Chapter 6 Intro. to Business – Flashcards
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Sole Proprietorship
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a business owned by one person
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Advantages of a Sole Proprietorship
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easy to start, run company without needing approval from someone else, keep all profits, income taxes usually lower than a corporation's
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Disadvantages of a Sole Proprietorship
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unlimited liability, hard to get bank loans, many fail, may not have a skills necessary to succeed
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Partnership
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a business owned by 2 or more people
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Advantages of a Partnership
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easy to start, easier to get bank loans, each partner gives money to start business, only taxed once, each partner brings different skills
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Disadvantages of a Partnership
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all partners share business risk, problems occur if partners don't get along or if one leaves, unlimited liability
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Corporation
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a company that is registered by a state and operates apart from its owners
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Advantages of a Corporation
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limited liability, raise moeny through stock, does not end if owner dies
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Disadvantages of a Corporation
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taxed twice, government regulates more, difficult and costly to start
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Cooperative
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an organization that is owned and operated by its remember
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Nonprofit organization
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a type of organization that focuses on providing a service, but not to make a profit
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Franchise
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a contractual agreement to use the name and sell the products or services of a company in a designated geographic area
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Entrepreneur
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Someone who takes a risk starting a business to earn a profit
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Entrepreneurship
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The process of starting, organizing, managing, and assuming the responsiblity for a business.
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Venture Capital
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Money provided by large investors to finance new products and new businesses that have a good chance to be very profitable.
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Innovation
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An invention or creation that is brand new.
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Improvement
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A designed change that increases the usefulness of a product, service, or process.
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Small Business
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An independent business with fewer than 500 employees.
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Small Business Administration (SBA)
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A government agency that helps small business owners develop business plans and obtain financing and other support for their companies.
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the 3 types of businesses
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sole proprietorship, partnership, corpporation
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a sole proprietorship is owned by __________ person
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one
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about ____ of all businesses in the us are a sole proprietorship
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72%
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About __ of the revenue comes from a sole proprietorships
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5%
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an advantage of a sole proprietorship is that proprietors keep all the _______
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profits
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an advantage of a sole proprietorship is that __________ are lower than corporations
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taxes
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an advantage of a sole proprietorship is that it's ______ to start
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easy
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an advantage of a sole proprietorship is that proprietors are in _______
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charge
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a disadvantage of a sole proprietorship the owner has ________liability and is responsible for the company's __________.
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unlimited; debts
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a disadvantage of a sole proprietorship is that there is a limited access of
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credit
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a disadvantage of a sole proprietorship is that the company may run out of _______
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money and supplies
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a disadvantage of a sole proprietorship is that the owner may not have the necessary __________
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skills
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a disadvantage of a sole proprietorship is that the business ______ when the owner dies
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ends
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owned by two or people people who share the risk
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partnership
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a partnership is owned by ____ or more people show share the ________
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2; risk and rewards
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partnerships need a
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partnership agreement
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an advantage of a partnership is that it's _____ to start
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easy
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an advantage of a partnership is that it's easier to obtain________
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capital and credit
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an advantage of a partnership is that it's not dependent on a _______ person
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sole
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an advantage of a partnership is that it's only taxed
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once
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an advantage of a partnership is that there is ___________ in skills
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diversity
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a disadvantage of a partnership is that business ______ is shared
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risk
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a disadvantage of a partnership is that __________ legal and financial liability is shared
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unlimited
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a disadvantage of a partnership if one partner makes a mistake all partners are
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responsible
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a company that is registered by a state and operates apart from its owners
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corporation
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A corporation is a company that is ________ by a state and _________ apart from its woners
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registered; operates
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Where must the company obtain the charter
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state where the main office is located
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to form a __________________ the owners mus get a corporate charter from the state where their main office is located
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corporation
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Which of the ones stated above isn't processed?
