List the two basic ways to cope with risk in a small business and identify tools
associated with each of these. Which method involves an insurance program?
In a family business, there is a possibility for either conflict or harmony between
business goals and family goals.
What are the personal issues an entrepreneur will face in post-harvest life?
Under certain circumstances, local, state, and federal laws must be considered in setting
prices in a small business.
An evoked set is a group of brands that a consumer is aware of but unwilling to
consider as a solution to a purchase problem.
Bottling machines and auto assembly line machinery are examples of general-purpose
equipment.
The UFOC is the Uniform Franchise Offering Circular.
In a small business, the entrepreneur’s marketing philosophy typically shapes the firm’s
marketing activities.
Socially responsible activities may be consistent with a firm’s long-term profit
objective.
A chain-ratio method of sales forecasting, or a buildup process, is frequently used for
consumer products forecasting.
One advantage of preparing a formal written plan for a business is the discipline
provided for the prospective entrepreneur.
Increasingly, small firms are going global in search of skilled labor.
The five Cs of credit are character, capacity, capital, conditions, and collateral.
You Make the CallSituation 2
Ruston Manufacturing Company is a small firm selling entirely on a credit basis. It has
experienced successful operation and earned modest profits. Sales are made on the basis
of net payment in 30 days. Collections from customers run approximately 70 percent in
30 days, 20 percent in 60 days, 7 percent in 90 days, and 3 percent bad debts. The
owner has considered the possibility of offering a cash discount for early payment.
However, the practice seems costly and possibly unnecessary. As the owner puts it,
“Why should I bribe customers to pay what they legally owe?”
Question 1 Is offering a cash discount the equivalent of a bribe?
Question 2 How would a cash discount policy relate to bad debts?
Question 3 What cash discount policy, if any, would you recommend?
Question 4 What other approaches might be used to improve cash flows from
receivables?
Business plans should seldom exceed 40 pages in length.
One potential problem with acquiring funds from friends and relatives is that they might
feel that they have the right to interfere in the management of the business.
Existing franchisees are a valuable source of information about franchises.
For many entrepreneurs, choosing a location for a small business is a one-time
decisionmade only when the business is first established or purchased.
A firm’s cost of capital is simply the interest rate it must pay on its loans.
What are the rights of stockholders in a corporation?