Starting Your Small Business
Page 27 Questions 4, 9, 10
4. What comes to your mind when you think of a small business? How does your concept differ from the definition given in this chapter? When I think of a small business, I think of smaller stores like on the main street in old Ellicott City. Small stores in shopping centers where there is only one like it. Also, businesses people run from their house like small home improvement company’s or hair salons. The definition from the text book states that a small business is one that is independently owned and operated and is not dominant in its field of operation, and does not engage in new or innovative practices. My ideal of what a small business is pretty much goes along with the definition in the book, although I didn’t know that they didn’t engage in new or innovative practices.
9. Discuss the four personal objectives that people seek when starting a new business. The four primary personal objectives of small business owners, according to the text, are to achieve independence, obtain additional income, help their families, and provide products not available anywhere else. Achieving Independence is the main objective in starting a new business because people start businesses to be there own boss, to have creative freedom and be able to express their ideas how they want to. People also start businesses to obtain additional income. Some people what extra money on top of the money they already make, and some people are looking for a whole new job life where they can make more money then they were making at their old job. Another personal objective when staring a new business is to help their families. Many people start businesses to have more money to help support their families or they may take over a family owned business to take some of the stress off their family. The last personal objective is to provide products that aren’t available elsewhere. People may be looking for something, and see that it is hard to find but there is a demand for it so they start a business to help make it available to everyone.
10. Explain the interrelationship between the service and profit objectives. The service objectives must be achieved to attain the profit objective. The objective of a business is to serve customers by producing and selling goods or services at a cost that will ensure a fair price to the consumer and adequate profits for the owners. Profit is the revenue received by a business in excess of the expenses paid. Profits are the reward for accepting business risks and performing an economic service.
Page 48 Questions 2, 3, 5
2. Why is it often difficult to make reasonable decisions in a family business? What problems are caused by a family organization structure? It is difficult to make reasonable decisions in a family business because people in the family don’t want to hurt other family members feelings and don’t want to make then feel like they are unimportant or any different from everyone else in the family.
3. What problems face a company when a key officer leaves suddenly? If a key officer suddenly leaves and didn’t leave any instructions as to how things should continue with the company, people will most likely have conflicting ideas on what they think should be done. The company may end up falling apart.
5. Suppose you have a successful business now but decide you want to leave it. What might be some reasons for leaving it? What alternatives do you have for the business? Some reasons someone might leave a successful business are to pursue another career, start a family, death, and continue education, etcetera. Some alternatives for the business are let someone in the family take over the business, have one or more members work part-time, get education, and rotate jobs.
Forms of Ownership of Small Business