small business detailed notes and examples about the module on small businesses

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Accounting & Financial Management
AFM 131
Robert Sproule

September 23, 2010 Small Business Right of first refusal: if a partner wishes to leave the partnership, they must first offer their share to the remaining partner (before selling it to an outside party) Why is this provision typical? - The other partner has invested lots of time and interest in the company, they have the knowledge, perspective, skill set, etc. Shotgun Clause - When one partner wants to dissolve the partnership, he first gives the other partner the option to buy him out but if that is not possible, he must buy his partner out Why would someone choose to be a limited partner? - No commitment other than monetary (daily involvement) - You are only liable for the money you invest in the partnership (risk tolerance) Partnerships: Joint Ventures - Shared risk - Shared management or technical competence - Shared financial resources Mabel’s Labels 1. How did each of the forms of business impact the operations of Mabel’s Labels? corporation: helped with financing partnership: easy and quick, template from Staples. 2. How has each of the forms of business contributed to the success of Mabel’s Labels? partnership: they were able to split up and focus on specific roles; equal responsibility and roles outlined corporation: allowed them to acquire more funding; took away some of the personal risk Franchises - How you choose to run your business - There are few restrictions on the type of business that can become a franchise Entrepreneurship - Small business has a pretty important role in supporting growth and development of entrepreneurship September 28
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