Introduction to Business (Chapters 1-3) – Flashcards
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Entrepreneur
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Someone who creates and runs a business; they take the risks that it involves.
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Risk
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The chance of losing something
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Rewards of Being an Entrepreneur
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Making your own rules; doing work you enjoy; creating greater wealth; helping your community.
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Risks of Being an Entrepreneur
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Potential Business Failure; unexpected obstacles; financial insecurity; long hours and hard work.
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Small Business Job Creation
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Small Business create 64% of all new jobs
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Skill
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Is an ability that's learned through training and practice.
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Aptitude
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Is a natural ability to do a particular type of work or activity well.
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Attitude
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Is a way of viewing or thinking about something that affects how you feel about it.
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Reasons to Study Entreprenuership
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Learning to think like an entrepreneur and develop a vision of life.
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Self Assessment
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Evaluating your strengths and weaknesses is an important part of being an entrepreneur.
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Increasing Your Business Potential
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Focus on business knowledge, financial skills, career exploration, community awareness, education and relationships.
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Characteristics of an Entrepreneur
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Courage, creativity, curiosity, determination, discipline, empathy, honesty, responsibility.
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Economics
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Social science concerned with how people satisfy their demands for goods (things you can buy) and services (things people do for a fee) when the supply of those goods and services is limited.
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Command Economy
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The government owns and manages the nation's resources and businesses
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Market Economy
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Suppliers produce whatever goods and services they wish and set prices based on what consumers are willing to pay
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Mixed Economy
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An economy where both government control and a market economy are intermingled together.
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Free Enterprise
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Another name for a market economy.
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Supply
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Is the quantity of goods and services a business is willing to sell at a specific price and a specific time.
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Demand
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Is the quantify of goods and services consumers are willing to buy at a specific price and a specific time.
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Supply and Demand Curves
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Is a graph that includes both a supply curve and a demand curve. It shows the relationship between price and the quantity of a product or service that is supplied and demanded.
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Competition
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Is common in a market economy. People are free to start and operate businesses that compete against each other.
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Profit Motive
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Is an incentive that encourages entrepreneurs to take business risks in the hope of making a profit.
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Economics of One Unit
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Is a calculation of the profit (or loss) for each unit of sale made by a business. Calculate the economics of one unit by subtracting the costs for the unit of sale from its selling price.
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Profit or Loss
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Selling Price - Cost
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Non-Profit Organization
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Operates solely to service the good of society. Non-profits are not governmental organizations. They operate much like for-profit businesses.
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Global Economy
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Is the flow of goods and services around the world.
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Profit Percentage
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(Profit/Selling Price) x 100
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Scarcity
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When there are not enough goods and services to meet the demand.
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Types of Businesses
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Manufacturing, Wholesaling, Retailing, and Service
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Business Start-Ups
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Service Based Economy in the 21st Centruy
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Unlimited Liability
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Means that a business owner can be legally forced to use personal money and possessions to pay the debts of the business
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Limited Liability
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Means that a business owner cannot be legally forced to use personal money and possessions to pay business debt.
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Sole Proprietorship
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Is a legally defined type of business ownership in which a single individual owns the business, collects all profit from it, and has unlimited liability for its debt.
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General Partnership
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Is a legally defined type of business organization in which at least two individuals share the management, profit, and liability.
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Limited Partnership
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Is structured so that at least one partner (the general partner) has limited liability for the debts of the business.
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Corporation
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Is a legally defined type of business ownership in which the business is considered a type of "person" (or "entity") under the law, and limited liability is granted to the business owner(s).
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Shareholders or Stockholders
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The owners of a corporation.
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C Corporation
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They are taxed as an entity by the federal government.
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Subchapter S Corporation
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Differs from a C corporation in how it is taxed. It is not taxed as an entity, rather its income or loss is applied to each shareholder and appears on their tax returns.
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Limited Liability Company
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Differs from a C corporation in how it is taxed. It is not taxed as an entity, rather its income or loss is applied to each shareholder and appears on their tax returns.
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Non-Profit Corporation
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Is a legally defined type of business ownership in which the company operates not to provide profit for its shareholders but to serve the good of society.
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Cooperatives
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Is a business owned, controlled, and operated for the mutual benefit of its members—people who use its services, buy its goods, or are employed by it.
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Advantages of a Sole Proprietorship
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Pride of Ownership, Ease of Start up and Closure, Retention of all profits
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Disadvantages of a Sole Proprietorship
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Unlimited liability, limited money, lack of management skills
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Advantages of a Partnership
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Ease of start up, availability of credit, combined knowledge
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Disadvantages of a Partnership
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Unlimited liability in a general partnership, management disagreements, frozen investment
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Advantages of a Corporation
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Limited liability, Ease of raising capital, perpetual life
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Disadvantages of a Corporation
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Difficult and expense to form, government regulation and paperwork, double taxation
