understanding entrepreneurship and business ownership

business essentials -- part 3 -- terms

small-business administration (SBA) -- federal agency charged with assisting small businesses
small-business -- independently owned and managed business that does not dominate its market
entrepreneur - business person who accepts both the risks and opportunities involved in creating an operating a new business venture
business plan -- documents in which the entrepreneur summarizes the business strategy for the proposed new venture and how that strategy will be implemented
venture capital company -- group of small investors to invest money in companies with rapid growth potential
small-business investment company (SBIC) -- government regulated investment company that borrows money from the SBA to invest in lend to small-business
small business development center (SBDC)-- SBA program designed to consolidate information from various disciplines and make available to small-businesses
franchise -- arrangement in which a buyer (franchisee) purchases the right to sell a good or service of the seller (franchiser)
sole proprietorship -- business owned and usually operated by one person who is responsible for all of its debts
unlimited liability -- legal principle holding owners responsible for paying off all debts of a business
general partnership -- business with two or more owners who share in both the operation of the firm in the financial responsibility for its debts
limited partnership -- the type of partnership consisting of limited partners and an active or managing partner
limited partner -- partner who does not share in a firm's management and is liable for its debts only to the limits of said partner's investment
general (or active) partner -- partner who actively manages the firm into as unlimited liability for its debts
Corporation -- business that is legally considered an entity separate from its owners and is liable for its own debts; owners liability extends to the limits of their investments
limited liability -- legal principle holding investors liable for firms that the only to the limits of their personal investments in it
tender offer -- offer to buy shares made by prospective buyer directly to a target corporations shareholders, who then make individual decisions about whether to sell
double taxation -- situation in which taxes may be payable both by a corporation on its profits and by shareholders on dividend incomes
closely held (or private) corporation -- Corp. whose stock is held by only a few people and is not available for sale to the general public
publicly held (or public) Corp. -- Corp. to stock is widely held and available for sale to the general public
S corporation -- hybrid of a closely held corporation and a partnership, organized and operated like a corporation but treated as a partnership for tax purposes
limited liability corporation (LLC) -- hybrid of a publicly held corporation and a partnership in which owners are taxed as partners but enjoy the benefits of limited liability
professional Corporation -- form of ownership allowing professionals to take advantage of corporate benefits while granting them limited business liability and unlimited professional liability
multinational or transnational corporation -- form of corporation spanning national boundaries
corporate governance -- roles of shareholders, directors, and other managers incorporate decision-making
stockholder or shareholder -- owner of shares of stock in a corporation
stock -- share of ownership in a corporation
preferred stock -- stock that offers its holders fixed dividends and priority claims over assets but no corporate voting rights
common stock -- stock that pays dividends and guarantees corporate voting rights but offers last claims over assets
board of directors -- governing body of a corporation that reports to its shareholders and delegates power to run its day-to-day operations while remaining responsible for sustaining its assets
chief executive officer (CEO) -- top manager hired by the Board of Directors to run a corporation
strategic alliance -- strategy in which two or more organizations collaborate on a project for mutual gain
joint venture -- strategic alliance in which the collaboration involves joint ownership of the new venture
employee stock ownership plan (ESOP) -- arrangement in which the Corporation holds its own stock in trust for its employees, who gradually received ownership of the stock and control its voting rights
institutional investor -- large investor, such as a mutual fund or pension fund, that purchases large blocks of corporate stock
merger -- the union of two corporations to form a new corporation
acquisition -- the purchase of one company by another
divestiture -- strategy whereby a firm sells one or more of its business units
spin-off -- strategy of setting up one or more corporate units as new, independent corporations