Small Businesses Management

Accrual Accounting

accounting method that records revenues and expenses when they occur, not necessarily when cash actually changes hands

stages of growth

1. Existence 2.Survival 3.Success 4.Take off 5. Resource Maturity

Fortune Magazine published the Fortune 500 annually, which lists the 500 largest companies in the world. What percentage of Fortune 500 companies, according to the textbook authors, are family businesses?

35%

The Small Business Association considers ____of American businesses as "small businesses" (i.e. businesses with less than 500 employees).

99.7%

Ethics

A system of moral principles. Right from wrong.

Liquidity

Availability of resources to meet short-term cash requirements.

Family members working in a company generally experience more advantages, such as being paid more than other employees; and working fewer hours etc. This process is called nepotism, and it's one of the main reasons why children of a company's founder choose to join the family business.

False

The word "Entrepreneur" is synonymous with the title "Small Business Owner".

False

Two thirds of small businesses have a security plan actively in place.

False

The purpose of the United States Department of Commerce is to "aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns."

False; that's the duties of SBA

Which of the following is a true statement regarding family businesses:

Family businesses tend to be more resilient in hard times because they are willing to plow profits back into the business Family businesses are less bureaucratic and less impersonal, which allows for greater flexibility and quicker decision making Family businesses also exhibit more social responsibility than their competitors. This has been attributed to their concern about image and local reputation

The authors state that Small Businesses often fail due to:

Managerial inadequacy Financial inadequacy External factors

Cash flow management

Managing the pattern in which cash flows into the firm in the form of revenues and out of the firm in the form of debt payments.

According to the textbook authors, 80% of small businesses fail within 2 years.

The authors state "When discussing failure rates in small business, there is only one appropriate word: confusion. There are wildly different values, from 90 percent to 1 percent, with a wide range of values in between". Failure rates are difficult to calculate because entrepreneurs and small business owners often define failure differently.

code of conduct

The contents should be specific to the values, goals, and culture of each company, and it should be "a central guide and reference for users in support of day-to-day decision making. It is meant to clarify an organization's mission, values, and principles, linking them with the standards of professional conduct"

digital technology

The use of the Internet and other digital processes to conduct or support business operations.

According to the authors, there are many sources of negative conflict in a family business. The fundamental psychological conflict in family businesses is rivalry.

True

Cybercrime refers to any criminal activity that is done using computers and the Internet.

True

Intellectual property is defined as:

a creation of the mind, such as inventions, literary and artistic works, and symbols, names, images, and designs, used in commerce

The type of e-commerce that is defined as transactions with the government is called:

business-to-government (B2G)

e-commerce

electronic business or exchange conducted over the internet

The standard definition used by business scholars and practitioners for a family business is "a private, for-profit venture founded, managed and controlled by family members".

false

Receivables management

forces owners to think about how to walk the delicate balance of offering customers the benefits of credit while trying to receive the payments as quickly as possible. They can use technology and e-business to expedite the cash inflow.

One way to describe Peer-to-Peer e-commerce is:

internet users to share files and computer resources directly without having to go through a central web server

Three broad categories of causes of failure

managerial inadequacy, financial inadequacy, and external factors.

Business Ethics

principles and standards that determine acceptable conduct in business

Expense Control

requires owners or operators to think in terms of constantly seeking out efficiencies and cost-reduction strategies.

cash-based accounting

sales are recorded when you receive the money.

Customer Value

the difference between the benefits a customer sees from a market offering and the costs of obtaining those benefits

total customer cost

the perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering, including monetary, time, energy, and psychological costs

Total customer benefit

the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a product or a service because of the products, services, personnel, and images involved

inventory control

the process of managing inventories in such a way as to minimize inventory costs, including both holding costs and potential stock-out costs

cash flow

the total amount of money being transferred into and out of a business, especially as affecting liquidity.

e-business

using the internet to facilitate every aspect of running a business