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Questions and Answers
A corporation is a group acting as a single legal entity.
A corporation is a group acting as a single legal entity.
True (A)
A business model describes how a business will deliver its product to the market but not how it drives sales.
A business model describes how a business will deliver its product to the market but not how it drives sales.
False (B)
A subscription-based model involves one-time payment from a customer.
A subscription-based model involves one-time payment from a customer.
False (B)
An on-demand model connects customers with independent sellers through physical stores.
An on-demand model connects customers with independent sellers through physical stores.
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A business plan is a written description of a business that would be established in the past.
A business plan is a written description of a business that would be established in the past.
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A major goal of a business plan is to assess the feasibility of the business idea.
A major goal of a business plan is to assess the feasibility of the business idea.
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Entrepreneurs do not need a business plan if they already have started the business.
Entrepreneurs do not need a business plan if they already have started the business.
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The executive summary in a business plan highlights the management team and personnel.
The executive summary in a business plan highlights the management team and personnel.
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Study Notes
Types of Business Organizations
- Three main types of business organizations: sole proprietorships, partnerships, and corporations.
Sole Proprietorship
- A business owned by one person.
- Represents approximately three-quarters of all businesses in the United States.
- Characteristics include single ownership, no sharing of profit/loss, one person's capital, unlimited liability, fewer legal formalities, and sole control.
Partnerships
- A business structure involving two or more people.
- Represents 5% of all businesses.
- Examples include Warner Bros. Pictures (Harry, Albert, Sam, and Jack Warner), Hewlett-Packard (William "Bill" Redington Hewlett and David "Dave" Packard), and McDonald's (Richard James "Dick" McDonald and Maurice James "Mac" McDonald).
Corporations
- A company or group of people authorized to operate as a single entity in law.
- About 20% of all businesses.
- Often large, with significant profits.
Business Model
- Describes how a business will market and sell its products/services.
- Elements include: cost, core value, distribution management, marketing, product & services, competencies, and target customer.
Subscription Based Model
- Customers pay monthly or yearly for products/services.
- The customer decides the frequency of their payments.
B2C (Business-to-Consumer) Model
- Businesses sell products/services directly to individual customers.
B2B (Business-to-Business) Model
- Businesses sell products/services to other companies.
- Examples include wholesalers selling to retailers and manufacturers selling to wholesalers.
On-Demand Model
- A business model that connects customers with independent sellers/providers through an online platform.
Business Plan
- A written description of a future business.
- It guides entrepreneurs on choosing beneficial strategies.
- Elements of a business plan include: executive summary, management & organization, product/service plan, market plan, financial plan.
Goal of a Business Plan
- To assess the feasibility of the business idea.
- To develop strategies for the business idea.
- To create a realistic business plan.
- To create a specific business plan.
- To ensure the business plan is followed through.
Reasons Entrepreneurs Need Business Plans
- Risk reduction.
- Avoiding costly mistakes.
- Foreseeing demand fluctuations.
- Organizing activities beforehand.
- Setting sales, revenue & expense targets.
When to Create a Business Plan
- During the early stages of a business.
- For growth of an established business.
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Description
Explore the three main types of business organizations: sole proprietorships, partnerships, and corporations. Understand their characteristics, legal structures, and how each contributes to the business landscape in the United States. This quiz will deepen your knowledge of essential business concepts.
