understanding business chapter6 – Flashcards
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What are four reasons why people become entrepreneurs
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a. Opportunity b. Profit c. Independence d. Challenge
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five desirable attributes for entrepreneurs are
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a. Self-directed b. Self-nurturing c. Action-oriented d. Highly energetic e. Tolerant of uncertainty
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Name some entrepreneurs
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Steve jobs (apple computer) mark zuckerberg ( facebook) michael dell (delll Inc) bill gates (microsoft) howard schultz (starbucks) jack dorsey (twitter) and chad hurley and steve chen (youtube)
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You may have a business idea that is a good opportunity if:
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a. It fills customer needs. b. You have the skills and resources to start a business. c. You can sell the product at a price customers can pay and still make a profit. d. You can get your product to customers before competitors beat you to the market. e. You can keep the business going.
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more than __ of all small businesses are run from owners home
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50 %
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why might entrepreneurial teams be better than an individual entrepreneur
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An entrepreneurial team may be better than an individual entrepreneur because a team can combine creative skills with areas such as marketing and production skills from the beginning. A team can ensure better cooperation and coordination between functions of a business.
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describe a micropreneur and how he or she differs form an entrepreneur
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Many micropreneurs are home-based business owners who are interested in simply enjoying a balanced lifestyle while doing the kind of work they want to do. While micropreneurs can be happy if their companies remain small, an entrepreneur may be committed to growing his or her business.
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melissa harvey company Will n Roses LLC
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Its about independence you can take something that motivates you that inspires you and act on it without roadbacks
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self nurturing
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you must believe in your idea even when no one else does, and be able replenish your own enthusiasm
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action oriented
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most important is a burning desire to realize, actualize, and build your dream into reality
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Highly energetic
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you must be emotionally, mentally, and physically able to work long and hard
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while many entrepreneurs
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business ideas are inspired by their passions, many see business opportunities in their problems
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Entrepreneurial teams Apple computers who was invloved
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steve wozniak mike markkula and steve jobs
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steve wozniak
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invented the first personal computer model (part of apple team)
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mike markkula
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offered business expertise and access to venture capital.
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the key to apples early success was
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that it was built around this "smart team" of entrepreneurs
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describe the reasons for the growth of home-based business
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a. Computer technology allows home-based businesses to look and act like their corporate competitors. b. Corporate downsizing has led many to venture out on their own. c. Social attitudes have changed. d. New tax laws have loosened restrictions regarding deductions for home offices.
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identify 5 challenges faced by the owners of home-based business
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a. Getting new customers b. Managing time c. Keeping work and family tasks separate d. Abiding by city ordinances e. Managing risk
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if you are interested in getting into a home office you should focus on
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a. finding opportunity instead of security. b. getting results instead of following a routine. c. earning a profit instead of a paycheck. d. trying new ideas instead of avoiding mistakes. e. long-term vision instead of a short-term payoff.
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finding opportunity instead
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of security
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getting results instead
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of following a routine.
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earning a profit instead
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of a paycheck.
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trying new ideas instead
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of avoiding mistakes.
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long-term vision instead
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of a short-term payoff.
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home business managing risks
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homeowner's insurance policy, since not all policies cover business- related claims. Some even void the coverage if there is a business in the home.
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how "big" are web based businesses
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Web based businesses have experienced a great deal of growth.
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In 2007 online retail sales reached
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$165.9 billion, approximately 8% of all retail sales. Online sales grew nearly six times faster than total retail sales.
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what must Web-based businesses do to be successful
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Web-based businesses have to do more than offer the same merchandise customers can buy at local stores. They must offer unique products and services.
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describe affiliate marketing
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Affiliate marketing is an internet based marketing strategy in which a business rewards individuals or other businesses for each visitor or customer the affiliate sends to its web site.
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what is a widget, and how does it work
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A widget is an application that links your page on a social network such as MySpace to a seller's site. Whenever anyone clicks on the widget, which is an image of seller's product), and buys that product, the seller pays you a commission.
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describe a shopping widget operator, such as Lemonade Stand
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Once an e-tailer is partnered with a shopping widget such as Lemonade Stand, the e-retailer provides Lemonade Stand access to product information and images. Lemonade Stand then funnels that information through its web site so users can select which products they would like to appear in the widget product galleries on their web sites, social network pages, or blogs. Widget users get commissions on sales generated through the widgets. Using a widget operator such as Lemonade Stand saves users from having to register as an affiliate with multiple sellers.
