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actuating/directing

answer

regulating the activities or course of activities of an organization; to guide and/or supervise the activities of an organization; refers to those activities which encourage subordinates to work toward the achievement of the company's goals

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angels

answer

private investors who are willing to supply financing for new and or risky small venture start ups

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consumerism

answer

the emphasis is placed on providing to customers products and services that are safe, reliable, and honestly advertised; also a social movement that seeks to strengthen the rights of consumers relative to sellers

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controlling/evaluating

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a management function which compares organizational and individual performance with predetermined standards of expected results

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copyright

answer

the registered right of a creator to reproduce, publish, and sell the work which is a product of the intelligence and skill of that person

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corporate refugees

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those individuals who flee th bureaucratic environment of big business by going into business for themselves

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delegation of authority

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a superior's act of granting to subordinates, on the basis of competence, the right to act or decide

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entrepreneur

answer

one who organizes, manages, and assumes the risk of a business firm adventures

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goodwill

answer

intangible asset such as the name of the funeral home; also an intangible asset which enables a business to earn profit in excess of the normal rate of profit earned by other businesses of the same kind

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intangible asset

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a type of asset that is not able to be physically touched but is retained by a small business because of its genuine value

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management

answer

the art and science of motivating people toward the achievement of a goal; is a process of planning, organizing, staffing, directing and controlling activities in an organization in a systematic way in order to achieve a common goal

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organizing

answer

to arrange or constitute in interdependent parts, each having a specific function or relation with respect to the whole; the way in which work is arranged and distributed among members of the firm

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patent

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the registered right of an inventor to make, use, and sell an invention

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planning

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the function of determining in advance what needs to be accomplished in order to achieve a particular goal

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tangible assets

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a physical asset that possesses genuine value

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trademark

answer

an intangible asset that is a distinct name, sign, or symbol that the federal government grants exclusive rights to use for a specified period of time

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artisan entrepreneur

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a person with primary technical skills and little business knowledge who starts a business

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founder

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an entrepreneur who brings a new firm into existence

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internal locus of control

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a belief that one's success depends on one's own effort

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opportunistic entrepreneur

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a person with both sophisticated managerial skills and technical knowledge who starts a business

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refugee

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a person who becomes an entrepreneur to escape an undesirable situation

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reluctant entrepreneur

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a person who becomes an entrepreneur as a result of some severe hardship

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business

answer

an organization that takes inputs of raw materials, capital, labor, and management skills to produce useful outputs of goods and services so as to earn a profit; a person, partnership, or corporation engaged in commerce, manufacturing or services as a profit seeking enterprise or concern

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trends of small business

answer

- actively managed by the owners - highly personalized - largely local in its area of operations - largely dependent on internal sources of capital - independently owned and operated and does not dominate the field of operation

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small business administration act

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principal government agency concerned with the financing, operation and management of a small business; established by the small business act in 1953 to combat growing monopolies by the larger business; purpose is to encourage competition by small business as a basis for free enterprise

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mining/manufacturing

answer

500-1500 employees

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wholesale

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500 employees

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retail

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25-100 employees

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service

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25-300 employees

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dollar sales volume

answer

3.5 million on up depending on the type of business

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manufacturing business

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makes finished goods from raw materials by hand or machinery

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service business

answer

a business that provides a service as opposed to a product

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economic contributions of small business in the US

answer

interdependence of business: small businesses are essential to enable a few large ones to concentrate on those economic activities where their efforts are more effective; small business creates 52% of all private employment and 51% of the nations total output of goods and services stimulating economic competition: economic development of the US has resulted form the efforts of small business innovation: individuals and small businesses provide the major source of new ideas, inventions and innovations

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external factors that influence management

answer

competitors: important for managers to recognize and understand the activities of their competitors in a market in order to make decisions about pricing, product modification, and advertising technological change: this can lead to a decrease in price due to the discovery of a cheaper method for manufacturing a product (steel) or can result in an organization's product becoming obsolete economic conditions: inflation rate, interest rates societal values and attitudes: environment, 7-11 vs Playboy, cremation political process: federal, state, and local taxes physical condition: natural events; sunny, rainy, snowy, tornadoes, hurricanes, earthquakes

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internal factors that influence management

answer

- employees - research and development - financing - marketing - advertising

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management skills

answer

technical skill: abilities necessary to carry out a particular task human skills: ability to work with, motivate and direct individuals toward a common gal conceptual skills: ability to understand the degree of complexity in a given situation and to reduce that complexity to a level at which specific courses of action be derived

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management activities

answer

- planning - organizing - motivating: energizing, channeling and sustaining people's behavior - directing - controlling

