Chap 3 Flashcards
what is needed to define a small buisness
- Size
- economic criteria
what are the advantages and disadvantages of small businesses
- they can set up w a small capital and enjoy quick returns while being flexible to handle the change of the market
- lack of finance, poor operations management, lack of experience, poor financial management.
what are the different forms of buisness
- proprietorship
- partnership
- corporation
what is a proprietorship
its a form of buisness with single owner who has unlimited liability, controls all decisions and receives all profits
what is partnership
2 or more people having unlimited liability who have pooled resources to own a buisness
what is corporation
its a separate legal entity that is run by stockholders having limited liability.
what are the factors that influence the choice of a form of buissnes
- ownership
- libaility of owners
- costs of starting buisness
- continuity of buisness
- transferability of interest
- capital requirements
-management control
-distribution of profits and losses
-attractiveness for raising capital
what is the characteristics of small buisnesses
-they work with known products and services aimed at incremental growth
- their innovation is focused on sales, marketing and market expansion
what is the characteristics of entrepreneurial ventures
- they aim at rapid growth
- apply innovation and creativity at every node of the buisness process
- work w new offering
-face a lot more uncertainties - they need continuous work on mitigating uncertainty and risk reduction
what are the general criteria for defining a small buisness based on size
- financing is supplied by 1 person or a smal group
- the firms operations are geographically localized
- compared to other firms its small
- nbr of employees is smaller than 100
what are the economic criteria to define a small buisness
- market share
- independence
- personalized management
- technology
- geographical area of operation
what are some contributions that small businesses do in developing countries
- large employment opportunities
- economical use of capital
- balanced regional development
- equitable distribution of wealth and decentralization of economic power
- unregulated growth of large-scale industries
- dispersal over wide areas
- higher standard of living
- mobilization of locals resources
- innovative and productive technology
- less dependence on foreign capital
- promotion of self employment
- protection of self employment
- shorter gestation period
14.facilicate development of large scale enterprises - individual tastes, fashions and personalized services
- more employment creation capacity
what are the 4 characteristics of small buisnesses
- market share
- independence
what are causes of small buisness failure
- inadequate management
- inadequate financing
