Entrepreneurship test

Lenders

are those outsiders who provide business owners money for a limited time at a fixed rate of interest.

Equity investors

are those who actually become part owners of the business.

Fixed assets

assets that are relatively permanent, such as land, buildings, and equipment

Specialized Small Business Investment Companies (SSBICs)

assist socially and economically disadvantaged businesses with venture capital

Combination franchising

big-name franchise operations offer both companies' products under the same roof

Financial resources

cash flow, debt capacity and equity available to finance operations

royalty fee

continuous fee paid by the franchisee to the franchiser usually based on a percentage of the franchisee's gross revenue

Working Capital

current assets - current liabilities

Policies

general guidelines to be followed when making decisions

business format franchising

grants a franchisee the right to market the product and trademark and to use a complete operating system

product and trademark franchise

grants the franchisee the right to sell a wide key recognized product or brand

Financial planning

involves determining what funds are needed, where they can be obtained, and how they can be controlled

Franchisee

is an independent business person who agrees to sell the product according to the franchisers requirements

human resources

manager's response the personnel that make up the businesses workforce

Short term securities

mature in one year or less

Franchiser

owns the franchise's name and distinctive elements and licenses others to sell its products

consignment selling

payments to suppliers are made only when the products are sold, rather than when they are received in stock

Line of credit

permits a business to borrow up to a set amount without red tape

Methods and procedures

provide standing instructions to employees on how to perform their jobs

Stock

represents ownership in a corporation

Prospectus/disclosure statement

sometimes called an offering circular is a document that provides information on 20 items required by the federal trade commission

Physical resources

tangible items that organizations use in the conduct of their businesses

Cash flow

the amount of cash that is available at any given time

Synergy

the power that results from the combination of two or more forces

How to go into a business for yourself

1. Search for and identify a needed product 2. Study the market for a product, using as many sources of informstion as feasible 3. Decide wheather to start a business buy an existing one or buy a franchise 4. Make strategic plans, including setting your mission, strategic objective, and strategies 5. Make operational plans, including setting policies, budgets, standards, procedures, and methods 6. Make financial plans including estimating income and expenses, locating source of funds, and estimating initial investments Develop these plans into a detailed business plan 8. Implement the plan

Vision

A business vision explains what the business is trying to become in the future.

Uniform Franchise Circular

A document that contains information franchisers must provide

SCORE

A group of retired - but active - managers from all walks of life who help people develop their business ideas

Mortgage loan

A loan secured by a mortgage on property.

Franchising

A marketing system whereby an individual owner conducts business according to the terms and conditions set by franchiser

Franchise fee

A one-time fee paid by franchisees to the franchisor prior to the opening of a new outlet.

Competitive edge

A particular characteristic that Ames one firm more attractive to customers than its competitors

Franchisee

An independent business person who agrees to sell the product according the the franchisers requirements

angel capitalists

Are wealthy individual investors who do not operate as a business but invest in promising early-stage companies in exchange for a portion of the firm's equity.

variable expenses

Change in dollar amount every month and include things like utility bills, gasoline, and groceries

Common stock

Corporation's basic ownership share; also generically called capital stock.

Fixed expenses

Do not vary with output, but remain the same

Preferred stock

Has a fixed par value and a fixed dividend payment

Franchise

Is an agreement whereby an independent business person is given exclusive rights to sell and specific good or service

Net profit

Is the amount of revenue over and above the total amount of expenses of doing business

Human resource planning

Is the process of converting the businesses plans and programs into an effective work force.

Due diligence

Is the research and analysis of the company that is done before a business transaction

market research

Is the systematic gathering, recording, and analyzing of data related to the marketing of goods and services

What are the opportunities in franchising?

It is one of the fastest growing areas of us business in the past decade. The franchiser brings successful methods of operation and business images to aid the franchisee.

venture capital firms

Make investments based on projected future income and generally require a substantial return as either equity or profit

Bonds

Paper notes promising to repay money after a certain length of time with interest

Small business investment companies

Private businesses that are authorized to make SBA insured loans to start-ups and small businesses.

Cash budgets

Project working capital needs by estimating what out-of-pocket expenses will be incurred and when revenues from these sales are to be collected

Strategic planning

Provides comprehensive long term direction to help a business accomplish its mission

operational planning

Set policies, procedures and standards for achieving objectives

Microloans

Small shorty term loans provided by the SBA through intermediaries

How can you search for/identity a product needed by the public?

Talking to large companies can help you identify opportunities that can be handled better by a small business. Niche marketing allows you to find a small but profitable demand for something by producing a custom made product for that market..

Strategies

The means by which business goals and objectives will be achieved.

Niche Marketing

The process of finding a small, but profitable, demand for something and producing a custom-made product for that market.

Planning

The process of setting objectives and determining actions to reach them

Objectives

The purposes, goals, and desired results for the business and its parts.

What are some ways to purchase an existing business?

You can acquire the total ownership of the business or acquire the firms assets, its name or certain parts of it.

Executive summary

a brief overview of the entire marketing plan

Employee Stock Ownership Plan (ESOP)

a company-established benefits plan in which employees acquire stock, often at below-market prices, as part of their benefits

Lease

a contract granting use or occupation of property during a specified time for a specified payment

Budgets

a detailed financial report that looks forward, based on expected income and expenses

Business plan

a formal written document that describes the nature of a business and how it will operate

Mission Statement

a short, specific written statement of the reason a business exists and what it wants to achieve

Asset-Based Financing

accepts as collateral the assets of a firm in exchange for the loan

green product

an environmentally friendly product offered for sale commercially

Equity

an owners share of the assets in a company