FSE 2202 Funeral Home Management Midterm

collaborative

The family pattern in which the family members work together.

Pre-Business Stage

The first part of business succession: A potential successor becomes acquainted with the business part of growing up. The young child may accompany the parent to the office, may learn some of the terminology of the business or some faucets of the business. Orientation of the business if very informal.

if a funeral home is operated as a general or limited partnership and you are one of the general partners, who has personal liability if the funeral home is sued?

The general partner (you)

Early Succession Stage

The son/daughter is named president or general manager. He/she becomes the manager de jure of the company. That is the manager in name though maybe not in fact. The parent or founder may still be controlling much of the company, but not in a day-to-day managerial role.

corporate charter

The written application for permission to incorporate that is approved by a state official.

Corporate Refugees

Those individuals who flee the bureaucratic environment of big business by going into business for themselves.

borrowed equity

Using the appeal of an event to market a product. Exchanges. Transaction between a producer & consumer.

Participative

a business pattern in which all family members participate in the operations, decisions or profits of the funeral home.

Laissez-faire

a business pattern in which family members do not interfere with each others departments and responsibilities

professional

a business pattern in which the family funeral home is completely oriented toward the business and not the family

manufacturing business

a business that makes finished goods from raw materials by hand or machinery -500 to 1500 employees

merchandising business

a business that purchases finished goods for resale

earnings approach

a business valuation approach which centers on estimating the amount of potential income that may be produced by the business in the next year. income-based small business valuation establishes the business value by dividing the expected financial benefit (example: seller's cash flow)

Patriarchal

a family that is headed by a male family member

Personal Equity

a person's assets after all their liabilities are deducted

Goodwill

a tangible asset such as the name of a funeral home; also an intangible asset which enables a business to earn a profit in excess of normal rate of profit earned by other business of the same kind

Business plan (new venture plan)

a written description of a new idea that projects marketing, operational, and financial aspects of a proposed business.

articles of partnership

a written document that explicitly states the rights and duties of partners in a partnership

Corporation

an artificial being, invisible, intangible, and existing only in contemplation of the law an entity that is something that has a distinct existence separate and apart from the existence of its individual members

Consumerism

an emphasis placed on providing to consumers products/services that are safe, reliable, and honestly advertised a social movement that seeks the rights of consumers relative to sellers

venture capitalists

an investor or investment group that commits money to new business ventures

Debt Equity (Debt Capital, Borrowed Capital)

any borrowed or loaned capital invested in the business that must be repaid to creditors

advisory board

board helps makes major decisions for the funeral home, but does not deal with the daily actions

wholesaling business

buys goods in large quantities, typically from manufacturers, and resells them in smaller batches to retailers. -up to 500 employees

retailing business

buys goods, often from wholesalers, and resells them directly to consumers, who are the end buyers. -20 to 100 employees

limited partner

can only lose the amount of money invested in a partnership

replacement value

fair market price to purchase similar assets

family business is misleading because

families are supposed to be nurturing and help build up the members, while businesses are based on profitability and survival of income

conflicted

family members work against each other

Matriarchal

family ruled by a woman such as a mother, grandmother, or aunt

Functional stage

follows their education non managerial roles in company

Board of Directors (BOD)

governing body that is elected by stockholders of a corporation

intangible assets

long-term assets (e.g., patents, trademarks, copyrights) that have no real physical form but do have value

Factoring

obtaining cash before payments are received from customers by selling off one's accounts receivable to a third party

Entrepreneur

one who organizes, manages, and assumes the risks of a business or enterprise

General Company Description

provides a general direction of the business and outlines the company for potential investors or potential partners

shareholder

rarely be personally liable for actions of the funeral home corporation

Owner's Equity

the amount of the business that belongs to the owners minus any liabilities owed by the business

liquidation value

the anticipated value of an asset that would be realized in case of liquidation of the business

Total Quality Management (TQM)

the efforts of all members of an organization directed to ensure that quality in the production of goods and services is achieved.

internal focus of control

the perception that you control your own fate

appendix

the place to include any additional documents that you want to use to give your reader a feel for your product, marketing, services and so on

