A formal document that describes a business concept

  A formal document that describes a business concept

What is the role and structure of the small business within the U.S. economy?

 

-       A small business is a business that is independent owned and operated, is not dominant in its field, and has fewer than 500 employees and less than $6.5 million in annual revenue.
- Small businesses are important to the economy for several reasons. They account for more than one-half of America's economic input, help foster innovation, supply larger companies do not or cannot supply themselves, supply products and services to consumers that large companies can not to will not provide, and employ approximately 50 percent of the private workforce.

 

What are the traits of an effective entrepreneur, and what are the different types of entrepreneurs?

 

-       -An entrepreneur is someone who assumes the risk of creating, organizing, and operating a business.
- Entrepreneur are innovative, risk-taking, individuals who are motivated to succeed and who are flexible and self-directed. They work well with people, posses good leadership skills, and are "system thinker".
- Not all entrepreneur are the same:
1. lifestyle entrepreneur look for business that matches their desire lifestyle
2. Micropreneur are satisfied with keeping the business small to achieve a balanced lifestyle
3. Home-based entrepreneur run their businesses out of their
homes
4. Internet entrepreneurs run their business strictly on-line
5. Growth entrepreneurs strive to create fast growing businesses and look forward to expansion
6. Social entrepreneur start businesses with a social mission in mind.
*intrapreneur are entrepreneurs who work in an entrepreneurial way within an organizational environment.

 

What are the advantages and disadvantages of franchising?

 

-       Franchise is a method of doing business whereby the business sells a company's products or services under the company's name to independent third-party operations.
- the advantages of franchising include that the business is a proven system of operation, franchises benefit from economies of scale, and the franchiser often offers training and marketing support as well as market research.
- The disadvantages of franchising include a lack of control over the look of store and the product or service being offered, start-up costs and monthly fee that must be paid to the franchisor, and a heavy work load. Too, franchises will be affected by negative news involving the franchisors or another franchises of the same company.

 

Why is the business plan crucial to small business success and what factors lead to small business failure?

 

-       _ A business plan outlines the goals and strategies of a company, including company information, marketing planes, financial forecasts, a risk analysis and operational plan. Neglecting to consider any of these options can doom a business from the start.
- The reasons new business fail include accumulating too much debt, inadequate management, poor planing and unanticipated personal sacrifices.

 

What resources are available to provide assistant and guidance to small business owners?

 

-       _ The small business Administration offers assistance in the legalities associated with starting and operating a business as well as education and training, financial assistance, disaster assistance, and counseling.
- SCORE volunteers provide free assistance by reviewing business plans, helping with tax planing and offering new ideas and fresh insignias. Other mentoring sources include industry-related conferences and other organizations, such as the EO.
- Business owners can receive formal classroom training at two and four year colleges and participate in internships with companies in similar industries for hands-on training.
Business incubators support start-up business by offering resources such as administrative services, technical supports, business networking and sources of financing that a group of start-up companies share.
- Advisory board offer guidance to new business owners, but they generally do not have authority to make decisions.
- Enterprise zones are geographic areas targeted for economic revitalizing by state and federal government. Businesses receive generous tax benefits for locating and hiring in these enterprise zones.

 

What are the potential benefits and drawbacks of each major source of small business financing?

 

-       The benefit of using cash borrowed from friends and family members is that, unlike banks or another lending institutions, these contacts often do not require a high rate of return or demand to see the business turn a quick profit. However, the potential drawback lis that these types of personal loans can sometimes be handled unprofessionally.
_ The benefit of credit cards is that they are convenient means acquiring short-term cash. however, the risk associated with using credit cards for initial business financing is high rate of interest charged on unpaid balances.
- When more money is needed that credit cards, friends, or family can provide, another source of financing are small business loans from banks and saving and loan institutions. Lines of credit or start-up loans are also available and can be used to bridge short term capital needs. Federal and state grants may also be available, depending on the nature of the business.
- Angel investors are wealthy individuals who are looking to invest in interring businesses that have a prospect of growth and returns. Generally, angel investors do not want managerial role in their investment and often have a longer timeframe to receive a return on their investment.
- Venture capitalists invest in a business in return for some form of equity or ownership in the business. Venture capitalists usually require playing an active role in the management of the company, so this funding option may not be attractive to business owners who aren't open to the idea of relinquishing control.

 

 

Advisory board

 

-       is a group of individuals who offer guidance to the new business owner. Such boards are similar to boards of directors in publicly held companies except that they generally do not have the authority to make decisions.

 

angel investors

 

-       Wealthy individuals who invest in start-up companies with high growth potential in exchange for a share of ownership.

 

bootstrap financing

 

-       financing with with using your own money, borrowing from friends and family and possibly trading services and products with vendors or clients.

 

business incubator

 

-       are organizations that support start-up businesses offering administrative services, technical support, business networking, sources of financing, and more that a group of start-up companies share.

 

business plan

 

-       A formal document that describes a business concept, outlines core business objectives, and details strategies and timelines for achieving those objectives

 

due diligences

 

-       conducting a reasonable investigation into the business history, operating and financial records, contracts, and valuation of the business so that a complete and full understanding of the business is achieved

 

enterprise zones

 

-       geographic areas targeted for economic revitalizing.

 

Franchise

 

-       A business established or operated under an authorization to sell or distribute a company's goods or services in a particular area

 

Franchisee

 

-       An individual or business that is granted the right to sell another party's product

 

Franchisor

 

-       Company that develops a product concept and sells others the rights to make and sell the products.

 

Goodwill

 

-       the intangible assets represented by a business's name, customer service, employee morale, and other factors- that might be lost with a change in ownership.

 

growth entrepreneur

 

-       strive to create fast-growing business and looks forward to expansion (these businesses are known as gazelles)

 

home-base entrepreneur

 

-       are entrepreneur s who run businesses out of their homes.

 

internet entrepreneur

 

-       creates bsinesses that open solely on the internet

 

intrapreneur

 

-       employees who work in an entrepreneurial way within an organizational environment.

 

lifestyle entrepreneur

 

-       look for more than profit potential when they begin their businesses.

 

Micropreneur

 

-       start their own businesses but are satisfied with keeping their businesses small in an effort to achieve a balanced life-style.

 

opportunity niche

 

-       a market that is not being adequately fulfilled

 

Service Corps of Retired Executive (SCORE)

 

-       offer workshops and counseling to small business at no cost.

 

Small Business Administration (SBA)

 

-       offer workshops and counseling to small business at no cost.

 

small business investment company (SBIC) program

 

-       are privete venture capital firms licensed by the SBA to make equity capital or long-term loans available to small companies.

 

social entrepreneur

 

-       set out to create innovative solutions int he social sector, they are entrepreneurs with a social mission.

 

social intrapreneur

 

-       build and develop ventures within a company that are designed to identify and solve large-scale social problems.

 

Venture capitalsists

 

-       are the next step in funding a start-up. Venture capital funding is generally sought when the business is more mature, and needs large sources of capital to take the business to the next step. Venture capitalists are corporate entities that use funds from anther investors and manage that money by investing it in businesses with prospect of high growth.