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organic vegetables
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an advantage of a corporation is that there is _______ liability
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limited
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an advantage of a corporation is hat owners are responsible for no more than the ______ that they have invested in it
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capital
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an advantage of a corporation is that there is ability to raise money by selling
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stocks
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money made off of stock
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dividen
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an advantage of a corporation is that the business __________- when the owner dies
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doesn't end
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a disadvantage of a corporation is that there is _______ taxation
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double
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a disadvantage of a corporation is that ________ is taxed
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income
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a disadvantage of a corporation is that stockholders pay taxes on _______ issued to them
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profits
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a disadvantage of a corporation is that there are many
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regulations
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a disadvantage of a corporation is that it's _____ to start
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difficult and costly
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A cooperative is an organization that is ________ by its members
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owned and operated
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an organization owned and operated by its members
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cooperative
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Purpose of cooperative
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to save money on the purchase of certain goods and services; makes the marketing of goods and services more efficient and profitable
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A nonprofit organization focuses on providing a __________, but not making a profit
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service
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focuses on providing a service, but not making a porfit
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nonprofit organization
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nonprofit organizations don't pay ______ bc they're not making a profit
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taxes
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nonprofit organizations must ______ with the government
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register
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most common type of business
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sole properitorship
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A franchise is a contractual agreement to use the _________and ____________ the products or services of a company in a designated geographic area
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name; sell
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contractual agreement to use the name and sell products of a company in a designated geographic area
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franchise
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to run a franchise you have to _________ money and pay ___________ or share the profits
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invest; franchise fees
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a business that gathers raw goods
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producers
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agriculture,mining, fishing, or forestory
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producers
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business that changes raw materials into more finished products
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processors
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turn crude oil into gasoline
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processor
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a business that makes finished products out of processed goods
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manufactureres
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cars and computers
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manufactuerers
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a business that moves goods from one business to another
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intermediary
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an intermediary ______ goods, ______ them, and then _____them
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stores; sells, resells
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business that distributes goods
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wholesaler
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another name for wholesaler
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distributer
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a business that purchases goods from a wholesaler and sells them to consumers
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retailer
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convenience store
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retailer
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perform tasks rather than provide goods
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service businesses
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service business employ about ___________ of the workforce and are rapidly increasing in numbers.
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three-quarters
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companies benefit when the five business functions
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work together
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manufactureres
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finished goods
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franchise offers well known
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product
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the process of creating, expanding, manufacturing or improving goods and services
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production
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buying and reselling of goods and services that have already been produced
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procurement
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the process of planning, promoting, pricing, promotion, selling, and distributing ideas, goods and services
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marketing
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Marketing involves getting consumers to _______ something
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buy
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advertising is used to _______- consumers to buy one product or service over another
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influence
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process of achieving company goals of planning, organizing, directing, controlling, and evaluating the effective use of resources
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mangament
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business or art of money mangament
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Finance
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analyzing financial statements to make future decisions
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finance
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maintaining and checking records, handling, and preparing financial reports for businesses.
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accounting
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requires attention to detail and accuracy
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accouting
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raw materials
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prodcuers
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changes raw materials
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processorers
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the functional areas of a business ______- on each other
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depend
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the functional area of a buisiness can ________ with each other
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conflict
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a furniture makers sales are __________. The ________ and ________ department notice decreasing sales. If the furniture is too highly price more _____ procedures will have to be implemented. A new _____________ is created. The accounting and finance department will ___________ the effects of new marketing efforts.
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decreasing; accounting, financing; efficient; marketing plan; monitor
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difference between financing and accouting
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Finance is analyzing future decisions. Accounting is maintaining and checking records.
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Biggest Advantage of a corporation
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limited liability only loose investment
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3 industries that produce raw goods
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forestry, mining, agriculture, fishing
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5 functions involved with running a business
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production and procurement; marketing; management; financing; accounting
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business plan
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A written description of the business idea and how it will be carried out, including all major business activities.