Small Business Administration (SBA)

the principal government agency concerned with the financing, operation, and management of small businesses

Partnership

the voluntary association of two or more people who have combined their resources to carry on as co-owners of a lawful enterprise for their joint profit

tangible assets

those assets that can be appraised by value or seen or touched

operating plan

typically designed for a one-year period, defines how you will conduct your business based on the action plan; it identifies clear targets such as revenues, cash flow, and market share

Business Angels

wealthy individuals operating as informal or private investors who provide venture financing for small businesses

seven stages of business succession

1. Pre-business 2.Introductory 3.Introductory Functional 4. Functional 5. Advanced Functional 6. Early Succession 7. Mature Succession

Executive Summary

A brief recounting of the key points contained in a business plan creates excitement

trade credit

A form of credit that is extended by one business to another business to help finance distribution of producer's goods.

financial plan

A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities.

management plan

A highly detailed plan that lays out the owner's objectives with the property, as well as what the property manager wants to accomplish and how, including all budgetary information.

Sole Proprietorship

A legal form of organization whereby the business is owned and operated by one person.

Limited Partnership (LP)

A partnership in which one or more partners have limited liability as long as at least one partner (the general partner) has unlimited liability. The limited partners are passive investors that cannot take an active role in the firm's management.

Introductory functional stage

A son or daughter begins to act as a part-time employee in the family business learns key people in the business and their roles may include formal education and work for other firms (internships)

Marketing Plan

A written document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the four Ps, action programs, and projected or pro forma income (and other financial) statements.

General Partnership

An association of two or more persons to carry on a business for profit as co-owners -personally liable for the obligations of the business

General Manager

An entrepreneur who functions as an administrator of a business.

Artisan Entrepreneur

An entrepreneur who primarily posse's technical knowledge but has little business experience.

Trademark

An intangible asset that is a distinct name, sign, or symbol that the federal government grants exclusive rights to use for a specified period of time.

Advanced Functional Stage

As the potential successor assumes managerial roles, he/she enters the advanced functional stage. This may include directing other employees, but not managing the entire company.

cover page

Contains the name of the venture and the owners, date prepared, and contact person

Products and services plan

Describes what kind of products/services you plan to provide

Occupation Safety and Health Act

Federal legislation that mandates that employers provide a workplace that is free from hazards likely to cause death or serious physical harm.

primary objective of a funeral home

Fulfilling the needs of the client-families and the community.

secondary objective of the funeral home

Insuring funds are available for meeting expenses, reasonable return on investment and capital improvements.

Fixed capital

Long-term capital that is invested in the small business; also, funds invested in such long-term assets as: land, building, machinery, furniture, fixtures, and other equipment.

Mature Succession Stage

Reached when the transition from parent to offspring is complete and the offspring is fully and solely in charge of the business. In this stage, the parent will not usurp the authority of the offspring, and all decisions are made by the offspring.

competition

THE PRACTICE OF TRYING TO OBTAIN SOMETHING THAT IS BEING SOUGHT BY OTHERS UNDER SIMILAR CIRCUMSTANCES AT THE SAME TIME.

copy right

THE REGISTERED RIGHT OF A CREATOR TO REPRODUCE, PUBLISH, AND SELL THE WORK WHICH IS THE PRODUCT OF THE INTELLIGENCE AND SKILL OF THAT PERSON

Rubber Stamp Board

The business governance board which exists and holds meetings, but only approves actions desired or completed by the manager of the funeral home.

paper board

The business governance board which exists only on paper and never holds true meetings.

Paternalistic

The business pattern in which the parent is in control.

Book Value

The cost of a fixed asset less accumulated depreciation.

Circulating capital (Working capital)

The current asset items consisting of cash, inventories, and accounts receivable. difference between current assets and current liabilities

Characteristics of a small business

- Highly personalized. - Customer focus/ recognition- In larger companies, there is sometimes (though not always) a tendency to forget the customer in favor of the profits. In small firms, if you remain focused on customer needs, you may be successful in areas where larger firms may not be able to serve the consumer. - Integrity and Responsibility- responsibility is not easily passed on to the next guy, as it can be in larger firms. - Innovation- Some researchers suggest that 50% of all new products and innovations have come from small businesses who have the need to find a better way to do things in order to compete with larger firms. These small businesses may also be able to be innovative since large firms tend to only improve existing products not create new ones.

