Textbook Notes (369,067)
Canada (162,366)
RSM100Y1 (431)
Chapter 5

RSM100 Chapter5,16

4 Pages

Rotman Commerce
Course Code
Khan, Michael

This preview shows page 1. Sign up to view the full 4 pages of the document.
RSM100-­‐John_Oesch-­‐textbook_notes-­‐created-­‐by-­‐lavender.y   Chapter  5  Forms  of  Business  Ownership  and  Organization   5.1  Small  vs.  Large  Business   • Small  business:  An  independent  business  with  fewer  than  100  employees  and  revenues   less  than  $2  million   • Industries:  non-­‐institutional  health  care,  construction,  accommodation,  food,  forestry   • Home-­‐based  business:       ü Pros:   more   control   over   business   and   personal   time,   easier   to   run   (Internet   &   advanced  technology),  less  cost,     ü Cons:  less  visibility  to  customers   5.2  Contributions  of  small  business  to  the  Economy   • Creating  new  jobs   • Creating  new  industries  (e.g.  Facebook,  online  shopping)   ü New  industries  are  formed  as  SB  shift  focus  to  meet  consumer  interests/preferences   • Innovation  (airplane,  personal  computer,  soft  contact  lenses,  zipper)     5.3  Survival  rate  of  small  business   • First  year  (96%),  third  year  (85%),  fifth  year  (70%)   • Management  shortcomings:   ü Owner  has  to  take  multiple  role  vs.  corporate  hires  experts     ü Solution:  learning  business  principles,  study  its  industry,  developing  interpersonal   skills,  understanding  its  limitations,  hiring  motivated  employees,  asking  professional   advice  on  finance,  regulation,  etc   • Inadequate  financing   ü Resource:  credit  lines,  loans,  vehicles,  leases   ü Solution:  spend  less  on  employees,  marketing,  inventory   • Government  regulation   ü E.g.  filling  papers,  taxes     5.4  Features  of  an  effective  business  plan   • Business  plan:  a  formal  document  that  details  a  company’s  goals,  methods,  standards   • Includes:     ü Executive  summary  that  briefly  answers  5Ws,  H   ü Introduction  that  includes  a  general  statement  lf  the  concept,  purpose,  objectives   ü Financial  /  marketing  section  that  describe  target  market,  marketing  plan,  financial   forecast   ü Resumes  of  principles     • Addressing  issue  (why  important):   ü Company’s  mission,  vision,  uniqueness,     ü Customers,  competition,  financial  evaluation  of  industry   ü Assessment  of  risks     5.5  Funding  opportunities  for  Small  Business   RSM100-­‐John_Oesch-­‐textbook_notes-­‐created-­‐by-­‐lavender.y   • BDC  (business  Development  Bank  of  Canada)   ü Government  agency  that  assist,  counsels,  protects  the  interests  of  small  business   ü Provides  long-­‐term  financial  assistance   • Financial  Assistance  -­‐-­‐-­‐  CSBFP  (Canadian  Small  Business  Financing  Program)   • Business  Incubator   ü Local  program  that  provides  low-­‐cost,  shared  business  facilities     • Private  Investors   ü Venture  capital:  money  invested  in  the  small  business  by  another  business  /  group   of  individuals   • Small-­‐Business  Opportunities  for  Women     5.6  Franchising   • A  contract-­‐based  business  arrangement  between  a  manufacturer  and  a  dealer   • Franchising  agreements:  contract  between  franchisee  and  franchisor   • Franchisee:  individual  /  business  that  buys  the  franchise   • Franchisor:  firm  whose  products  are  sold  by  the  franchisee   • Benefits:   ü (Franchisor)  able  to  expand  a  business  into  new  location  at  lower  costs   ü Quickest  /  least  risky  way  to  become  a  business  owner   • Problems:   ü Franchisee  and  franchisor  are  influenced  by  each  other   ü Franchisor  loses  control   ü Franchisee  has  many  cash  expense     5.7  Three  Main  Legal  forms  of  Business  Ownership   • Sole  proprietorships   ü Sole  proprietor’s  status  as  an  individual  is  not  legally  separate  from  his  status  as  a   business  owner   ü Pros:  easy  to  form  /  dissolve;  management  flexibility;  right  to  all  profits;     ü Cons:   unlimited   financial   liability;   handle   a   wide   range   of   management   and   operational  tasks   • Partnership   ü Association  of  two+  persons  who  operate  a  business  as  co-­‐owners  by  voluntary  legal   agreement   ü Pros:  easy  to  form;  various  skills;     ü Cons:  unlimited  financial  liability;  hard  to  dissolve;     • Corporation   ü Legal  organization  that  has  assets  and  liabilities  separate  from  owner’s     ü Pros:  limited  financial  risk;  limited  legal  risk;  more  access  funding;   ü Cons:  double  taxation  (federal  and  provincial  income  taxes,  owner’s  personal  tax)   ü Non-­‐for-­‐Profit  Corporations   Ø Whose  goals  do  not  include  pursuing  a  profit   RSM100-­‐John_Oesch-­‐textbook_n
More Less
Unlock Document

Only page 1 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.