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entrepreneur
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someone who organizes a business venture and assumes the risk for it
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entrepreneurship
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the process of starting, organizing, managing, and assuming the responsibility for a business
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improvement
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a designed change that increases the usefulness of a product, service, or process
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venture capital
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money provided by large investors to finance new products and new businesses that have a good chance to be very profitable
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innovation
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something newly introduced or created
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small business
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an independent business with fewer than 500 employees
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Small Business Administration
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an independent agency of the United States government that protects the interests of small businesses and ensures that they receive a fair share of government contracts
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start-up financing
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the amount of money needed to open the business
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short-term financing
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the money needed to pay for the current operating activities of a business
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long-term financing
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money needed for the main resources of a business that will last for many years
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Planning
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Involves activities such as setting goals.
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Organizing
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Involves activities such as creating an organizational chart determining the relationships and responsibilities of employees.
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Staffing
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Involves activities such as finding, selecting, hiring, training, appraising, and rewarding employees.
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Leading
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Involves activities such as directing employees, and requires good communication skills.
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Controlling
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Involves activities of evaluating business strategies and operations.
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Corporation
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A business owned by a number of people and operated under written permission from the state.
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Sole Proprietorship
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A business owned by one person.
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Dividend
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Part of profits that each shareholder receives.
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Articles of Partnership
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Written agreement that provides the details of how a partnership will operate.
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Board of Directors
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A group with responsibility to guide the procedures of a corporation.
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Organizational Chart
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Shows work relationships and responsibilities between employees.
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Stockholder
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A.K.A. Shareholders: Owners of a Corporation
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Franchise
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A written contract granting permission to sell someone else's product or service.
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Certificate of Incorporation
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Written permission to operate a corporation.
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Franchisor
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The parent company that grants the franchisee the franchise.
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Partnership
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A business owned and managed by a small group of people.
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business plan
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a detailed written statement that describes the nature of the business, the target market, the advantages against the competition, resources and qualifications of the owners
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enterprise zones
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specific geopgraphic areas to which governments try to attract private business investment by offering lower taxes and other gov. support
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entrepreneurship
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accepting the risk of starting and running a business
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incubators
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centers that offer new business low cost offices with basic business servies
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intrapreneurs
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creative people who work as entrepreneurs within corporations
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market
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people with unsatisfied wants and needs who have both the resources and the willingness to buy
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micropreneurs
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entrepreneurs willing to accept the risk... of a business that remains small to keep a balanced life
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service corps of retired executives (SCORE)
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an SBA office with volunteers from industry, trade associations and education who concel small businesses at no cost... except expenses
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small business
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a business that is independently owned and operated, not dominant.. meet certain size
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small business administration (SBA)
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a US goverenment agency that advises and assists small businesses by providing management training and financial advice and loans
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small business investment company ( SBIC) program
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program which private investment companies licensed by the SBA lend money to small businesses
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venture capitalists
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individuals or companies that invest in new businesses in exchange for partial ownership
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entrepreneurial team
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a group of experienced people from different areas of business who join to form a managerial team with the skills needed to develop, market, and make a new product
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Entrepreneurship
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Accepting the risk of starting and running a business.
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What are the reasons why people take the entrepreneurial challenge?
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1. Opportunity 2. Profit 3. Independence 4. Challenge
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What does it take to be an entrepreneur?
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1. Self-directed 2. Self-nurturing 3. Action-oriented 3. Highly energetic 4. Tolerant of uncertainty
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Why is an Idea is a good opportunity?
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1. It fills customers needs 2. You have the skills and resources to start a business 3. You can see the product or service at a reasonable price and still profit 4. You can get your product or service to customers before the window of opportunity closes 5. You can keep the business going
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Entrepreneurial Team
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A group of experienced people from different areas of business who join to form a managerial team with skills to develop, make, and market a new product.
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Micropreneurs
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Entrepreneurs willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle.
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Affiliate Marketing
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An internet based marketing strategy in which a business rewards individuals or other businesses (affiliates) for each visitor or customer the affiliate sends to its website.
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Intrapreneurs
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Creative people who work as entrepreneurs within corporations.
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Enterprise Zones
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Specific geographic areas to which governments try to attract private business investment by offering lower taxes and other government support.
