Entrepreneurship Chapter 20
traditional small business
a firm intended to provide a living income to the owner, and operating in a manner and on a schedule consistent with other firms in the industry and market
high-performing small business
a firm intended to provide the owner with a high income through sales or profits superior to those of the traditional small business
high-growth venture
a firm started with the intent of eventually going public, following the pattern of growth and operations of a big business
workout
a form of business termination in which the firm's legal or financial obligations are not fully met at closing
lifestyle or part-time firm
a small business primarily intended to provide partial or subsistence financial support for the existing lifestyle of the owner, most often through operations that fit the owner's schedule and way of working
termination
an endgame strategy in which the owner closes down a business
liquidity enhancement
an estate planning strategy which focuses on generating cash to cover likely estate taxes
tax management
an estate planning strategy which focuses on minimizing estate tax payments
estate freeze
an estate planning strategy which focuses on transferring assets to heirs when the asset costs are low
walkaways
business terminations in which the entrepreneur ends the business with its obligations met
business life-cycle
the sequence or pattern of developmental stages any business goes through during its life span
liability of newness
the set of risks faced by firms early in their life cycles that comes from a lack of knowledge by the owners about the business they are in and by customers about the new business
employee stock ownership plan
a formalized legal method to transfer some or all of the ownership of a business to its employees
consolidation
a transfer method in which a small business is bought by a larger firm for the purpose of quickly growing the larger firm
transfer
an endgame strategy in which ownership is moved from one person or group to another
bankrupcty
an extreme form of business termination which uses a legal method for closing a business and paying off creditors when debts are substantially greater than assets
success profits
returns at levels higher than the entrepreneur could make working for others
substitution profits
returns intended to equal and replace the salary or wages the entrepreneur could draw working for someone else
serial entrepreneurs
people who open multiple businesses throughout their career
slack resources
profits that are available to be used to satisfy the preferences of the owner in how the business is run
harvest
recover value through a sale of firm or its assets
supplemental profits
returns above costs intended as a secondary income for entrepreneurs
initial public offering (IPO)
transfer method describing the first-time public sale of a stock listed on a public stock exchange