Chapter 5: Small Business Flashcards Preview

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Flashcards in Chapter 5: Small Business Deck (11)
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1
Q

Characteristics of attractive small-business industry

A
  • Low initial capital investment
  • Some special skill requirements
  • High growth and profit potential
2
Q

Industries that attract small businesses

A
  • Distribution (retailing, communications, wholesaling)
  • Service (care, repairs, restaurants)
  • Production (construction)
3
Q

Characteristics of Entrepreneurs

A
  • “Entrepreneurial spirit”
  • Desire for independence
  • Desire to determine own destiny
  • Willingness to find and accept a challenge
4
Q

Motivations towards becoming an entrepreneur

A
  • Wanting to be ‘own boss’
  • High-tech opportunities
  • Lost a job (jobs unavailable)
  • New product-idea
  • A great new opportunity
5
Q

Advantages of ‘Smallness’

A
  • Personal relationships with customers and employees
  • Ability to adapt to change
  • Simplified record-keeping
  • Independence
  • Advantages paired with sole-proprietorships
6
Q

Three purposes of a business-plan

A
  • Communication
  • Management
  • Planning
7
Q

Types of Franchises

A
  • Brand-name items
  • Licenses to sell products
  • Brand names, techniques or services offered to franchisee (not real product)
8
Q

Advantages of franchising to the franchisor

A
  • Fast and well controlled distribution of its product
  • No need to construct and operate its own outlets
  • More working capital available for expanded production for advertising
  • Franchising agreements maintain product and quality standards
  • Motivated workforce of franchisees
9
Q

Advantages of franchising to the franchisee

A
  • Opportunity to start a proven business with limited capital
  • Guaranteed customers
  • Franchisor available for advice and guidance
  • Materials for local promotional campaigns and participation in national campaigns
  • Cost savings when purchasing in cooperation with other franchisees (Fish-Aways, Steers, Debonairs)
10
Q

Disadvantages of franchising to the franchisor

A
  • Failure of the franchisee to operate franchise properly

- Disputes with and lawsuits by franchisees over the terms of the franchise

11
Q

Disadvantages of franchising to the franchisee

A
  • Franchisor retains a large amount of control over the franchisee’s activities
  • Franchisor opening competing franchises within the franchisee’s market