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Incubators
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Centers that offer new businesses low-cost offices with basic business services
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Small Business
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A business that is independently owned and operated, is not dominant in its field of operation, and meets certain standards of size (set by the Small Business Administration) in terms of employees or annual receipts.
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Advantages of small over big business
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More personal customer service and the ability to respond quickly to opportunities
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Disadvantages (failures) of small over big business
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Owner closing a business to start another, changing forms of ownership, and retirement
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Business Plan
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A detailed written statement that describes the nature of the business, the target market, the advantages the business will have in relation to competition, and the resources and qualifications of the owner(s).
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Angel Investors
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Private individuals who invest their own money in potentially hot new companies before they go public.
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Venture Capitalists
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Individuals or companies that invest in new businesses in exchange for partial ownership of those businesses.
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Small Business Administration (SBA)
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A U.S. government agency that advises and assists small businesses by providing management training and financial advice and loans.
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Small Business Investment Company (SBIC) Program
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A program through which private investment companies licensed by the Small Business Administration lend money to small businesses.
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Market
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People with unsatisfied wants and needs who have both the resources and the willingness to buy.
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Service Corps of Retired Executives (SCORE)
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An SBA office with volunteers from industry, trade associations, and education who counsel small businesses at no cost (except for expenses).
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business plan
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a written descripitions of buss. ideas how it will b carry out in including all other majors business
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enterpreneur
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someone who takes a risk in starting a business to earn a profit
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improvement
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a desgined change that increases the usefulness of a product,service,or process
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innovations
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an inventions or creations that is brand new
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long term financing
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the money needed for the main resources of a business that will last 4 many years
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short term financing
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the money needed to pay for the current operating activities of a business
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small business
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an independent business with fewer than 500 employees
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small business admainistrations
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a government agency that helps small business owners develop buss. plans
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start-up financing
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the amount of money needed to open the business
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venture capital
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money provided by largeinvestors to finance new products and new business
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entrepreneurship
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the process of starting,organizing,mg,and assuming the responsibility for a business
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entrepreneur
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is someone who takes a risk in starting a business to earn a profit, desire to be own boss, has good initial plan, many are teens
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entrepreneurship
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is the process of starting, organizing, managing, and assuming the responsibility for a business
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venture capital
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is money provided by large investors to finance new products and new businesses that have a good chance to be very profitable
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innovation
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is an invention or creation that is brand new
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improvement
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design change that increases the usefulness of a product, service or process
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SBA (small business administration)
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a government agency that helps small business owners develop business plans and obtain financing and other support for their companies (also Chambers of Commerce helps)
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business plan
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a written description of the business idea and how it will be carried out, including all major business activities general description, credentials, description of service, business and financial plans updated annually
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start-up financing
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the amount of money needed to open the business (building, equipment, inventory)
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short-term financing
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the money needed to pay for the current operating activities of a business (less than a year)
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long-term financing
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money needed for the main resources of a business that will last for many years
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unique skills, new ideas, confidence, understanding of the business process
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What it takes to be an entrepreneur
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employment
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40% have no help 60% have one or more employees
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entrepreneurship and the economy
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10% of 18-64 involved in entrepreneurship 500,000 new businesses made each yr closing=openings
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financing
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most money from him and family 1 in 5 have invested in one or venture capital
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productivity
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produces lots of goods and services single owners make a ton of money for economy responsible for half of GDP
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risks
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lack of capital low sales higher expenses competition management problems lots of time
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small business
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has fewer than 500 employees, almost all are small owner=manager (usually) few locations small market not dominent greatest number starts with idea and research (competitors, regulations) choosing team is important
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small business employment
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employ 50% of all US workers many are professional and technical
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advantages of small business
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specialized help, direct info and help, unique services= special interest in customer
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small business problems and failures
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not accurate records, not enough start up money, no management experience, poor location
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business ideas
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from hobbies, interests, business experiences, opportunities
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research, game plan, sections of plan written
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steps for business plan
