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Foundations of Business (5th Edition) Chapter 5

Terms in this set (18)

small business
one that is independently owned and operated for profit and is not dominant in its field
3 small business industries
distribution
production
service
pros of smallness
personal relationships
ability to adapt to change
simplified record keeping
independence
cons of smallness
risk of failure
limited potential
limited ability to raise capital
business plan
a carefully constructed guide for the person starting a business
small business administration (SBA)
a governmental agency that assists, counsels, and protects the interests of small businesses in the United States
service corps of retired executives (SCORE)
a group of business people who volunteer their services to small businesses through the SBA
small business institutes (SBI's)
groups of senior and graduate students in business administration who provide management counseling to small businesses
small business development centers (SBDC)
university-based groups that provide individual counseling and practical training to owners of small businesses
venture capital
money that is invested in small firms that have the potential to become very successful
small business investment companies (SBIC)
privately owned firms that provide venture capital to small enterprises that meet their investment standards
franchise
a license to operate an individually owned business as though it were part of a chain of outlets or stores
franchising
the actual granting of a franchise
franchisor
an individual or organization granting a franchise
franchisee
a person or organization purchasing a franchise
3 types of franchising
1. A manufacturer allows retail stores to sell a certain brand-name item (gas)
2. A producer licenses distributors to sell a given product to retailers (soft drinks)
3. A franchisor supplies brand names, techniques, or services instead of a product (Denny's)
advantages of franchising
fast distribution
franchisee will bring in more sales
guaranteed customers
advise from franchiser
disadvantages of franchising
franchiser has control
contract disputes lead to law suits
success can lead to lost business
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