Chapter 5: Small Business, Entrepreneurship, and Franchising – Vocabulary Flashcards

Vocabulary flashcards covering key terms from the notes on small business, entrepreneurship, and franchising.

Entrepreneurship

The process of creating and managing a business to achieve desired objectives, often by risking money, time, and effort to develop a profitable product or new way of doing something.

Small business

An independently owned and operated business that is not dominant in its competitive area and employs 500 or fewer people (as defined by the SBA).

Microentrepreneur

An entrepreneur who starts and runs a very small business, typically with five or fewer employees.

Social entrepreneurship

Using entrepreneurial principles to address social problems, aiming to create social change; can be nonprofit or for‑profit.

Small Business Administration (SBA)

A federal agency that provides managerial and financial assistance and resources for starting and growing small businesses.

Undercapitalization

Lack of funds to operate a business normally, creating cash shortages and increasing the risk of failure.

Managerial inexperience

Lack of skilled management, including hiring, budgeting, financing, and control, leading to business difficulties.

Inability to cope with growth

Difficulty managing expansion, requiring new systems and management as a company scales.

Franchise

A license to operate a business using another company’s brand, products, and operating methods in exchange for fees and royalties.

Franchiser

The company that sells franchises and provides the franchise system.

Franchisee

The purchaser and operator of a franchise who must follow the franchiser’s standards.

Franchising

A system where a franchiser licenses its brand and business model to franchisees in exchange for fees and ongoing royalties.

Equity financing

(Your money)Funds for starting or growing a business provided by owners or investors in exchange for an ownership stake.

Venture capitalists

Investors who fund startups in exchange for equity, seeking high returns through growth and eventual exit.

Debt financing

(Borrowing money) Borrowed funds from banks or lenders to start or expand a business, repaid with interest and often secured by collateral.

Line of credit

A pre‑approved borrowing limit that a lender can advance on demand as needed.

Trade credit

Credit from suppliers allowing a business to buy now and pay later.

Crowdfunding

Raising small amounts of money from many people via online platforms, often in exchange for products or rewards rather than equity.

Direct marketing

Nonstore retailing using media like catalogs, websites, or telemarketing to solicit orders.

Direct selling

Face‑to‑face selling at home, work, or events by independent distributors (e.g., Amway, Avon, Mary Kay).

Nonstore retailing

Selling products outside a traditional storefront, including direct marketing and online marketplaces.

Etsy

An online marketplace connecting millions of sellers with buyers for handmade, vintage, and craft items.

Retailing

Buying goods from producers/wholesalers and selling them directly to consumers, online or in stores.

Wholesaling

Distributing goods to retailers or other businesses, including storage, transportation, and marketing support.

Services

Intangible offerings involving performance or actions that provide value; accounts for a large share of jobs.

Manufacturing

Producing goods, often customizable; modern small firms use on‑demand fabrication and technologies like 3D printing.

High technology (high‑tech)

Businesses that rely on advanced scientific and engineering knowledge in fields like computers, biotech, and robotics.

Sharing economy

Economic model based on renting or sharing underutilized resources (e.g., Airbnb).

Gig economy

Economy of independent contractors selling on‑demand services (e.g., Uber); workers are often classified as contractors.

Intrapreneur

An entrepreneur inside a large firm who drives internal innovation and new ventures.

Market niche

A narrowly defined target market segment; focusing on a specific group to reduce competition.

Reputation

How a firm is perceived by stakeholders, influencing trust and success through quality and service.

Granville Island Public Market

A market hub in Vancouver providing space and support for many small businesses to sell directly to consumers.

Incubator

An organization that accelerates startup development by offering mentoring, networking, and often capital.

SCORE

Service Corps of Retired Executives; SBA‑funded volunteers offering free or low‑cost business counseling.

SBDC

Small Business Development Centers; SBA‑funded centers on college campuses offering counseling and training.

Home‑based business

A business operated from home, common for micro and online ventures.

Generative AI tools (e.g., ChatGPT, DALL‑E)

AI applications that assist small businesses with content creation, research, and design; accessible to startups.

Independent contractor

A self‑employed individual who provides services under contract rather than as an employee; responsible for taxes and benefits.

Break‑even point

The sales level at which total revenue equals total costs, yielding zero profit.