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KCIS Gr.12 Business Studies – Small Business Quiz

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90%
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What percentage of firms with employees have fewer than 20 people on staff?
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More than 20 million
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How many people in the U.S. earn business income w/o employees?
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Almost half (1/2)
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What number of sales in the U.S. are made by small businesses?
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60% – 80%
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What percentage of new jobs did small businesses generate over the last decade?
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Small businesses and minorities
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Small businesses are a launching pad for ___________ and encourage the prevalence of __________.
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Small businesses
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Many people think about business as large corporations but _____ __________ are a strong engine in our economy.
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An independent business having fewer than 500 employees, not dominant in its market.
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How does the SBA define a small business?
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*Small businesses’ sizes range from $500,000 to $25million in sales and from 100 to 1,500 employees. (1)Manufacturing business: fewer than 500 workers (2)Wholesalers: ;100 workers (3)Retailers: ; $6m in annual sales (4)Agricultural business: ; $750,000
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Types of small businesses?
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Small Business Administration: the principal government agency concerned with helping small U.S. firms.
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SBA stands for?
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Home builders, Florists, Hair salons, Auto repair, Funeral homes
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What are some business sectors most dominated or most likely to be a small firm/business?
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Hospitals, Nursing homes, Paper mills, Electric utilities, Oil pipelines
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What are some business sectors LEAST dominated or LESS likely to be a small firm/business?
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Service based
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Small businesses compete with the world’s largest organizations. Small businesses have a strong concentration in a few specific industries (especially _______ _____).
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Construction, Agricultural services, Wholesale trade, Services, Retail trade
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In what industries do small businesses play a significant role?
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Firm or business operated from the residence of the business owner. Home based firms make up 52% of small businesses in the U.S.
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What is a home-based business?
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From cleaners to fast-food and day-care; small businesses create jobs, create new industries and are the driver of innovation in the economy. A niche for small businesses, in their competition versus larger firms, is to offer consumers customized services.
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Why are small businesses the core of the economy?
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(1)Create new jobs (2)Account for 30% of U.S. Exports (3)Offer customized services (4)Create new industries (5)Encourage innovation
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Contributions of Small Businesses?
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A small business is an independently owned business having fewer than 500 employees. Generally it is not dominant in its field and meets industry-specific size standards for income and number of employees. A business is classified as large when it exceeds these specifications.
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Distinguish between small and large businesses.
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New industries are formed when small businesses adapt to shifts in consumer interest and preferences. Innovation and new technology can play a significant role. In addition, new industries may be created when both the business world and consumers recognize a need for change.
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How are new industries formed?
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About 7 out of 10 new (small) businesses survive at least 2 years or 3 in 10 fail within 2 yrs. 50% fail within 5 yrs. But by the 10th yr, 82% have closed permanently.
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Discuss the survival rate of small businesses.
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(1) Management shortcomings (2) Inadequate financing (3) Government regulation
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3 main reasons why small businesses fail?
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A written document that provides an orderly statement of a company’s goals, methods, and standards.
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What is a business plan?
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The business plan puts in writing all the reasons the firm can be successful. It contains the written soul of the firm. It is the document that secures financing and creates framework for the organization.
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Why is an effective business plan important to the success of a firm?
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(1) Executive summary: answers the who, what, where, when, why and how questions for the business. (2) Introduction that includes a general statement of the concept, purpose, and objectives of the proposed business. (3)Separate financial and marketing sections that describe the firm’s target market, marketing plan, and detailed financial forecasts that reflects the need for funds and when the firm is expected to break even (the level of sales at which revenues equal costs).
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What does a typical business plan include?
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Although many businesses exist without a business plan, the development of a business plan is an important document to help guide a small business. The business plan analyzes the risks involved in the business, lays out the mission and vision, and provides details on the marketing and financial plans.
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How does a business plan increase the likelihood of small business success? How to create a business plan.
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Small businesses rely strongly on debt financing. Trade credit is purchasing goods or equipment from a supplier ho finances the purchase by delaying the date of payment. The reliance on debt financing furthers financing risk for small businesses. Many businesses do not qualify for any type of financing, and the business owner must use personal funds such as savings, personal credit card and/or relying on family and friends.
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Sources of Small Business Financing?
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Small Business Administration: the principal government agency concerned with helping small U.S. firms.
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SBA stands for?
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(1) Loan Guarantees (2) Microloans: small business loans often used to buy equipment or operate a business. (3) Small Business Investment Companies (SBICs) (4) Active Capital: SBA Loans
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What financial assistance is provided by the SBA?
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Seldom
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How often does the SBA provide direct business loans?
