Business-Chapter 5&6 Key Concepts – Flashcards

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question
Why does the success of strategic and marketing plans depend on a sound financial plan?
answer
give you realistic idea of what you will need, quality of your plan will affect the success of your business, impact your ability to qualify for financing, a concise/realistic financial plan will give lenders confidence in your business knowledge and skills no financial plan= no business
question
Name the three types of required capital for a business.
answer
start up capital, reserve capital, operating capital
question
Maria plans to open a bakery and has saved up just enough to buy all the business assets such as equipment, display racks and ingredients. Is she ready to start her business? Why or why not?
answer
No, Maria is not ready to open up her business since she just purchased the assets needed to start the business, she needs operating and reserve capital
question
List at least three assets that are commonly needed by businesses.
answer
office furniture, computer hardware, store equipment
question
Perry is opening a book store. He needs a copy machine and has priced them between 500 and 1,200. When estimating his required costs, which figure should he use? Why?
answer
higher figure
question
How does a projected income statement differ from a income statement?
answer
projected income: estimate plan-hope for the best, estimate of the way in which income amounts will change over the next few months or years income statement: report revenue, cost of merchandise, sold operating expenses and net income/loss
question
Liz owns Fun in the Sun swimsuit boutique. A department store is closing, and she can buy out its swimsuit inventory for a fraction of its wholesale cost. Which kind of capital should she use for the purchase?
answer
reserve capital because unexpected situation
question
Describe the ideal location for a music shop.
answer
online
question
Give an example of one short term goal and one long term goal for the new owner of a health food store.
answer
short term: rent the store in a good location long term: develop business clients
question
What six reports did Molly Singer include in her financial plan for Cricket Lane Flowers?
answer
1) Statement of Required Start Up Capital 2) Projected 12 Month Income Statement 3)Projected 12 Month Statement of Cash-Flows 4) Projected 3 Year Income Statement 5) Project 3 Year Income Statement of Cash Flows 6) Projected 3 Year Income Statement of Balance Sheet
question
List five common start-up costs.
answer
1) inventory needed to open the business 2) equipment, fixtures, display cases 3) security deposit for rented space 4) advertising/promotions 5) insurance
question
How do operating costs differ from start-up costs?
answer
operating costs are ongoing expenses for operating a business
question
Why do business owners need a reserve fund?
answer
money that they may be needed at a later date for growth, money availablee for the future expansion of a business repairs
question
Georgia tries to think of everything before opening up her catering business. She rented a space with a kitchen, bought plenty of cooking equipment, stocked up on food, and hired an assistant. However, during her first week in business, she did not have a single customer. What crucial aspect of start-up did Georgia overlook?
answer
advertising
question
Jamal lives in a house his parents left him, he owns a ten year SUV, and he wants to open a bike shop. What kind of personal funding do you think Jamal should consider to provide financing for his shop?
answer
loan from commercial bank because he has collateral and capital
question
Rachel lives at home and has recently graduated from cosmetology school. She wants to open her own salon. Is she more likely to get financing from her wealthy uncle, a local bank, or a large financial institution? Explain your answer.
answer
wealthy uncle She does not the 5 C's of credit
question
How would a bank that is considering making a business loan describe, "capacity"
answer
Do they have the amount to pay back, owe to much.
question
Explain how the Small Business Adminstration help business owners get financing.
answer
Applying for a SBA Loan 1) Apply to a bank or other financial institution for a commercial loan and wait for approval or denial 2) if denied- complete an application for an SBA loan 3) SBA examines application 4) if approved, SBA authorizes the bank to give you the funding
question
Catalina plans to expand her candle- and soap making business. She wants to approach a private investor for financing but does not know which of the successful people in her community would be interest. How can she find an "angel"?
answer
Catalina can find an angel by turning to SBA which set up Angel Capital Electronic Network which is a website that lists small businesses that are looking for investors
question
Mark wants to open a gyro restaurant in his family's neighborhood even though it is economically depressed. Where should he go for funding?
answer
going to regional office of SBA
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