MGT 491 Exam 2

Licensing

• Documented permission from the gov't to run a business

-Needs to gain basic experience -Lack resources to pursue a full time venture -Narrow window

• Four situations for starting a business on a part time basis o Needs to gain basic experience o Lack resources to pursue a full time venture o Narrow window

Home base business correct statement

• Home base business correct statement o There were about 9 million US home based businesses in 2012

closely related

• In most cases the cost to start up and time to market are what?

net income to equity

o Determined by dividing income by the owner's equity

disadvantages of purchasing an existing business

o Poor reputation o Successful business with right entrepreneur o Difficult value small business

Bricolage

o Process of analyzing the resources available and creating a product or service from them

B2B

o Sales from one business to another

Maker

o __ is a modern term for an investor who may use techniques like 3-D printers or DIY kits

Network marketing

o __ is an approach recruits customers to become distributors of a product or service

Variance

o __ is permission from a gov't org to act differently than law states

Reserve Price

o __ is the minimum acceptable selling price in an action

E-commerce

o __ is the use of the internet to conduct business transactions

pretax return on asset

• A firm's ____ is calculated by diving earnings before income tax by asset value

Outsourcing

• Contracting people or companies outside of ones business

Consumer

o A __ is a private individual or household that is the end user of a product or service

Blog

o A __ is a web page in which entries are posted in reverse chorological order

Synergy

o A combination in which the whole is greater than the sum of its component parts

Reciprocal link

o A listed, live connection to a different website

Conflict of interest

o A situation in which a person faces 2 or more competing standard or goals

Sponsored Links

o Form of paid advertising

Asset

o Something a business owns that is expected to have economic value in the future

Aggrandizing

o __ Attempts to make their business or self seem more accomplished than reality

Covenants

o __ are limitations imposed on an individuals property by their neighborhood group

B2C or business to customers

o __ are transactions using e-commerce that are between companies and individuals

buy-in

• A ___ ___ is defined as the purchase of substantially less than 100% of a business

Cannibalizing

• A business away from ones employer

-Take little investment -Don't require a lot of inventory

• Advantage of a stand business o Take little investment o Don't require a lot of inventory

Episodic

• An ____ business is a temporary project based, or sporadically operating business

assets minus liabilities

• Asset valuations methods are

Registration of business correct statement

• Registration of business correct statement o All business deal with three issues: Registration or licensing, taxes, and zoning o Many states have a website to register o Gov't and customers are key groups that all businesses deal with

Volatility

• Start stop type of business

book value, net realizable value, and replacement value

• Three most commonly used methods to estimate a firms assets

True

• True or False: Most part-time business' need a website

me too venture

• Vast majority of start us are considered ____ where the idea is a common business in that community

net income to equity plus debt

o An extension of net income to equity that explicitly includes the value of borrowed capital as a component of firm value

advantages of buying an existing business

o Employees are already placed o Seller will provide some financing o There are established customers ands sales

Termination

o Endgame strategy in which the owner closes down a business

statements about a firm's intangibles

o Examples are trademarks, patents, good will, and accounts payable o The value are likely to be misstated o No physically existence

Sell off

o Type of business transfer where the seller gets only a fraction of the value of the business

discount cash flow

• ___ Method reduces the value of the business cash flow because they will be received in the future

revolving credit

• ___ is a credit agreement that allows a borrower to pay all or part of a loan balance at any time

Zoning laws

o Gov't specifications for acceptable use of land

RSS

o Internet messaging service that sends web material

book value is correct if:

o It is the difference between asset's cost and amount accumulated o Depreciation is an arbitrary o One problem with using book is original cost of an asset may bear no relation to its current value

3 resources that entrepreneurs have access to

o Network of friends o Their own knowledge o Their own skills and abilities

Reverse Auctions

o Often used when a business is looking for someone to do work on a freelance basis like designing a website or translating a document

-Can be free owners to pursue higher value activities -Make sense when owners are not available -Others can due job better

• Delegation is true when? o Can be free owners to pursue higher value activities o Make sense when owners are not available o Others can due job better

-Owners keep their business in their home -Zoning and other restrictions require moving -Fine family situations make it practical

• Correct about home based business o Owners keep their business in their home o Zoning and other restrictions require moving o Find family situations make it impractical

serial entrepreneurs

• People who own multiple businesses throughout their career

35

• People work fewer than ____ hours per week are part-time

True

• True or false: Permanence is tied to one's customers considering the business to be legitimate

founders

• ___ Are people who create or start a new business

book value

• ____ is the difference between originals acquisitions cost and amount accumulated depreciation

replacement

• ____ value is the cost to acquire an essentially identical asset

Leveraging contingencies

• _____ is the practice of an ability to seize upon novel opportunities that become apparent during the conduct of business

-B2C online sales account for 10% -B2B and B2C sales are increasing in all trade sectors -47% using e-commerce

• B2C and B2B statements correct o B2C online sales account for 10% o B2B and B2C sales are increasing in all trade sectors o 47% using e-commerce

-Payment -Chargebacks

• Two important financial issues for companies that have e-commerce

Uniform Franchise Offering Circular

• UFOC stands for ______ and is a document that the franchisor must provide to each potential franchisee

importance of UFOC documents

• What is the UFOC documents that franchisor provides potential franchisee o It is an important document created by the franchisor

-cost of start-up -the expected return

• What should you consider when starting a part-time business?

