas through the use of _________?
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Zoning regulations
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What is the main reason that entrepreneurs set up businesses as corporations?
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Because the personal assets of the shareholders may not be taken to pay off debts
Limited Liability |
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With regard to taxes, what is a major disadvantage to corporations.
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Profits are taxed twice
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What do you call a unit of ownerdhip in a corporation?
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share of stock
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What do you call a business owned by one person?
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Sole-proprietorship
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What do you call the monthly payments made by franchisees to the company (franchisor)?
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royalty fees
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If you are considering buying a business from someone else, you should ask the owner for how many years of past financial statements at the least?
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3 years worth of financial statements
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Which financial statement best reflects how much the business took in last year?
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Sales tax return or income statement
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Mid term sales projections cover a period of how many years?
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2-5 years
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After it is completed, you can use your business plan to
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help manage your business and apply for a loan
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A good business plan includes sales projections for the long term which is considered ___________?
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5 years or more
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What organization has a web site that exists to help small businesses ?
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Small Business Administration
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What do you call the act of verifying information you have been given about a business that you plan on purchasing?
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Due diligence
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What are the 3 types of due diligence?
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1. Financial due diligence
2. Legal due diligence 3. Commercial due diligence |
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This financial statement shows a business's profit or loss over a given period of time
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Income statement
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This financial statement is a snapshot of a companies financial position on a given date
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Balance sheet
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What do you call the company or person that offers a franchise for sale?
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Franchisor
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What do you call the person who purchases a franchise agreement to sell a companies goods or services?
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Franchisee
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What do you call a symbol or slogan that gives legal protection to its owner for exclusive rights to its use?
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trademark
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How long is a patent good for?
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20 years
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How long is a copyright good for?
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Until the death of the author plus 70 years
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What do you call the initial payment a franchisee makes to a franchisor for the right to run a franchise?
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Initial franchise fee
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What do we call the amount of day by day cash necessary to run a business?
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Working capital
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What do you call the partner that takes an active roll in running the business while the other partners are not involved in the running of the buisness?
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General partner
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Common stock
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Shares whose owners have voting rights and the last claim on the distribution of assets of the company
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Distributions of the companys profits in the form of cash or shares of stock
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dividends
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Shares of stock that are non voting and give the holders of the stock first claim to a company's dividends and assets after paying all debts
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Preferred stock
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What do we call the level of ease with which an asset can be converted to cash
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Liquidity
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the owner or partner is personally liable for all debts and judgements held against a business (all his personal assets are at risk)
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Unlimited liability
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a partner is only liable up to the extent of the money they have invested in the business
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Limited liability
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a legally chartered enterprise having all of the rights of a person including the right to own and sell property, sue and be sued, and to borrow money
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corporation
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a document authorizing another person to vote on their behalf at a shareholders meeting
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Proxy
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How are the board of directors of a company chosen?
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They are elected by the stockholders
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How is the CEO (chief executive officer) of a corporation chosen?
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Appointed by the corporations board of directors
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the original creative work of an artist or inventor such as songs, novels, and artistic designs
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Intellectual property
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the grant of a property right to an inventor to exclude others from making, using, or selling his/her invention
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patent
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protects the creator of authorship such as books, plays, music, movie, or art
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copyright
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What are the consequences of stocking too much inventory?
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1. Money not available for other purposes
2. loss of perishable goods 3. interest paid on loans 4. storage costs 5. Work slowdown, stoppage, layoffs 6. Demand for goods drops further |
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List 4 types of people that would be interested in your business plan
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1. Lenders
2. Investors in your business 3. Franchisors 4. owner of the business to use it as a management tool |
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Walgreens, Home Depot, and Best Buy are all examples of what type of business model?
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Brick and Mortar
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What percentage of small businesses fail within the first 3 years?
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33%
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What percentage of businesses in the U.S. have fewer than 500 employees?
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99.7%
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What type of businesses are not intened to grow into large corporations, but rather stay small (usually 1 store)
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Lifestyle business
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(T/F) Small companies cannot take as many risks as large companies, so small companies are less likely to be innovative.
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False
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A barber shop is an example of a ___________.
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Service business
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A grocery store is an example of a ____________.
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Retail business
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Special meetings where companies display their products are called ___________.
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Trade shows
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Non-financial goals are important for an entrepreneur because they _____________,
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Often serve a community need
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What do you call individuals or companies that make a profit by investing in start-up companies?
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Venture Capitalists
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An unacknowledged discriminatory barrier that prevents women and minorities from advancing to positions of power within a company.
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Glass ceiling
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Businesses that sell products to other businesses rather than to the final customer.
