1.3 The Business Environment - 3

Franchise

The right to use a specific business's name and sell its products or services in a given territory

Franchisor

a company that develops a product concepts and sells others the rights to make and sell the products

Horizontal merger

joining of two firms in the same industry

Partnership

legal form of business with two or more owners

Double taxation

must file and pay taxes on corporate level and individual level

Vertical merger

the joining of two companies involved in different stages of related business

Cooperative

A business owned and controlled by the people who use it—producers, consumers, or workers with similar needs who pool their resources for mutual gain. Serve one billion members worldwide. Members democratically control the business by electing a board of directors that hires professional management. Examples: Land O'Lakes, Sunkist Growers, Ocean Spray, Associated Press

C Corporation

A state-chartered legal entity with authority to act and have liability separate from its owners

S Corporation

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships

General partnership

All owners share in operating the business and in assuming liability for the business's debts

Accounting

Daily sales, expenses, and profits. Inventory control, customer records, and payroll. Helps with - tax planning and financial forecasting. Choosing sources of financing and wiring requests for funds.

Human resources

Deciding labor needs. Recruiting and selecting the right people. Training and development for growth. Rewards and culture for retention. Motivation for performance.

Limited Partnership

Includes one or more general partners and one or more limited partners

Corporation

Legal entity that is separate and distinct from its owners "artificial being" - entity that exists only in the eyes of the law. Shareholders have rights to profits (dividends or appreciation of stock) but are not held personally liable for company's debts

Limited Liability Company (LLC)

Like S Corp, but without the special eligibility requirements. Owner(s) can be a person, partnership, or corporation. Owners are not personally liable. Pay self-employment tax. Pay personal tax or corporate tax. LLC ownership is not transferable (no stock)

Operations

Manufacturing plan - plant size, machinery required, production capacity. Supply chain considerations - inventory and inventory control-methods, location of plants and distributors, transportation costs.

Planning

Mission, Vision, and Values. Strategic and financial objectives

Sole proprietorship

Owned, and usually managed, by one person Owner manages all areas of the business Usually, fewer benefits and lower wages for employees, Most common form of business

Consumer market

People with unsatisfied wants and needs who have both the resources and willingness to buy. Know your customers and adapt quickly to ever-changing demands. Must listen, listen, listen!

Small Business Administration (SBA)

US government agency that advises and assists small businesses by providing management, financial advice, and loans

Financing

You need money to start a business.

Franchise Agreement

arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory

Crowdfunding

donation based or debt-investment (peer-to-peer lending)

Flow-through entity

income is passed straight to its shareholders or owners

Venture Capitalists

individuals or companies that invest in new business in exchange for partial ownership of those businesses

General partner

is an owner (partner) who has unlimited liability and is active in managing the firm

Limited partner

is an owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment.

Conglomerate merger

joining of firms in completely unrelated industries

Acquisition

one company's purchase of the property and obligations of another company

Franchisee

person who buys a franchise

Angels

private individuals who invest their own money in potentially hot new companies before they go public

Limited liability

responsibility of a business's owners for losses only up to the amount they invest

Unlimited liability

responsibility of business owners for all debts of the business

Merger

result of two firms forming one company