-Using an employees transitions services such as COBA health coverage -Business is entrepreneur's main source of income -big contract or sale

• Which of the following statements regarding moving from being a part time to full time are correct o Using an employees transitions services such as COBA health coverage o Business is entrepreneur's main source of income o Big contract or sale

Workout

• ___ Form of business termination which legal or financial obligations ARE NOT met

bootstrapping

• ___ Means to use low cost or free techniques to minimize the cost of doing business

Earnings multiple

• ___ is the ratio of the value of a firm to its annual revenue

registration

• ____ Information provided to the gov't concerning the existence of, name of, nature of, and contact info for ones business

takeover

• ____ Is seizing of control of a business by purchasing its stock to be able to select the board of directors

Multichannel

• ____ Marketing is using several different ways to reach customers

Strategic

• ____ Partnerships are formal or informal relationships with customers, vendors, or mentors to ensure the success of an entrepreneurial venture

Net realizable

• ____ Value is the amount at which an asset with sell, less the costs of selling

Search Engine Optimization

• ____ is a general approach to website design intended to result in the site being displayed toward the beginning of the search engine

point of indifference

• ____ is the price at which a buyer is indifferent about buying or not buying a business

buyout

• _____ Is a purchase of substantially all of an existing business

poisoning the wall

• _____ is creating a negative impression among your employers customers

What kind of product/service? How does the entrepreneur want to organize?

Which of the following are the two major questions that must be decided in becoming a part time entrepreneur

Moonlighting

___ is working on one's own part time job after regular job

Stand retailing

-Flea market -Farmers market -Roadside

heuristic

A commonsense rule or rule of thumb

financial

• Key question of whether to move to becoming a full time entrepreneur is usually a _____ question

due dilligence

Process of investigating a business to determine its value and potential for investment is called

24 hours a day, 7 days a week source of information for potential customers

•Correct form of an Informational website:

-Permanence and legitimacy are related -Often important indicator for legitimacy for part time -Customers want to know that the business will be around to provide customer service and sales

Correct statements about permanence: o Permanence and legitimacy are related o Often important indicator for legitimacy for part time o Customers want to know that the business will be around to provide customer service and sales

employee stock ownership

ESOP • ___ is a formalized legal method to transfer some or all of the business' ownership to its employees

Correct statements of intellectual property

Examples include inventions, visual, and performing arts o Property that comes from some sort of original thought o Protected through patents, trade marks, and copyrights

Tweet

• A _____ is a 140-character or less message sent using the Twitter web services

Cost Time The business permanence

• Following are key considerations regarding organizing a part time business

Venue

o Place where something takes place

-Choosing home work location away from noise -Setting up workday to minimize household distractions -Hiring help to handle household duties to free up time after work

• Issues home based entrepreneurial find most important o Choosing home work location away from noise o Setting up workday to minimize household distractions o Hiring help to handle household duties to free up time after work

IBM

• Large company that was not started as part time '

Intellectual Property

• ___ is property coming from some sort of original thought

Hybrid entrepreneurship

o Process or initiating a business while simultaneously remaining employed for wages or salary

correct statements about buyouts

o Restricted to corporations, LLC, and some partnerships o Sole Proprietorship and partnerships cannot be purchased through buyout o A business' assets and liabilities are purchased through a process called bulk asset sale

two problems with asset valuation method

o The estimates do not consider the value of an ongoing firm It is very difficult and time consuming

Pass off

• ___ is a type of business transfer where the owner gives the business to someone else without payment

-Alternatives to use .com are .net, .biz, or .us -Include "about us" page -Include product or service pages

• Basic informational websites o Alternatives to use .com are .net, .biz, or .us o Include "about us" page o Include product or service pages

Disadvantages of starting a business from scratch

• Disadvantages of starting a business from scratch o Bank credit is usually hard o A start up requires time o Business owner will have to attract, hire, and train employees

Caveat emptor

• Latin phrase means to let the buyer beware

-Partners are having a difficulty writing to company's business plan

• Not one where part time business make sense o Partners are having a difficulty writing the company's business plan

Delegation

• Owner assigns work to employees / has power over them

True

• True or false: The two main approaches to selling online are using sites like EBay and by the owners selling through the business website