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Intro to Business BMIN 1000 Week 7/Chapter 3 Notes

by: Sofia Gold

Intro to Business BMIN 1000 Week 7/Chapter 3 Notes BMIN 1000

Marketplace > University of Colorado Denver > Business > BMIN 1000 > Intro to Business BMIN 1000 Week 7 Chapter 3 Notes
Sofia Gold
CU Denver
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About this Document

These notes cover Chapter 3 of the textbook, including all objectives, sections, and vocab. This chapter is on entrepreneurship, new ventures, and business/small business ownership. This chapter is...
Introduction to Business
Barry McConnell
Class Notes
Entrepreneurship, business, Introtobusiness, newventures, smallbusiness, smallbusinessmanagement, Entrepreneurship class, The Entrepreneurial Experience




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This 3 page Class Notes was uploaded by Sofia Gold on Saturday October 15, 2016. The Class Notes belongs to BMIN 1000 at University of Colorado Denver taught by Barry McConnell in Fall 2016. Since its upload, it has received 31 views. For similar materials see Introduction to Business in Business at University of Colorado Denver.

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Date Created: 10/15/16
Chapter 3 Notes Friday, October 14, 2016 7:36 PM What is a Small Business -a small business is hard to define -the U.S Departmentof Commerceconsiders a business small if it consists of less than 500 employees -the U.S Small Business Administration considers a business small depending on the industry -Small Business Administration (SBA): gov. agency charged with assisting small businesses -Small Business: independently owned business that has relatively little influence in its market The Importance of Small Business in the U.S Economy -Job creation:thousands of small businesses provide work for the public -Innovation: innovationsoften come from small businesses -Contributions to big business: small businesses often sell big businesses products Popular areas of small business enterprise -services: ranges from marriage counseling to dog walking-things that require little resources -retailing: sell products to consumers -construction:many constructionjobs are small and local -wholesaling: buy products in bulk in order to sell in areas convenientfor consumers -finance and insurance: often affiliates for larger firms -manufacturing: small businesses sometimesdo better in manufacturing than big businesses -transportation:i.e. taxis and planes -other: 4.3% of small businesses are "other" Entrepreneurship: the process of seeking businesses opportunities under conditions of risk -entrepreneur: businessperson who accepts both the risks and rewards involved in creating and operation a new business venture Entrepreneurship goals: every entrepreneur has a different goal-somewant money,some fame, some have no goal at all Entrepreneurship characteristics: many successful entrepreneurs share the same characteristics, such as resourcefulness and concern for the better good Starting and Operating a New Business Understanding distinctive competencies 1) Identifying niches in established markets -established market:one in which many firms competeaccording to relatively well-defined criteria -niche: a segment of a market that is NOT currently being exploited 2) Identifying new markets:Can come from reinventing ideas, to completelyinventing your own idea 3) First-moveradvantages: any advantage that comes to a firm because it exploits an opportunity before any other firm does Crafting a Business plan: document in which the entrepreneur summarizes his or her business strategy for the proposed new venture and how that strategy will be implemented 1) Set goals and objectives-what's the goal, what strategies will be used to completeit, and how will they be put into effect 2) Sales forecasting: there needs to be an understanding of the market in order to somewhatforecast sales revenue 3) Financial planning: a way in which the entrepreneur's work turns into dollars Starting the small business -buying an existing building -franchising: arrangement in which a buyer (franchisee) purchases the right to sell the good or service of the seller (franchiser) -starting from scratch 1) Customers(who and where) 2) Product price 3) Product supply and revenue 3) Product supply and revenue 4) Competitors 5) Marketing: creating something of value Financing the small business -venture capital companies:group of small investors who invest money in companieswith rapid growth potential -small business investmentcompany (SBIC): gov. regulated investmentcompany that borrows money from the SBA to invest in or lend to a small business 1) SBA Financial programs -small business developmentcenter (SBDC): SBA program designed to consolidate info. From various disciplines and make it available to small businesses 2) Other sources of financing: i.e. overseas investors Trends, Successes, and Failures in New Ventures Trends in Small Business Start-Ups 1) Emergence of E-commerce:the internet provides ways in which a small business can grow faster and easier 2) Crossoversfrom big business: entrepreneurs that leave big business to have their own start