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a web- based business isn't always a fast road to success
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it can sometimes be a shortcut to failure
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what is the difference between an entrepreneur and an intrepreneur
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While entrepreneurs are risk takers who have started their own businesses, intrapreneurs are creative people who work as entrepreneurs within corporations.
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what was part of the intention of the Immigration Act of 1990?
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Part of the intention of the Immigration Act of 1990 was to encourage more entrepreneurs to come to the United States.
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What are investor visas?
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The act created a category of "investor visas" that allows 10,000 people to come to the U.S. each year if they invest $1 million in an enterprise that creates or preserves 10 jobs.
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what is the idea behind intrapreneurs
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The idea is to use existing human, financial and physical resources to launch new products and generate new profits.
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example of intrapreneur
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At 3m Art Fry made post its
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in addition to investor visas, what are two ways governments could encourage entrepreneurs
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a. creating enterprise zones, which are specific geographic areas to which governments attract business investment by offering lower taxes and other government support. b. offering tax breaks to businesses that make investments to create jobs.
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what kinds of services are offered by incubators?
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Incubators are centers that offer new businesses low cost offices with basic business services such as accounting, legal advice, and secretarial help.
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How do incubators help businesses survive?
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Incubators help companies survive because they provide assistance in the early stage of a businesses' development.
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another way to encourage entrepreneurship is
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enterprise zones
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other names for enterprise zones
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empowerment zones or enterprise communities
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according to a recent study conducted by the National Business Incubator Association (NBIA)
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87% of incubator graduates remain in business
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Self-Employment Assistance (SEA) program allows
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participants to collect unemployment checks while they build their businesses. Participants often get training and counseling as well.
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The government can also join with --- to promote entrepreneurship
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private entities such as startup america
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what are three criteria used by the SBA to classify a business as "small"
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a. independently owned and operated. b. not dominant in its field of operation. c. meets certain standards of size in terms of employees or annual receipts.
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How is it that a business that employs 1,500 people, or has revenues of $22 million be considered small
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A small business is considered small relative to the industry it is in. If it still meets the criteria listed above, a $22 million business would still be considered small. In manufacturing a company can have 1,500 employees and still be considered small.
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what are some statistics that illustrate the impact of small business on the American economy
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a. There are 26.8 million small businesses in the U.S. b. Of all nonfarm businesses, 97% are considered small c. Small businesses account for more than 50% of GDP d. Nearly 750,000 businesses are started every year. e. Small businesses generate 60-80% of the new jobs each year. f. Small businesses employ about half of all private-sector employees g. About 80% of workers find their first jobs in small businesses.
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what percent of the nations new jobs are in small business
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60-80%
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what are two advantages small business owners believe they have over big business
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Small businesses owners believe their advantages over large businesses are: more personal customer service and their ability to respond quickly to opportunities.
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what is the failure rate of small business?
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The Monthly Labor Review reports that 56% of new businesses don't last four years. A study by an economist indicates that the failure rate is only 18 percent over the first 8 years.
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why are the statistic misleading with the failure rate of small business
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the statistics can be misleading because when small business owners went out of business to start new and different businesses, they were included in the business failure statistics. Also, when a business changes its form of ownership from a partnership, for example, to a corporation, it was included in the statistics, as were retirements.
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if you want to be both independent and rich you need to go after
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growth such as technology firms but they are not easy to start and are even more difficult to keep going
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. In general the easiest businesses to start are
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the ones that tend to have the least growth and the greatest failure rate. like restaurants
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In general the easiest businesses to keep alive are
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the difficult ones to get started. like manufactoring
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In general the businesses that can make you rich are the ones that are
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both hard to start and hard to keep going. like automobile assembly
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Three ways to learn about small business are:
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a. learn from others b. get some experience c. take over a successful firm
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When you talk to others about starting a small business, they:
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a. will tell you location is critical b. tell you not to start without enough money c. warn you about the problems of finding and retaining good workers. d. will suggest that you hire a lawyer and an accountant.
