Entrep. Review #2 Terms to study for test

Question Answer
Government Does NOT determine supply & demand in the marketplace.
Sole Proprietorship Easiest form of business to create. One owner. Owner is responsible for all debts in the business.
Limited Liability Company "LLC" If a business owner wants to protect their personal assets this is the kind of business ownership they should have.
Partnership A legally defined type of business organization in which at least 2 individuals share the management, profit & liability.
Corporation A legally defined type of business ownership in which the business is considered a type of “person” (or “entity”) under the law, and limited liability is granted to the business owner(s).
Business's fixed costs Insurance premium, rent, salaries
Business variable costs materials, commissions, Shipping & Handling
Major Components of a Business Plan Executive Summary, Financial Plan, Analysis of Business Situation, Description of Marketing/Promotion
Characteristics of a Brick & Mortar Business Geographically limited, Immediate product availability, sample products before purchase
Characteristics of an Internet Business Increased market reach, lower startup costs, reduced overhead
Equity Funding You have an idea for a new company & need money to start your business. You find an investor willing to give you money in exchange for a portion of your new company. This is the type of funding the investor is willing to give you.
Click & Mortar Store Where they have an online store as well as a store you can go shopping in (example Walmart)
Which of the 5 C's of credit determines the ability to repay a loan? Capacity
Purpose of a business plan Present an outline for funding – Tool used to show potential lenders your business idea.
Imports Buying goods from other countries to sell in your own country
Opportunity Cost The cost of an alternative that must be forgone in order to pursue a certain action. The benefits you receive by taking an alternative action. The next best thing.
Own your own business. Fixed costs are $50,000 a year. Selling price is $15 per unit with a variable cost of $5 per unit. How many do you sell to breakeven? 5,000
Bootstrapping Entrepreneur starts a company using personal finances without external help or capital.
Sources for financing business Venture Capitalist, Angel investor, personal savings
Market All consumers who share similar needs/wants and who have the ability to purchase a product.
4 P's of Marketing Product, Price, Place, Promotion
Market Share Portion of the market controlled by a company
Start Up Expenses New business is formed and this is the money spent on inventory, etc.….
Liabilities Section If a company owes $100,000 this section is where you find it in on the balance sheet
Location Critical factor in business especially in brick & mortar retail
Crowdfunding New, relies on receiving small business contributions from many sources. “Kickstarter”
Patent & Copyright 2 legal ways to protect your ideas or intellectual property
Disadvantage of owning your own business You could lose your investment
Variable Costs Costs that fluctuate in proportion to goods or services a business produces.
Purchase Insurance Entrepreneurs can purchase insurance to help transfer some of their risk
Supply Amount of good or service that producers are willing & able to make available at a certain price
Investor Funding If you want to find an investor willing to give you money for a percentage of your business. Bob finds an investor willing to give him money for a percentage of his business.