Disadvantages of a corporation

- Legal restrictions on activities- Most companies can only do business in a specific area, and growth into other areas are allowed only with permission of the government that issued the charter. - Separation of ownership and control- Though a stockholder may own a stock in a corporation, he/she may not call the company and tell them as a shareholder that he/she would like to change the way business is done. - Lack of personal interest- Since many people can buy stock in a company, they are generally more concerned with the profits of the company than the products/services of the company. - Double taxation of earnings- The corporation is taxed on profits, then the shareholders are taxed on profits. - Lack of privacy- The company documents are open for inspection by governmental authorities. - Difficult to create- Articles of incorporation must be drawn up.

Advantages of Entrepreneurship

- Reward of profit - Many persons begin companies in order to obtain a return on his/her investment of money and time. - Reward of independence - Entrepreneurs sometimes begin a new business in order to "Be their own boss." An entrepreneur may choose to leave a company because of bad relations with his/her boss, to be able to take time off when he/she desires, or run the company as he/she thinks it should be run without interference from others. - Reward of a satisfying way of life - Some entrepreneurs begin companies because they have a vision of a way to help others, while making a reasonable return on their investment.

contributions of small businesses

- Simulates economic competition, innovation. - Represent 99.7 % of all employer firms. - Generate jobs. - Interdependence (dependence between things) of business.

Advantages of a Family Business

- Strength of family relationships- Resulting from the family working together. - Personal commitment to the business and to service- Sometimes this means that the son or daughter is reluctant to leave the business and go into another career. - Preservation of humanity in the workplace- A family business can easily demonstrate higher levels of concern for individuals than are found in the typical corporation. - Focus on the long run instead of the short term gains- Family managers can take the long-run view more easily than can corporate managers who are being judged on year-to-year results (profits). - Emphasis is placed on quality- Because they have a stake in preserving the reputation of the family and the business, family members are likely to maintain a tradition of providing quality and value to the consumer.

Advantages of Partnership

-Combined Management/Talent and capital -Easy to form -Efficiency of labor -Possibility of employees to buy into the business -possibility of raising more capital than proprietorship Each partner contributes to the goodwill of the business

Advantages of a corporation

-Continuity in existence -Ease of ownership -Limited liability -Large financial capability -Specialized management -Legal entity: personal assets are separated

Advantages of Sole Proprietorship

-Ease of Starting/closing -Low Cost of Organization-fewer levels of management -Freedom to Manage -Profit Incentive -Promptness of action -Secrecy -Customer recognition -Unique credit standing-can use personal assets for business purposes

External Cause of Business failures

-HR planning -Capital shortages -Taxes -Governmental regulations -Consumerism -Disaster of tragedy -Business risks

Disadvantages of Partnership

-Lack of Continuity-limited life -Decisions binding on each party -Frozen investments -Collateral for the business may be taken if one partner makes a bad decision -Unlimited liability for General Partners -Possibility of unsatisfactory division of profits -Possibility of managerial difficulties

Internal Cause of business failures

-Lack of expertise -Financial Shortages -HR management

sources of funds for new business

-Personal equity -Trade credit -Small Business Administration

Parts of a Business Plan

-cover letter -executive summary -company background -management team -financial plan -capital required -marketing plan -location analysis -manufacturing plan -appendix

disadvantages of a family business

-family feuds- usually over the division of profits and division of labor -lower saleries- though this is not always the case, as an employee, it is sometimes harder for a family member to ask for a raise than it is for a non family member. -sucessive generations may not be as interested in the business as the parent was

disadvantages of entrepreneurship

-long hours of hard work -emotional energy -risk of business failure

Disadvantages of Sole Proprietorship

-unlimited financial risk -limited size -limited life -limited management ability -limited opportunities for employees -difficulty raising capital

characteristics of entrepreneur

-willing to take risks -need for achievement -self confidence -forward looking approach -open mindedness -need for achievement -willingness to take risks