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Wholesale business
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A business usually run by a team rather than an individual with the goal to grow rapidly into multiple locations.
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High Growth Ventures
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Businesses that actually produce the products that they sell.
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Manufacturing business
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These types of businesses perform services rather than sell a product.
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Service business
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Businesses that take resources out of the ground to be consumed.
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Mining or Extracting business
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Businesses that generate fresh produce and other farm products.
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Agricultural business
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(True/False) A trademark if registered properly, can be renewed every 20 years, so it generally belongs to the owner forever
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True
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(True/False) A partnership agreement must be written by a lawyer and filed with your local government.
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False
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(True/False) the government exercises very little control over sole-proprietorship.
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True
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A unit of ownership in a corporation is called ___________.
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Share of stock
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When buying an existing business, this type of financial statement will give the most accurate picture of a company's prior year sales.
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Sales tax return
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What are the 2 reasons for issueing a patent to an inventor?
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1. Give the inventor time to recover the costs of bringing the product to market
2. To reward innovationa dn encourage new creative ideas |
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The right to take and hold or sell the property of someone who owes you money for work you performed for them is called _________.
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Lien
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The distribution of a company's profits to its shareholders in the form of cash or other assets
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Dividends
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Payroll is an example of what type of expense/
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Variable expense
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What does debt-to-equity ratio measure?
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the relation between the dollars you have borrowed and the dollars you have invested in your business
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What are loans that are backed by collateral called?
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Secured loans
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What is a line of credit?
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an agreement by a bank to lend up to a certain amount of money whenever the borrower needs it
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What do you call a person that you owe money to?
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A creditor
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A type of business financing in which the investor is given a % of revenue or a partial ownership in the business.
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Equity Capital
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Individuals or companies that make a living by investing in young growth companies.
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Venture Capitalist
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A current or former successful business owner who invests in new business ventures.
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Entrepreneurial Angel
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Amounts of money that you owe to others
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Liabilities
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Things that the business or individual owns
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Assets
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Using friendships or other informal relationships to get a job or advance in business
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Networking
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Doctors, dentists, accountants, that invest in new business ventures.
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Professional angels
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A type of business financing in which you take out a loan that you must repay with interest
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Debt capital
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What are the 3 factors that determine what your interest rate will be on a loan?
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1. The risk associated with you or your business
2. Current interest rates such as the "prime lending rate" 3. Time - how long you plan on borrowing the money for |
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Any loans or financing that will be paid in one year
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Short term financing
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Any financing that will be repaid in a period longer than one year
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Long-term financing
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What do you call loans that require no collateral?
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Unsecured loans
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Loans backed by something of value (collateral), which may be seized by the lender in the event that the borrower fails to repay the loan
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Secured loans
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Payment for using someone else’s money; payment received for lending money
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Interest
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The amount of a debt or loan before interest is paid
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Principal
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What are the 2 types of capital financing discussed in class?
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1. Debt (loan) financing
2. Equity (ownership) financing |
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What are the two types of debt (loan) financing discussed in class?
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1. Secured
2. Unsecured |
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What type of items may be used as collateral on a loan?
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1. Personal assets ( home, car, bank accounts, cd's, stocks, bonds, etc.)
2. Accounts receivable (businesses only) 3. Inventories ( businesses only) 4. Business buildings and equipment |
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A type of loan that requires no collateral.
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Unsecured loan
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What does the lender rely on to guarantee an unsecured loan?
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The credit rating and reputation of the borrower.
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Is an unsecured loan an option for an owner of a new business?
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No
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What is short term financing?
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Any financing that will be repaid within one year
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What is long term financing?
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Any financing that will take longer than one year to repay
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What are four characteristics of a loan that will make you pay a higher interest rate on the loan?
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1. New credit or no credit
2. Bad credit 3. Amount of collateral that you put down 4. Risky nature of the business that you're going into |
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What are the 3 factors that determine the cost of capital?
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1. Risk
2. Current Interest Rates 3. Time - how long before you repay the loan |
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What are the six groups of lenders discussed in class?
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1. Family and friends
2. Investment angels 3. Venture capitalists 4. Banks and credit unions 5. Small Business Administration (SBA) 6. Strangers |
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a cooperative financial institution in which individuals pool their money to provide loans and services to other members.
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Credit Union
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What are the 3 main advantages to obtaining a line of credit
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1.Don’t have to reapply for a loan every time you need it
2.You pay interest only on the amount of money you withdraw 3.Your monthly payment is only on the interest – you don’t pay back the original amount of money you borrowed until money comes back into your business through sales |
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A bank loan that is specifically designed for short term financing.
A pre-approved amount of money that will be available for you to draw on when you need it |
Line of Credit
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