Business Financing and Ownership Basics

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Questions and Answers

What is a potential disadvantage of starting a new business?

Shorter time to profitability

Long time to establish profitability (correct)

Guaranteed market success

Immediate customer base

Which of the following is NOT a question typically addressed in a vision statement?

What products do we offer today? (correct)

What are our core values?

What is our business?

What do we want to become?

Which component is essential for effective strategic goal setting?

Avoiding time frames for goal completion

Goals should be measurable and clear (correct)

Focusing only on immediate challenges

Setting vague and broad objectives

What is one advantage of buying an existing business?

Existing track record and customer base Signup and view all the answers

Which of the following statements best describes equity financing?

Investors buy shares and gain ownership in the company Signup and view all the answers

Which is a defining characteristic of debt financing?

Money is borrowed to be paid back with interest Signup and view all the answers

What is a key question addressed in a mission statement?

What is our business? Signup and view all the answers

What is a common challenge associated with minority-owned and women-owned businesses?

Access to capital and funding Signup and view all the answers

What is a sole proprietorship?

An independently owned business operated by a single individual Signup and view all the answers

Which component is essential in a business mission statement?

A description of the target market Signup and view all the answers

What does a vision statement typically convey?

The company’s future aspirations Signup and view all the answers

Which of the following defines strategic goal setting?

Establishing long-term objectives to guide the company's direction Signup and view all the answers

Which of the following is a characteristic of a corporation?

Limited legal liabilities for owners Signup and view all the answers

In which type of small business do most entrepreneurs typically start?

Manufacturing Signup and view all the answers

What is a primary advantage of a partnership?

Access to a broader range of skills and resources Signup and view all the answers

What typically describes the finance sector in small business contexts?

Involves a variety of services related to money management Signup and view all the answers

What is a primary objective of marketing in a business context?

To meet operational and financial business goals Signup and view all the answers

Which of the following best describes the 'PLACE' aspect of the marketing mix?

Where and how to provide access to services or products Signup and view all the answers

Which factor is NOT commonly considered when establishing pricing for a product?

Competitor brand reputation Signup and view all the answers

What should a business primarily focus on when conducting market analysis?

The set of all actual and potential buyers Signup and view all the answers

Which component is essential in building consumer loyalty?

Value and satisfaction Signup and view all the answers

Which of the following is NOT a step in the simple marketing system?

Secure partnerships with large corporations Signup and view all the answers

What is the primary purpose of effective promotion strategies?

To communicate benefits and create awareness Signup and view all the answers

What aspect of business is addressed by identifying and satisfying social needs?

Value creation Signup and view all the answers

Which marketing objective involves persuading consumers about products or services?

To create curiosity Signup and view all the answers

Which of the following is NOT considered a cost contributing to service pricing?

Target market's purchasing habits Signup and view all the answers

Study Notes

Debt Financing

Money to be paid at a later date
Loan with interest
Loaners have no ownership or shares

Equity Financing

Funds invested in exchange for ownership of the company
Investors own a piece of the company

Ways to Become a Business Owner

Start a new business
- Develop and design your own way
- Long time to get off the ground and make it profitable
Buy an existing business
- Shorter time and an existing track record
- Need to pay for goodwill

5 Stages of Growth for a Company

New Market Niches

Types of Small Businesses

Retail
Manufacturing
Service
Construction
Communications
Finance
Real Estate

Who are Entrepreneurs?

Often have distinguishing backgrounds and demographics
- First-born children
- Children of immigrants
Emerging growth companies of the next decades
- Women-owned businesses
- Minority-owned businesses

3 Basic Legal Forms of Business

Sole Proprietorship
- Unincorporated business owned by an individual for profit
Partnership
- Unincorporated business owned by two or more people
Corporation
- Artificial entity created by the state and existing apart from its owners
- Separate entity from owners or other businesses under it
- Can open bank accounts, own cars and land, lease out land, make profit, be sued, and have legal responsibilities

Marketing

Vital function to business survival
Social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others
- Creates value
- Relates to your problem and provides a solution
Utilizes activities designed to sense, serve, and satisfy potential clients, physicians, or whoever you are targeting your message and efforts
Identifying and satisfying social needs
- Creating curiosity

Main Objectives of Marketing

Identify and meet the target market’s needs and wants
Increase awareness of the product or service
Increase accessibility to the consumer
Persuade the consumer of the product or service
Meet the operational and financial business goals
Build consumer loyalty based on value and satisfaction
Achieve a financial profile

Simple Marketing System

Price
- The cost of the service or product
- Development and production costs
- Fair market value
- Government regulations and fee schedules
- Competitor pricing
- Overhead Expenses (rent, licenses, permits)
- Target market’s budget and purchasing habits
- Payroll and taxes
Place
- Where and how you will provide access to your service or product
- Where your rehab business is located
- Where your target market will receive access to your products and services
Promotion
- Communication of the benefits and place of your services
- Creating and communicating specific variables of your business, products, or services
- Increasing awareness or educating
Position
- How and where your service or product compares to your competitors
- Determining how well your rehab business is performing compared to your competitors

Four Simple Marketing Steps

Analyze your market
- Set of all actual and potential buyers of a product, service, or idea
Develop a marketing strategy to reach and engage your target market
Implement the marketing strategy
Evaluate and refine the marketing strategy

Components of a Mission Statement

Some may describe company values, product quality, attitudes toward employees
What is our business?
What do we want to become?

Vision Statement

10-15/20 years

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Description

Explore essential concepts of business financing and ownership through this quiz. Understand the differences between debt and equity financing, various methods to become a business owner, and the stages of company growth. Test your knowledge on the types of small businesses and the profile of entrepreneurs.