Chapter 3 – Starting A Small Business

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entrepreneurship
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accepting the risk of starting and running a business
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market
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people with unsatisfied needs and wants who have both the resources and willingness to buy
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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 owners
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sole proprietor
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a business that is owned and typically managed by one person
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mentor
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an advisor experienced in a particular job or type of business who acts as a guide for someone entering a field
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chain store
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a business location that is one of many stores, all of which have central management, and share a brand name
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company store
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a store owned and operated by a chain
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franchise
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a person who buys a franchise
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franchisor
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a person or entity that owns the rights to a franchise
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cannibalization
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a situation in which a new franchise takes away customers from an existing franchise nearby
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sole proprietorship
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a business operated by a sole proprietor
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unlimited liability
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the responsibility of business owners for all the debts of the business
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partnership
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a legal from of business with two or more owners
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general partnership
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a partnership in which all owners share in operating the business and in assuming liability for the business’s debts
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limited partnership
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one or more general partners and one or more limited partners
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general partner
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an owner who has unlimited liability and is active in managing the firm
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limited partner
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an owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment
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limited liability
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limited partners are not responsible for the debts of the business beyond the amount of their investment; personal assesses are not at risk.
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master limited partnership
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acts like a corporation and is traded on a stock exchange like a corporation, but taxed like a partnership and thus avoids the corporate income tax
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limited liability partnership
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All partners are limited partners and not responsible for the debts and other liabilities of other partners
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corporate governance
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the system used to govern a corporation so that the interests of corporate owners are protected
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board of directors
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the group ultimately responsible for the decisions of a business
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conventional corporation
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a from of business ownership that provides limited liability
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double taxation
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corporation taxed and dividends taxed
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dividends
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earnings distributed to stockholders
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S corporation
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a legal form of corporation for which the biggest advantage is its tax status, which is the same as a sole proprietorship
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venture capitalists
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people or companies that invest money in businesses in return for a stake in them
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angel investors
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people who invest their own funds in a business in exchange for a stake in the company
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small business administration
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a U.S. government agency that advises and assists small businesses by providing management training, financial advice, and loans

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