up 3) Opportunities for minorities and women:more and more minoritiesand women are creating businesses 4) Global opportunities: entrepreneurs find opportunities and ideas from foreign markets 5) Better survival rates: 1/2 of small business can last for at least 4 years, and 1/3 survive for 10+ years Reasons for failure 1) Managerial incompetenceor inexperience 2) Neglect 3) Weak control systems 4) Insufficient capital Reasons for success 1) Hard work, drive, and dedication 2) Market demand for products 3) Managerial competence 4) Luck NoncorporateBusiness Ownership Sole proprietorships:business owned and usually operated by one person who is responsible for all of its debts 1) Advantages- freedom and tax benefits 2) Disadvantages- unlimited liability: legal principle holding owners responsible for paying off debts of a business, and a sole proprietorship can limit a business based on managerial and financial limits Partnerships/generalpartnership: business with two or more owners who share in both the operation of the firm and the financial responsibility to its debts 1) Advantages- ability to grow with added talent and money -who invested what -who will profit what -who does what -consider partner breakup and asset distribution 2) Disadvantages- unlimited liability, and lack of continuity 3) Alternatives- limited partnership: types of partnership consisting of limited partners and a general (or managing) partner Limited partner: partner who does not share in a firm's managementand is liable for its only to the limits of said partner's investment General/activepartner: partner who actively manages a firm and who has unlimited liability for its debts Master limited partnership: form of ownership that sells shares to investorswho receive profits and that pays taxes on income from profits General/activepartner: partner who actively manages a firm and who has unlimited liability for its debts Master limited partnership: form of ownership that sells shares to investorswho receive profits and that pays taxes on income from profits Cooperatives:form of ownership in which a group of sole proprietorships or partnerships agree to work together for commonbenefits Corporations:business that is legally considered an entity separate from its owners and is liable for its own debts; owner's liability extends to the limits of their investment The corporate entity: -Can sue and be sued -Buy, hold, and sell property -Make and sell products -Commitcrimes and be tried and punished for them 1) Advantages- limited liability: legal principle holding investorsliable for a firm's debts only to the limits of their personal investmentin it; and continuity 2) Disadvantages- tender offer: offer to buy shares made by a prospective buyer directly to a target corporation'sshareholders who then make individual decisions about whether to sell double taxation: situation in which taxes may be payable both by a corporation on its profits and by shareholders on dividend incomes Types of corporations 1) closely held (or private): corp. whose stock is held by only a few people and is not available for sale to the public 2) publicly held (or public): corp. whose stock is widely held and available for sale to the public 3) S corp.: hybrid of a closely held corp. and a partnership, organized and operated like a corporation but treated as a partnership for tax purposes 4) limited liability (LLC): hybrid of a publicly held corp. and a partnership in which owners are taxed as partners but enjoy the benefits of limited liability 5) professional:form of ownership allowing professionals to take advantage of corporate benefits while granting them limited business liability and unlimited professional liability 6) multinational (or transnational): form of corp. spanning national boundaries Managing a corporation 1) Corporate governance: roles of shareholders, directors, and other managers in corporate decision making and accountability 2) Stockholder (or shareholder): owner of shares of stock in a corp. 3) Board of directors: governing body of a corp. that reports to its shareholders and delegates power to run its day to day operationswhile remaining responsible for sustaining its assets 4) Officers: top managementteam of a corp. Special issues in corporate ownership 1) Joint ventures -strategic alliance: strategy in which two or more organizations collaborate on a project for mutual gain -joint venture: strategic alliance in which the collaborationinvolves joint ownership of the new venture 2) Employeestock ownership plans (ESOP): arrangement in which a corporation holds its own stock in trust for its employees,who gradually receive ownership of a stock and control its voting rights 3) Institutional investor:large investor, such as a mutual fund or a pension fund, that purchases large blocks of corporatestock 4) Mergers, acquisitions, divestitures,and spin-offs -merger: the union of two corporationsto form a new corp. -acquisition: purchase of one companyby another -divestiture: strategy whereby a firm sells one or more of its business units -spin off: strategy of setting up one or morecorporate units as new, independent corps.


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