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what is the "rule of thumb" about getting experiences in small business?
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The rule of thumb is: have three years' experience in a comparable business.
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how do you get the rule of thumb experience
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You can get this experience by working for a small business owner, and eventually learning the business well enough to allow the owner to take off weekends and holidays, and take a vacation. After working for several years and learning as much as you can about the business, make an offer to take over the management of the business
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Three factors used to determine the value of business are:
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a. what the business owns b. what it earns c. what makes it unique
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Cornelius Vanderbilt
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In 1818 he went to work for a steamboat company so that he could learn the rules of the new game of team after learning what he needed to know he quit and started his own steamship company
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who that the first U.S. business owner to accumulate $100 million
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Cornelius Vanderbilt
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how do you determine a fair price for a business?
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value is based on what the business owns what it earns what makes it unique
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who can help you determine the business's value (when buying it from someone)
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Naturally an accountant will need to help you determine the business's value
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according to the Small Business Administration one of the major causes of small business failures is
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poor management
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poor managemnet covers a number of faults such as
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poor planning, record keeping, inventory control, promotion, or employee relations. most likely it includes poor capitalization.
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what two management functions are of primary concern when you are first starting your business
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The two management functions of primary concern are planning and financing.
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what three functions are of concern after the start up when managing the business
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The three important functions after the startup are knowing your customers (Marketing), managing your employees (Human resource development), and keeping records (Accounting)
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functions of business in a small business setting
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planning your business
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financing you business
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knowing your costumes (marketing) managing your employees (human resource development keeping records (accounting)
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a business plan is
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A business plan is a detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and qualifications of the owner. It forces a small business owner to be specific about products they intend to offer.
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a business plan is also mandatory for
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talking with bankers or othe rinvestors
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list the tips for small business owners who want to borrow money from a bank
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a. pick a bank that serves small businesses b. have a good accountant prepare a complete set of financial statements and personal balance sheet c. make an appointment before going to the bank d. go to the bank with an accountant and all necessary financial information e. demonstrate good character f. ask for all the money you need g. be specific h. be prepared to personally guarantee the loan
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a good business plan takes a long time to write but you've got only five minutes in the __ to convince readers not to throw it away
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executive summary
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list the information that generally should be included in a business plan
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a. Cover letter b. Executive Summary of proposed venture c. Company background d. Management team e. Financial plan f. Capital required g. Marketing plan h. Location analysis i. Manufacturing plan j. Appendix which includes marketing research and other information about the product
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what are two software programs that can help with writing a business plan
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Two software programs that can help with writing a business plan are Business Plan Pro and MiniPlan.
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a good business plan is between -- and -- pages long and takes at least-- to write
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25 and 50 and takes at least six months
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list several sources of small business funding
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a. Personal savings b. Relatives c. Former employers d. Banks e. Finance companies f. Venture capitalists g. Small Business Administration h. Farmers Home Administration i. Economic Development Authority j. Minority Business Development Agency
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According to the text, the most common source of funding is
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friends and family after personal savings
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describe an angel investor
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Angel investors are private individuals who invest their own money in potentially hot companies before they go public.
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you can consider borrowing from a
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potential supplier
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what company borrowed from a supplier
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Ray Kroc in the early years of MacDonald. When he no longer had the funds he asked his suppliers to help him with the necessary funds.
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what does (CDFIs) stand for
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community development financial institutions
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when were CDFIs first formed
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early 1980s by socially motivated investors such as nuns investing their retirement funds
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in 2009 how much flowed into CDFIs from big investment companies
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more than $1 billion
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in 2009 how much flowed into CDFIs from government
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$247 million
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CDFIs do not just loan money they also
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provide business counseling such as helping owners learn how to develop marketing strategies manage inventory and improve cash flow
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what percent of loans given by the CDFI were not paid back in the last three decades
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1 %
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what is peer to peer lending
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Peer-to-peer lending is a form of individual investing. Web sites match people who want money with people who are willing to lend it.
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Many computer software programs can help you get organized one highly rated business- plan program is
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business plan pro by palo alto software
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name some websites that match perople who want money with those willing to lend it
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Prosper Marketplace Zopa Lending Club Kiva Virgini Money CircleLending GlobeFunder
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what websites specialize in lending to students
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GreenNote and People Capital
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what is one potential drawback with using venture capital
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The potential drawback with venture capital is that these companies will often ask for as much as 60% ownership in your business. You could lose control of your business.
