Questions and Answers
What is a franchise?
What characterizes the survival stage of a business?
Regularly taking on new customers and starting to generate consistent income.
What is the success stage in business?
When an entrepreneur is earning and the business is economically healthy.
What decision does an owner face in the take-off stage?
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The business life cycle includes existence, survival, take-off, resource maturity, pivot or persist, and _____
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Who are stakeholders in a company?
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What is the role of a stockholder?
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What is an S corporation?
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What is a C corporation?
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What is a commission in a business context?
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How are employees compensated in a piecework system?
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What is equity in a business?
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What is a trade secret?
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What must happen before one can use someone else's patent?
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Match the business role to its description:
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What is a characteristic of a business opportunity?
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Franchises will generally have higher _____, but they offer support and training.
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Network marketers make their money through _____.
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Study Notes
Business Concepts Overview
- Franchise: Business model that allows an owner to license operations, products, services, and branding for a royalty fee.
- Survival Stage: Early phase where businesses gain customers and stabilize income. At this point, they cover loans and begin to pay owners a fair salary.
- Success Stage: During this phase, businesses are economically healthy; entrepreneurs may seek growth opportunities or delegate operations to executives like CEO, CFO, and COO.
- Take Off Stage: Owners assess whether to expand into a larger business and strategize for rapid growth or consider selling the company.
- Business Life Cycle: Stages involving Existence, Survival, Take Off, Resource Maturity, Pivot or Persist, and Exit Plan.
Stakeholders and Shareholders
- Stakeholder: Groups or individuals invested in the company's success.
- Stockholder: Holds voting power on company management decisions, including potential removal of the CEO.
Business Structures
- S Corporation: Limited liability business structure with special taxation permitting income pass-through to shareholders, resulting in lower taxation.
- C Corporation: Provides limited liability but incurs double taxation on profits and shareholder dividends. Suitable for international business.
Compensation and Payment Models
- Commission: Payment structure that rewards employees based on performance, particularly in sales, using a percentage of sales or fixed rates.
- Piecework: Compensation method where employees are paid for the number of units produced.
- Equity: Non-cash compensation that includes ownership stakes or stocks offered to employees as an incentive.
Understanding Business Opportunities
- Seller assistance is key in finding optimal business locations.
- Franchises come with higher start-up costs but provide ongoing support and training.
Management and Skills
- Management reliability is assessed alongside one's personal skills to ensure business opportunity success.
- Companies value validated processes, leading to the utilization of trade secrets.
Business Plans and Pitch Decks
- Business Plan: Detailed operational and growth framework.
- Pitch Deck: Concise overview containing key business elements including problems addressed, vision, team strengths, milestones, competition, and funding needs.
Characteristics of Entrepreneurs
- Self Resilience: Confidence in personal goals and progress.
- Forward-Thinking Mentality: Proactive planning for future success.
- Opportunity Recognition: Innovative approach to new ventures.
- Initiative: Execution of ideas to improve or generate business outcomes.
- Resiliency: Ability to adapt to changes and setbacks.
- Growth Mindset: Belief in achieving success through effort and determination.
Intellectual Property
- To use someone else's patent, legal ownership must be obtained first.
Executive Roles in Business
- CEO: Chief decision-maker overseeing operations and strategic vision.
- CFO: Manages financial aspects, cash flow, and budgets.
- COO: Handles day-to-day operations and administrative tasks.
- Founder: Originator of the company or organization.
- Partnership: Shared financial responsibilities among one or multiple individuals.
- Employee: Executes assigned tasks within company guidelines and policies.
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