MOR 331 Funeral Home Management Lesson 1.1

Proprietorship (Sole proprietorship)

A business owned by one person who bears unlimited liability for the enterprise; aka Sole proprietorship.

Laissez-faire business pattern

A business pattern in which the family members do not interfere with each others' departments or responsibilities.

Manufacturing business

A business that makes finished goods from raw materials by hand or machinery.

Service business

A business that provides a service as opposed to a product.

Define a service business.

A business that provides a service.

Merchandising business

A business that purchases finished goods for resale.

Describe the qualities of a small business (as defined by the SBA)

A business which is independently owned and operated and is not dominant in its field of operations.

Small business

A business which is independently owned and operated and is not dominant in its field of operations.

Stock (Stock certificate)

A document specifying the number of shares owned by a stockholder; aka Stock Certificate.

Limited partnership (LP)

A form of partnership in which two or more partners unite to jointly conduct a business in which one or more of the partners is liable only to the extend of the amount of money that partner has invested.

Articles of Incorportation

A set of formal documents filed with a government body to legally document the creation of a corporation; aka a Corporate charter

S Corporation

A type of corporation that offers limited liability to its owners but is taxed by the federal government as a partnership.

Articles of Partnership

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

C Corporation

An ordinary corporation taxed by the federal government as a separate legal entity.

Business

An organization that combines inputs of raw materials, capital, labor, and management skills to produce useful outputs of goods and services so as to earn a profit.

Describe a general partner in a partnership.

An owner in a partnership who has unlimited liability; a partner that is actively and openly engaged in the day-to-day operations of the business; also known as a managing partner.

General partnership (GP)

An owner in a partnership who has unlimited liability; a partner that is actively and openly engaged in the day-to-day operations of the business; also known as a managing partner.

Shareholder (Stockholder)

Anyone having title to one or more shares of stock in a corporation; combined, they represent the ownership of the corporation; aka Stockholder.

The term for a set of formal documents filed with a government body to legally document the creation of a corporation.

Articles of Incorporation

What is the term for an organization that combines inputs of raw materials, capital labor, and management skills to produce useful outputs of goods and services so as to earn a profit?

Business

The family pattern in which the family members work together is know as:

Collaberative

What are the advantages of a partnership?

Combined management talent Capital of the two(or more) persons Easy to form Efficiency of labor Possibility of employees to buy into the business Each partner contributes good will in the business

List the advantages of a corporation.

Continuity in existence Ease of Ownership Limited Liability Large financial capability Specialized management Separate legal entity

Which type of business organization is defined as having a distinct existence separate and apart from it individual members?

Corporation

What is the name of the written document that states explicitly the rights and duties of partners in a partnership?

Division of Labor

Describe (not define) a corporate charter.

Documents that outline the firm's name, address, agents, the amount and type of stock to be issued, and and are often required to state the purpose of the business.

List the advantages of a sole proprietership.

Ease of starting Low cost of organization Freedom to manage Profits Promptness of action Secrecy Customer recognition Unique credit standing

What are some disadvantages of working in a family funeral home?

Family Feuds Lower Salaries - Difficult to ask for a raise Successive generations may not be as interested in the business as the parent was.

Limited liability company (LLC)

Form of business ownership that combines aspects of partnerships with the limited liability of a corporation; owners are known as members and cannot be held personally liable for the company's debts or liabilities.

Business policies

Fundamental statements that serve as guides to management practice.

What is the greatest risk for siblings in a family business?

If the siblings can not agree on the direction or the roles each should play

What are the disadvantages of a partnership?

Lack of continuity Frozen investments Decisions are binding on both parties Collateral is used for business debt if one partner makes a bad decision Unlimited liability of general partners Possibility of unsatisfactory division of profits Possibility of managerial difficulties

In which type of business pattern do family members avoid interfering with each other's departments or responsibilities?

Laissez-faire

List the disadvantages of a corporation.

Legal restrictions on activities Separation of ownership and control Lack of personal interest Double taxation on earnings Lack of privacy Difficult to create

A partner in a partnership who is not active in its management and has limited personal liability is called a:

Limited Partner

The term for a business that makes finished goods from raw materials by hand or machinery.

Manufacturing business

The family pattern in which the mother is in charge:

Matriarchal

What are the requirements for forming an S-corporation?

No more than 100 shareholders Only one class of stock for sale (e.g. common vs. preferred)

Which type of business governance board exists only on paper and never holds true meetings?

Paper Board

List the 4 governance patterns of a family funeral home.

Paper BoardRubber-Stamp BoardAdvisory BoardOverseer Board

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

Participative

Limited partner

Partner in a partnership who is generally not active in the business and whose liability is limited to the extent of the partner's share of ownership.

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 is known as a:

Partnership

What is often the primary focus of the founder of a family business?

Passing the business on to the next generation

In which family business pattern is the parent in control?

Paternalistic

What are the 4 business patterns of a family business?

Paternalistic Laissez-Faire Participative Professional

The family pattern in which the father is in charge.

Patriarchal

What are the 4 familial patterns of a family business?

Patriarchal Matriarchal Collaborative Conflicted

Which type of business governance board holds meetings but only approves actions desired by the manager of the funeral home?

Rubber Stamp Board

Board of Directors

The governing body that is elected by the stockholders of a corporation.

Describe the concept of double taxation in a corporation.

The occurrence of corporate earnings being taxed twice; once as the earnings of the corporation and once as dividends disbursed to stockholders.

Double taxation

The occurrence of corporate earnings being taxed twice; once as the earnings of the corporation and once as dividends disbursed to stockholders.

Small Business Administration

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.

List the disadvantages of a sole proprietorship.

Unlimited financial risk Limited size Limited life Limited management ability Limited opportunity for employees Difficulty in raising capital

What is a potential problem of couples working together in a family funeral home?

When the two have a difference of opinion in how the business should be managed or in other decisions that need to both agree on in order to proceed smoothly.

Describe the issues when a parent seeks to pass the family business to their offspring.

Will the child want the business?Will the child be able to manage the business?What can I do to prepare the child for the business?

Legal entity

A business organization that is recognized by the law as having a separate legal existence.

As a shareholder, which document would specify the number of shares you own in the company?

Stock

According to the notes, what are the advantages of a family funeral home over other business structures?

Strength of family relationshipsPersonal commitment to the business and to servicePreservation of humanity in the workplace - a family business can easily demonstrate higher levels of concern for individuals than what is usually found in the typical corporationFocus on the long run instead of the short term gainsEmphasis is placed on quality.

Rubber-stamp Board

The business governance board that 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.

Advisory Board

The business governance board which helps make major decisions for the funeral home but does not deal with the daily operations.

Describe the advisory board as a governance pattern in a family funeral home.

The business governance board which helps make major decisions for the funeral home but does not deal with the daily operations.

Describe the overseer board of a family funeral home.

The business governance board which makes most decisions for a family funeral home, including the decisions made during the daily operation.

Overseer Board

The business governance board which makes most decisions for a family funeral home, including the decisions made during the daily operation.

Participative business pattern

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

Professional business pattern

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

Paternalistic business pattern

The business pattern in which the parent(s) is in control

Describe the "professional" business pattern of a family business.

The family funeral home is completely oriented toward the business and not family.

Conflicted familial pattern

The family pattern in which the family members work against one another instead of together.

Collaborative familial pattern

The family pattern in which the family members work together.

Patriarchal familial pattern

The family pattern in which the father is in charge.

Matriarchal familial pattern

The family pattern in which the mother is in charge.

Capital

The financial resources available for use in a business; an owner's financial interest in a business.