mie 201 - ch 5

entrepreneurship

the process of creating and managing a business to achieve desired results

small business

Independently owned and operated, not dominant in its competitive area, doesn’t employ more than 500 people.

equity financing

owner uses real personal assets rather than borrowing funds from outside to get started, can also obtain by finding investors and selling stock, venture capitalists hope to purchase stock at a low price, then sell for profit, requires that the owner shares profits of business with investors

debt financing

sometimes borrow more than half of financial resources. bankers are main suppliers,

franchising

pros: Training and support

• Brand-name appeal

• Standardized quality of goods and services

• National/local advertising

• Financial assistance

• Proven products/format

• Centralized buying power

• Site selection and territorial protection

• Greater chance for success
  
  cons: Fees and profit sharing

• Standardized operations

• Restrictions on purchasing

• Limited product line

• Possible market saturation

• Less freedom in decisions