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organizational goals: two main functions

answer

- goals affect the way the organization relates to the environment , serving to clarify the connection between organizational activities and other organizations, groups and individuals in the environment - goals build the internal activities of the organization, providing employees knowledge of task scope, decision, guidelines, methods of motivation, performance criteria, and a rational for organizing

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purpose

answer

reason for the organization's existence, without it the organization need not exist; is determined by its creators

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mission

answer

the path that managers choose to achieve their purpose

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legitimacy

answer

the acceptance of the organization's activities by non-members of the organization

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plans

answer

written statements of actions and decisions that will lead the company to its goals or mission

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long range planning

answer

over 10 years

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intermediate planning

answer

2-9 years

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short-term planning

answer

1 year or less

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external causes of failure in small business

answer

human resource planning: developing a comprehensive strategy for meeting future human resource needs capital shortages: the lack of available money; securing funds or good interest rates, maintaining cash tax burdens government regulations: EPA, OSHA, EEOC, FTC, IRS consumerism

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internal causes of failure in small business

answer

- lack of expertise; mismanagement - financial shortages; poor cash flow - human resource management: a process of acquiring training, developing, motivating and appraising a sufficient quantity of qualified employees to perform necessary activities

question

reasons for selling a small business

answer

- old age, illness, retirement - desire to relocate in a different part of the country - made a decision to accept a position at another company - the owner is about to lose a contract or franchise - proposed changes in road routes or zoning

question

profit potential

answer

- secure financial statements from independent audit for accuracy and completeness of financial statements of the business - insist upon seeing the records of bank deposits for at least 5 years or for the length of time the business has been operating, which ever is shorter - ask to see the owner's copy of his or her tax returns, which any honest seller should be willing to show - make certain all back taxes have been paid and that interest payment can other current obligations are not in arrears - make sure there are no liabilities due from federal, state, or city fines and penalties due for violations

question

tangible assets

answer

examples: accounts and notes receivable, fixtures, the building, prepaid expenses, supplies, equipment inventories: - timely, fresh, well balanced selection of materials and merchandise - consist of items the public wants - raw materials and supplies that will be used up within a reasonable production time - "close buying" is essential to profit in any business when just starting - don't buy "dead" stock that the seller lists as worth, (original value)- the loss rightly the original buyers

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intangible assets

answer

goodwill: - the name of your funeral home - is subjective - every business has good will because of its public acceptance over the years - the difference between the selling price and appraised value of the tangible and other intangible assets - leases and other contracts: favorable lease in a good location is a valuable business asset; new owner must determine if lease is transferable or must be re-negotiated and the terms - patents: protective product ideal from unauthorized or infringement for a limited time - copyrights: offer the best protection for books, periodicals, and orally presented materials; difficult to protect against infringement trademarks: provide protection against unfair competition in business, chief function is to identify certain products and to create and maintain a demand for them

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competition

answer

- a prospective buyer should look into the extent, intensity, and location of competing businesses - is the competition losing or gaining on the business

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human resources

answer

- are there qualified people presently employed - how many will depart with the old owner - will key employees stay or leave

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reduction of uncertainties: successful going concern has been demonstrated

answer

- an ability to attract customers - an ability to control costs - an ability to make a profit - have a track record under actual marketing conditions

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acquisition of ongoing operations and relationship a buyer usual obtains:

answer

- personnel - inventories, equipment and fixtures - physical facilities - established banking facilities - ongoing relationships with trade suppliers

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a bargain price: must be determined by prospective new owners: reasons for low price may be as follows

answer

- business is losing money - the location is deteriorating - sellers may intend to re-open another business in competition

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market value approach: valuation based upon the sale of similar businesses

answer

- depends on the similarity of business - recent sales of like business - real estate agents rely extensively on this method

question

replacement cost approach: asset valuation that relies on replacement value of the business

answer

- attempts to find replacement value of tangible assets being purchased - starts with most recent balance sheets - this method usually ignores intangible assets - difficult if small business has poor business records, need good accounting records

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liquidation value approach: asset based method that equates the salvage value of the business assets

answer

- provides a "minimum" value, worst case scenario - is the worst method for the seller

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earnings approach: valuation bases on the business's part earning record

answer

- centers on estimating the amount of potential income that may be produced by the business - capitalization of the average earning of the company; usually 5 year average - the average annual earnings are divided by expected rate of return - funeral home rate of return is about 12.9% before taxes

question

terms of sale

answer

- cash - owner financing - third party financing

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sources of new venture ideas

answer

- prior work experience - hobbies - deliberate search - personal experience - accidental discovery

question

preparing a business plan

answer

a written description of a new idea that projects marketing, operational, and financial aspects of a proposed business

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