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if you're a very small company, which is funding source are you more likely to use venture capital or an angel investor? why?
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If you're a very small company you don't have a very good chance of getting venture capital. Since the failure of early Web start-ups, venture capitalists are willing to invest less are willing to invest in a business and they expect more return on their investment. You will stand a better chance of finding an angel investor.
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venture capitalist may ask for a
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hefty stake in your company as much as 60%
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You may be able to connect with potential investors through
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Angellist.com a non profit service that helps entrepreneurs and venture capitalist get to know each other
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to learn more about how to find venture capitalist you can visit
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the National Venture Capital Association's website (www.nvca.org)
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what are micro-loans and what criteria are used to award micro-loans
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The microloan program provides very small loans and technical assistance to small business owners. These loans are awarded on the basis of belief in the borrowers' integrity and the soundness of their business ideas.
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the SBA started a microloan demonstration program in 1991 this program provides
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very small loans up to 50,000$ and technical assistance to small- business owners.
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an SBIC must have a minimu of
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$5 million in capital and can borrow up to $2 from the SBA for each $1 of capital it has
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perhaps the best place for young entrepreneurs to start shipping for an SBA loan is
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A small Business Development Center (SBDC)
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how are SBDC funded
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jointly by the federal government and individual states, and are usually associated with state and community colleges and universities.
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SBDC can help you evaluate the feasibility of your
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idea, develop you business plan and complete you funding application- all for no charge
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a small business investment company can help small businesses from defaulting on loans by
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A Small Business Investment Company can help small businesses from defaulting on loans by identifying a business's trouble spots early, giving entrepreneurs advice, and rescheduling payments.
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describe the Small Business Development Center, and how they help small businesses
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Small Business Development Centers are funded jointly by the federal government and individual states and are usually associated with state universities. SBDCs can help a small business owner evaluate the feasibility of their idea, develop the business plan and complete the funding application, all of which is free of charge.
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Three important factors for success in you small business are
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a. knowing your customers b. managing your employees c. keeping efficient records
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one of the most important elements of small-business success is knowing
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the market
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once you have identified your market and its needs you must
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Once you have identified your market and its needs, you must fill those needs by offering top quality at a fair price with great service.
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what is one of the greatest advantages small businesses have over larger businesses
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One of the greatest advantages that small businesses have over larger ones is the ability to know their customers better and to adapt quickly to their changing needs.
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Three criteria critical for small business owners regarding managing employees are:
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a. hiring b. training c. motivating employees
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entrepreneurs best serve themselves and the business if
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they gradually recruit and groom employees for management positions, enhancing trust and support between them
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how do employees of small businesses often feel about their jobs? Why?
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Employees of small companies are often more satisfied with their jobs than their counterparts in big business. Often they find their jobs more challenging, their ideas more accepted, and their bosses more respectful.
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what are the challenges in small business regarding promotion and delegating authority
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Entrepreneurs who have built their companies often feel compelled to promote employees who have been with them from the start, even when those employees aren't qualified as managers. There is also sometimes the idea that you must promote, or can't fire, someone because they're family, and this can hinder growth
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small business owners say they need the most assistance in the are of
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accounting
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computers can help small business owner in the area of accounting by
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Computers can help a small business owner in the area of accounting by simplifying recordkeeping, and by enabling the business owner to follow sales, expenses and profits. A computer system can also help with inventory control, customer records and payroll.
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how can an accountant help in managing a small business
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An accountant can help make decisions such as whether to buy or lease equipment and whether to own or rent a building. Further, an accountant can help with tax planning, financial forecasting, choosing sources of financing, and writing requests for funds.
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Small business owners have learned they need help with
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a. legal advice b. tax advice c. accounting advice d. marketing e. finance
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in what ways can a lawyer help a small business owner
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Lawyers can help with such areas as partnership agreements, leases, contracts, and protection against liabilities.
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in what areas will a marketing research study help a small business
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a. where to locate b. whom to select as your target market c. what would be an effective strategy for reaching the market.
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how would an internet site be important if you aren't planning to sell products online?