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No. Instead it guarantees small business loans made by private lenders, banks and other institutions. This includes “microloans” of up to $35,000 to start-ups and other small firms.
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Does the SBA provide provide outright grants start or expand small businesses?
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$13,000
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How much is the average “microloan” with a term of 6 years?
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Equipment or operate a business but ot to buy real estate or pay off other loans.
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What can “microloans” be used to purchase?
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(1) Set-Aside Programs such as “Government Contracts” (over 23% and 5% for women and minorities) (2) Business Incubators
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What are some other Specialized Assistance for small businesses?
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Local programs designed to provide low-cost shared business facilities to small start-up ventures.
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What are business incubators?
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Small Business Development Centers
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SBDC stands for?
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Hispanics
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Currently what minority group is the largest group of business owners?
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Money invested in a business by another business firm or group of individuals in exchange for an ownership share.
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What is Venture Capital?
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A contractual business arrangement between a manufacturer or other supplier, and a dealer such as a restaurant operator or retailer.
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What is Franchising?
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The franchisor and franchisee are the key parties in a franchise agreement. The franchisor is a large business firm that permits a small business owner (franchisee) to market and sell its products under its brand namefin return for a fee.
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Who are the key parties in a franchising agreement?
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Benefits to the Franchisor include opportunities for expansion and greater profits. Benefits to the Franchisee include the name recognition, quick start-up, support from the franchisor, and the freedom of small-business ownership.
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What are the benefits to both parties of franchising?
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ADVANTAGES: -Prior Performance Record -Recognizable Company Name (Brand) -Proven Business Model -Tested Management Program -Savings through Volume Purchases DISADVANTAGES: -Franchise Fees -Future Payments (Royalties) -Linked to Reputation and Management -Franchise Agreement Restrictions -Tight Control
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What are some other Benefits and Problems of Franchising?
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The legal formation of any small business falls into the category of corporation (19%), partnership (9%) or sole proprietorship (72%).The liability associated which each form is a key issue.
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What are the 3 legal forms or structures of business ownership?
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Business ownership in which there is no legal distinction between the sole proprietor’s status as an individual and his or her status as a business owner. This one is the most common. There is only one owner. A major disadvantage is the owner’s personal financial liability for all debts of the business.
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What is Sole Proprietorships?
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The Uniform Partnership Act (which regulates this ownership form in most states) define partnership as an association of two or more persons who operate a business as co-owners by voluntary legal agreement. Most partnerships have the disadvantage of being exposed to unlimited financial liability. Each partner bears full responsibility for the debts of the firm and each is legally liable for the actions of other partners.
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What is Partnership?
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A legal organization with assets and liabilities separate from those of its owner(s). Corporation is a separate legal entity, its stockholders have only limited financial risk. A major disadvantage for a corp. is the double taxation of corp. earnings, (pay federal, state and local income taxes on its profits, its owners (stockholders) also pay personal taxes on profits they receive from the corporation in the form of dividends.
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What is a Corporation?
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Corporations that do not pay corporate taxes on profits; instead, profits are distributed to shareholders, who pay individual income taxes.
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What is S – Corporation?
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Corporation that secures the corporate advantage of limited liability while avoiding the double taxation characteristic of a traditional corporation.
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What is Limited – Liability Corporation (LLC)?
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A business in which workers buy shares of stock in the company that employs them.
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What is Employee – Ownership?
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backbone
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Family-owned companies are considered to be the _______ of American businesses.
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An organization whose goal do no include pursing a profit. This is the main distinction from other organizations.
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What is a Not-for-Profit Corporation?
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Public ownership occurs when a unit or agency of government owns and operates an organization. “Parking structures, water systems, turnpike authority”.
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What is Public Ownership?
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Collective ownership establishes an organization referred to as a cooperation (or co-op), whose owners join forces to operate all or part of the activities in their firm or industry.
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What are Customer-Owned Businesses?
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(1) Domestic (2) Foreign (3) Alien
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Identify the types of corporations?
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(1) Where to incorporate and (2) the corporate chater.
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What are the two key elements of the incorporation process?
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-Stockholders -Board of Directors -Top Management -Middle Management -Supervisory Management
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What are the 5 main levels of corporate ownership and management?
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In a merger, two or more firms combine to form one company. The different mergers are vertical, horizontal, and conglomerate. An acquisition occurs when one firm purchases another. A joint venture is a partnership between companies formed for a specific undertaking.
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Describe mergers, acquisitions, and joint ventures?
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In a merger, two or more firms combine to form one company. The different mergers are vertical, horizontal, and conglomerate. An acquisition occurs when one firm purchases another. A joint venture is a partnership between companies formed for a specific undertaking.
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Describe mergers, acquisitions, and joint ventures?