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BUS 150 Module 2 - Fundamentals of Business

1. What is a business plan and why does an entrepreneur need one?
   A business plan is a formal document outlining business goals, strategies, and financial projections. Entrepreneurs need one to secure funding, attract investors, and provide a roadmap for success.

2. What are some resources that can help entrepreneurs set up a business?
   Resources include the Small Business Administration (SBA), business incubators, online courses, professional networks, and financial institutions.

3. What is a franchise?
   A franchise is a business model where an individual (franchisee) buys the rights to operate a business using the branding and business structure of a franchisor.

4. What is a franchisor?
   A franchisor is the company that owns the brand and business model, granting licenses to franchisees to operate under its name.

5. What is a franchisee?
   A franchisee is an individual or business that purchases the rights to operate a franchise under the franchisor’s brand and guidelines.

6. What are the advantages of franchising to the franchisor?

   • Rapid expansion

   • Consistent revenue from franchise fees

   • Increased brand recognition

   • Reduced operational costs

7. What are the advantages of franchising to the franchisee?

   • Established brand and reputation

   • Proven business model

   • Training and support from franchisor

   • Lower risk than starting a business from scratch

8. What are the disadvantages of franchising to the franchisor?

   • Loss of control over individual franchise locations

   • Potential damage to brand reputation if franchisees perform poorly

9. What are the disadvantages of franchising to the franchisee?

   • High startup costs and ongoing fees

   • Limited flexibility and control over business decisions

   • Dependence on the franchisor’s reputation

10. What is a small business?
    A small business is an independently owned and operated company with a limited number of employees and revenue, typically defined by the SBA.

11. Why would someone want to be an entrepreneur? What is an entrepreneur?
    An entrepreneur is someone who starts and runs their own business. Reasons for becoming an entrepreneur include financial independence, pursuing a passion, and creating job opportunities.

12. Why do some businesses fail?

• Poor financial management

• Lack of market demand

• Strong competition

• Ineffective marketing strategies

13. Why is small business important?

• Drives innovation

• Creates jobs

• Strengthens local economies

14. What are the advantages of a small business?

• More flexibility and control

• Ability to build strong customer relationships

• Lower startup costs compared to large businesses

15. What are the disadvantages of a small business?

• Limited financial resources

• Higher risk of failure

• Greater workload for owners

16. What are the three sources of funding an entrepreneur may use?

• Personal savings

• Loans

• Investors

17. What is a sole proprietorship?
    A sole proprietorship is a business owned and operated by one person.

18. What are the advantages of a sole proprietorship?

• Easy to start and manage

• Full control over business decisions

• All profits go to the owner

19. What are the disadvantages of a sole proprietorship?

• Unlimited personal liability

• Limited funding options

• Heavy workload on the owner

20. What is a partnership?
    A business structure where two or more people share ownership and management responsibilities.

21. What are the advantages of a partnership?

• Shared financial and managerial responsibilities

• More resources and expertise available

• Easier access to funding

22. What are the disadvantages of a partnership?

• Shared profits

• Potential conflicts between partners

• Unlimited liability for general partners

23. What is a corporation?
    A legal entity separate from its owners, providing limited liability and the ability to raise capital through stock sales.

24. What are the advantages of a corporation?

• Limited liability for owners

• Easier access to funding

• Perpetual existence

25. What are the disadvantages of a corporation?

• Double taxation

• Expensive and complex to set up

• More government regulations

26. What is an LLC?
    A Limited Liability Company (LLC) combines the benefits of a corporation and a partnership, offering limited liability with flexible taxation.

27. What are the advantages of an LLC?

• Limited liability protection

• Flexible management structure

• Pass-through taxation

28. What are the disadvantages of an LLC?

• Can be more expensive to establish than a sole proprietorship or partnership

• Varies in regulations by state

29. What are ethics? Business ethics? Situational ethics?

• Ethics: Principles of right and wrong that govern behavior

• Business ethics: Applying ethical principles in a business environment

• Situational ethics: Ethical decision-making that depends on the context

30. What are some ethical issues you may encounter?

• Fraud and deception

• Discrimination

• Environmental impact

• Conflicts of interest

31. What are the factors that influence ethical behavior?

• Personal values

• Company policies

• Social and cultural influences

• Legal and regulatory requirements

32. What might the government, industry, or an individual company do to encourage ethical behavior?

• Enforce laws and regulations

• Provide ethics training programs

• Establish corporate ethics policies

33. What is a whistle-blower?
    A whistle-blower is an individual who exposes unethical or illegal activities within a company or organization.

34. What are the two views of social responsibility?

• Economic view: A business’s primary responsibility is to maximize profits for shareholders.

• Socioeconomic view: A business has a responsibility to benefit society, not just generate profits.