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Your business will benefit from a presence online even if you don't directly sell online. For example, a restaurant could feature their menu and daily specials, the head chef's credentials, and photos of the restaurant.
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a necessary and invaluable aide is a
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competent experienced lawyer who knows and understands small businesses
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FindForms.com offers what
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a search tool that helps you find free legal forms form all over the web as well as advice, links, books, and more
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two other invaluable experts for small business owners are
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a commercial loan officer and an insurance agent
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how would a small business owner benefit from the advice of a commercial loan officer and an insurance agent
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A commercial loan officer can help a small business owner design an acceptable business plan, offer financial advice and lend money when necessary. An insurance agent will explain all the risks associated with a small business and how to cover them most efficiently with insurance and other means.
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describe some important sources of information for small business owners
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a. the Service Corps of Retired Executives (SCORE) b. local colleges which may have business professors who will advise small businesses c. other small-business owners d. local chambers of commerce e. the Better Business Bureau f. national and local trade associations g. the business reference section of the library h. and many small-business related sites on the Internet
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the Service Corps of Retired Executives (SCORE) has more than
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10,500 volunteers form industry, trade associations, and education who counsel small businesses at no cost (except for expenses)
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in general, what is the level of small businesses involvement in the global market place
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According to the U.S. Department of Commerce only about a third of small businesses now export, but half are expected to engage in global trade by 2018. Small and medium-sized business accounted for 99 percent of the growth in exporting in recent years.
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what are four hurdles small businesses face in the international market
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a. Financing is difficult to find b. would-be exporters don't know how to get started c. Potential global business people do not understand cultural differences d. The bureaucratic paperwork can be overwhelming
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small businesses have advantages over large business in the international market because
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a. Overseas buyers enjoy dealing with individuals rather than large corporate bureaucracies b. Small companies can begin shipping faster c. Small companies provide a wide variety of suppliers d. Small companies can give more personal service and more undivided attention
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parts of a business plan
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cover letter sec 1 executive summary sec 2 company background sec 3 management team sec 4 financial plan sec 5 capital required sec 6 marketing plan sec 7 location analysis sec 8 manufacturing plan sec 9 appendix
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business plan cover letter
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should summarize the most attractive points of you project in as few words as possible. Be sure to address the letter to the potential investor by name. To whom it may concern or dear sir is not the best way to win an investor's support
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business plan sec 1 executive summary
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Being with a two- three page management summary of the proposed venture include a short description of the business, and discuss major goals and objectives
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business plan sec 2 company backgroud
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Describe company operations to date (if any), potential legal consideration, and areas of risk and opportunity. Summarize the firms financial condition , and include past and current balance sheets, income, and cash flow statements, and other relevant financial records. Also include a description of insurance coverage
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business plan sec 3 management team
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include an organization chart, job descriptions of listed positions, and detailed resumes of the current and proposed executives. Managers should have expertise in all disciplines necessary to start and run a business. If not, mention outside consultants who will serve in these roles and describe their qualifications
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business plan sec 4 financial plan
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provide five-year projections for income, expenses, and funding sources. Explain the rationale and assumptions used to determine the estimates.
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business plan sec 5 capital required
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indicate the amount of capital needed to commence or continue operations, and describe how these funds are to be used.
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business plan sec 6 marketing plan
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Discuss strengths and weaknesses of the product or service. Compare pricing to the competition's. Forecast sales in dollars and units. Outline sales, advertising, promotion, and public relations programs.
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business plan sec 7 location analysis
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Provided a comprehensive demographic analysis of consumers in the area of the proposed business as well as a traffic- pattern analysis and vehicular and pedestrian counts
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business plan sec 8 manufacturing plan
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describe minimum plant size, machinery required, production capacity, inventory and inventory-control methods, quality control, plant personnel requirements and so on.
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business plan sec 9 appendix
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Include all marketing research on the product or service and other information about the product concept or market size. Provide a bibliography of all the reference materials you consulted. Demonstrate that the proposed company won't be entering a declining industry or market segment.
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angellist.com
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a website where you may be able to connect with potential investors it is a nonprofit service that help entrepreneurs and venture capitalist get to know each other
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to learn more about how to find venture capitalist visit
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national venture capital associations website www.nvca.org
