BSM 100 Week 5
62 flashcards
- Sole proprietorship Advantages
- • Ease of starting and ending ○ Buying or leasing equipment, permit of license, announcement• Own boss• Pride of ownership• Retention of company profits ○ Increasing value of growing business• No special taxes ○ All profit personal income of owner, normal personal income tax rate on that money ○ Can claim business losses against other earned income, decreasing taxes• Less regulations than corporation, less costly admin
- Sole proprietorsip Disadvantages
- 1. Unlimited liability, risk of personal losses, debts and damages2. Limited financial resources3. Management difficulties ○ Inventory, accounting, taxes4. Time commitment5. Few fringe benefits - health, disability, sick leave6. Limited growth - slow expansion7. Limited lifespan8. Possibly pay higher taxes
- Canadian controlled private corporation
- CCPC
- Partnership
- Legal form of business with 2 or more parties
- General partnerships
- All owners share in operating business and assuming liability for business debts
- General partner
- General parter - owner (partner) with unlimited liability, active for managing firm
- Limited partnerships
- Has at least 1 limited or silent partner in addition to general partner
- limited or silent partner
- Invests money, no management responsibility or liability for losses beyond investment
- Limited liability
- partners liability for debts of business limited to amount put into business
- imited liability partnerships
- Limits partners risk of losing personal assets to outcome of only their own acts and omissions and those of people under their supervisions, limited to certain types of businesses
- Corperations
- Entity existing only in eyes of law to protect people's personal assets, - Federally or provincially chartered legal entityAuthority to act and have liability separate from owners/shareholders
- Partnership Advantages
- • Easier to manage• Variety of skills• Financial resources• Shared management, skills knowledge• Longer survival• No special taxes (like sole proprietorships)Less regulated than corporations
- Partnership Disadvantages
- • Division of profitsDisagreements• Difficulty of termination • Possibly pay higher taxesUnlimited liability
- Partnership agreements
- legal document specifying rights and responsibilities of each partner
- Incorporate
- start a corporation
- Public corporation
- has right to issue shares to public, may be listed on a stock exchange
- Private corporations
- usually controlled by small number of shareholders, shares not listed on a stock exchange
- Benefit corporation
- - for profit company commits to conduct business in responsible and sustainable way, promote one or more public benefits
- Crown corporation
- can only be registered by provincial or federal government
- Domestic corporation
- conducts business in home country
- Multinational corporation
- conducts business in several countries
- Non-profit corporation
- does not seek personal profits for its owners
- Professional corporation
- priv corp formed by licensed professionals, governed by their professional bodies
- articles of incorporation
- - Legal authorization for company to use corporate formatgives company name protection, guarantees usage
- Coattail effect
- - failure if others fail potential, or new locations put you out of business
- Franchise
- business idea developed by someone else
- Franchise agreement
- arrangement where franchisor sells right to use business name to sell good or service (franchise) to other (franchisee)
- Franchise Disadvantages
- 1. Unlimited liability, risk of personal losses, debts and damages2. Limited financial resources3. Management difficulties ○ Inventory, accounting, taxes4. Time commitment5. Few fringe benefits - health, disability, sick leave6. Limited growth - slow expansion7. Limited lifespan8. Possibly pay higher taxes
- Franchise Advantages
- 1. Management and marketing assistant, training, marketing2. Personal ownership - incentives and profits as sole proprietor3. Nationally recognized name4. Financial advice and assistance Lower failure rate
- fringe benefits
- health, disability, sick leave
- Officers
- set corporate objectives and select managers in corporation
- board of directors
- represent owners/shareholder, elected by owners/shareholders
- Corporate governance
- process and policies determining how organization interacts with stakeholders
- Corperations Advantages
- Limited liability , ability to raise more money for investment , size, perpetual life, 5. Ease of ownership change, 6. Attracting employeesSeparation of ownership from management
- Corperations Disadvantages
- 1. Initial cost2. Extensive paperworkDouble taxation 5. Size - too big may become inflexible to respond to market changes6. Difficulty of terminationPossible conflict with shareholders and board of directors
- dividends
- remains after taxed income, distributed to shareholders
- Self
- __ directed (entrpreneurial skill)
- Nurturing
- self__ (entrepreneurial skills)
- Action
- __ oriented (entrepreneurials skills
- energetic
- Highly _ (entrepreneruial skills)
- Uncertainty
- tolerant of _ (entrepreneurial skills
- Entrepreneurial team
- people from different business experiences to form managerial team to develop make and market new products
- Intrapreneur
- creative people who work as entrepreneurs within corporations - Use companies existing resources
- Micro-preneurs
- owners of micro-enterprises - 1-4 employees
- Business accelerator
- program giving developing companies access to mentorship, investors, other support
- Business incubators
- space, service, advice support to assist new and growing businesses
- Incubator sponsors
- organizations or individual supporting incubation program financially
- Business plan
- 25-50 p. detailed statement about nature of business, market, advantaes, resources and qualification
- Bootstrapping
- building business without attracting investment or with minimal external capital
- Angel investors/business angels
- wealthy individuals investing funds into private companies with growth potential
- Venture capital
- type of private-equity financing to start-up companies and small business with long term growth potential □ Group □ Larger money for businessesAsk for large stake, up to 60%
- Crowd funding
- Knowing your customer
- Macro economics
- operations of nations economy as whole
- gross domestic product
- GDP
- GDP
- - Total goods and services produced by the economy - Indicates if economy is growing or shrinking through for phases
- Expansion
- Sustained rise of GDP
- Peak
- can occur after expansion
- contraction
- drop in GDP
- Recession
- 2 consecutive periods of contraction, usually quarters
- Trough
- opposite of peak
- Economic indicators
- GDP , unemployment rate, inflation
- Micro economics
- industry and individuals in industry and how they play role