Small Business Management Exam 1

A small business is one that is?
Activity managed by the owners
Highly personalized
Largely local in it’s area of operations
Largely dependent on enternal sources of capital.
Independently owned and operated and does not donate the field of operation.
A successful going concern has demonstrated?
An ability to attract customers.
Can control cost.
Can make a profit.
Has a track record under actual marketing conditions.
Causes of business failure?
External Problems:
Human Resource Planning
Capital Shortages- Lack of available money.
Tax Burdens
Government regulations
Consumerism

Internal Problems:
Lack of expertise
Financial Shortages
Human resource management

Economic contributions of small business in the U.S.?
Interdependence of business-small business are essential to enable a few large ones to concentrate on those economic activities where their efforts are more effective. S.B. creates 52% of all private employment and 51% of the nations total output of goods & services (as of 2002).

Stimulating economic competition

Innovation

Intangible and Tangible asset
Intangible: is a type of asset that is not able to be physically touched but retained by a small business.

Tangible:Physical asset that possess ginuine value.

Long range planning
Over 10 years
Intermediate planning
2-9 Years
Short-term planning
1 year or less
Major source of new ideas come from?
Innovation
Management Activities
1. planning – selection ordering of tasks to achieve goals
2. organizing – assign/coordination of tasks, resources to perform tasks
3. motivating – goal directing force – organize – give director to tension caused by unsatisfied need
4. directing – process – motivation leading and influencing activities of subordinate
5. controlling – collecting, evaluating, comparison of information in order to correct improper performance
Management Skills
1. technical skills – these are the abilities necessary to carry out specific tasks that have been assigned
2. human skills – the ability to work with, motivate, and direct individuals for to a common goal
3. conceptual skills – ability to understand the degree of complexity in a given situation and to reduce that complexity to a level at which specific course of action can be determined
Organizational goals two main functions?
A. Goals affect the way the organization relates to the environment, serving to clarify the connection between organizational activities and other organizations, groups, and individuals in the environment.

B. Goals guide the internal activities of the organization, providing employees knowledge of task scope, decision guidelines, methods of motivations performance criteria, and a rational for organizing.

Reasons for selling a business
a. old age/illness
b. desire to re-locate in a different part of the country
c. decision to accept a position with another company
d. owner is about to loose a big contract
e. proposed changes in road routes or zoning
Small Business Administration Act
A principle government agency concerned with the financing, operation, and management of a small business

, Established by the small business act in 1953 to combat growing monopolies by the larger businesses.

Mining/Manufacturing
500-1500 Employees
Wholesale
500 Employees
Retail
25-100 employees
Service
25-300
Types of small business activity?
– Manufacturing business
– Merchandising business
– Service business
Valuation approach methods
1. Market Value Approach 2. Replacement Cost Approach 3. Liquidation Value Approach 4. Earnings approach (Pg. 6 A-D)
Angels
PRIVATE INVESTORS WHO ARE WILLING TO SUPPLY FINANCING FOR NEW AND OR RISKY SMALL VENTURE STARTUPS
Artisan entrepreneur
a person with primarily technical skills and little business knowledge who starts a business
Consumerism
THE EMPHASIS PLACED ON PROVIDING TO CUSTOMERS PRODUCTS AND SERVICES THAT ARE SAFE, RELIABLE, AND HONESTLY ADVERTISED; ALSO A SOCIAL MOVEMENT THAT SEEKS TO STRENGTHEN THE RIGHTS OF CONSUMERS RELATIVE TO SELLERS
Copyright
THE REGISTERED RIGHT OF A CREATOR TO REPRODUCE, PUBLISH, AND SELL THE WORK WHICH IS THE PRODUCT OF THE INTELLIGENCE AND SKILL OF THAT PERSON
Corporate refugees
THOSE INDIVIDUALS WHO FLEE THE BUREAUCRATIC ENVIROMENT OF BIG BUSINESS BY GOING INTO BUSINESS FOR THEMSELVES.
Delegation of authority
A SUPERIOR’S ACT OF GRANTING TO SUBORDINATES ON THE BASIS OF COMPETENCE, THE RIGHT TO ACT OR DECIDE
Entrepreneur
someone who organizes a business venture and assumes the risk for it
Founder
An entrepreneur who brings a new firm into existence.
Goals
the broad, long-term accomplishments an organization wishes to attain.
Goodwill
An intangible asset such as the name of a funeral home; also an intangible asset which enables business to earn a profit in excess of the normal rate of profit earned by other businesses of the same kind.
Internal locus of control
the belief that success depends on one’s own efforts
Legitimacy
The acceptance of the organization’s activities by non-members of the organization.
Management
The art and science of motivating people toward the achievement of a goal.
Mission
The path that managers choose to acheive their purpose.
Opportunistic entrepreneur
a person with both sophisticated managerial skills and technical knowledge who starts a business.
Patent
The registered right of an inventor to make use and sell an invention.
Plans
Written statements of actions and decisions that will lead the company to its goals or missions. 3 types: long range, intermediate, and short-term.
Refugee
A person who becomes an entrepreneur to escape an undesirable situation.
Reluctant entrepreneur
a person who becomes an entrepreneur as a result of some severe hardship
Trademark
An intangible asset that is a distinct name, sign, or symbol that the federal government grants exclusive rights to use for specified period of time.