Small Business Management Chapter 6
pass off
type of business transfer where the owner gives the business to someone else without a payment.
Which of the following statements about buyouts are correct?
They are restricted to businesses that have a formal legal form of organization, including corporations, limited liability companies, and some partnerships. Partnerships and sole proprietorships do not exist separately from the owners and thus cannot be purchased. The assets of the business must be purchased and the liabilities assumed in a process called key resource acquisition or bulk asset sale.
revolving credit
allows borrowers to pay all or part of loan balance at any time
The three most commonly used methods to estimate a firm's assets' values
book value, net realizable value, and replacement value
four basic forms of franchising
trade name, product distribution, conversion, and business format franchising
discounted cash flows method
reduces the value of the business' cash flow because they will be received in the future
Bricolage
the process of analyzing the resources available and creating a product or service from them
Due diligence
the process of investigating a business to determine its value
earnings multiple
the ratio of the value of a firm to its annual revenues
Which of the following statements regarding the four basic forms of franchising are correct?
Conversion franchising provides the opportunity for independent businesses to combine resources. Product distribution franchising provides franchisees with specific brand named products to resell. Trade name franchising is an agreement that provides only the rights to use the franchisor's trade name and/or trademarks. Business format franchising includes trade names, products, operating methods, a marketing plan, and national advertising program.
minimum viable product
least version of the product that can be produced at a low cost and sold to customers in order to get feedback to improve upon the product
UFOC document
It is an important document created by the franchisor that explains the firm's operations, requirements, and costs of owning the franchise
methods used to determine value of a firm's assets
Replacement value. Book value. Net realizable value.
heuristic
a commonsense rule or a rule of thumb
strategic partnerships or alliances
formal or informal relationships with customers, vendors, or mentors to ensure the success of an entrepreneurial venture
Which of the following are likely to increase the success of a start-up business?
Make sure the business provides a product or service with a proven demand. Join a mentoring program, such as SCORE. Choose a business with high margins. Create and update a detailed start-up budget. Have a business partner who has complementary skills. Start the business in a business incubator.
lean business practices
These practices refer to methodically removing wastage of time, materials, and money throughout a business address the specifics of new business creation, particularly Internet-based businesses, where rapid experimentation and constant monitoring of viewers' choices are possible
Which of the following is a problem associated with using asset valuation methodologies?
They are time consuming as they involve identifying and estimating all assets of a business separately
effectual reasoning
a logical process in which one analyzes the resources available and restraints on the use of resources to create an attainable goal
net realizable value
amount for which an asset will sell, less the costs of selling
asset valuations
based on the postulation that the value of a business is the value of its resources and holdings minus the value of any obligations
book value
the difference between the original acquisition cost and the amount of accumulated depreciation
affordable loss
the minimum possible expenditure of capital and other resources in order to bring an entrepreneurial idea to market
Net income to equity is
determined by dividing income by the owners' equity.
causal reasoning
predicated reasoning
Leveraging contingencies
the practice of and ability to seize upon novel opportunities that become apparent during the conduct of business