Deck 2: Small Business Management, Entrepreneurship, and Ownership

Question 1

What do entrepreneurs do that distinguishes them from other persons involved in business?

Answer 1

Not Answer

Question 2

When would forming a limited-liability company be more advantageous than creating a C corporation or a partnership?

Answer 2

C Corporation:
C Corporation is a separate legal entity that provides reports on its expenses and income on a corporate income tax return and it gets taxed on its profits at corporate income tax rates.
Limited liability Company:
Limited Liability Company is a type of corporation that taxes the owners as partners and provides a more flexible structure than other corporation.
Justification:
Limited Liability Company has more advantages than C Corporation or partnership firms.
The following are a few advantages of Limited Liability Company:
• There is a regulation imposed on limited liability Company as to what they can own and what they cannot own.
• Profit and loss allocations are done by the internal management as there is no rule applied for a percentage of allocation.
Example:
The Limited liability company owner can allocate 50 percentage of the business's profit to a person who owns 30 percent of the company's shares. This allocation is not possible in C Corporation or in a partnership firm.

Question 3

Imagine that the principal from the high school you attended (and graduated from) called to invite you to make a presentation to a newly founded entrepreneurship club at the school. What would you tell this group of high school students about owning their own business as a career option?

Answer 3

Not Answer

Question 4

What do entrepreneurs do that distinguishes them from other persons involved in business?

Question 5

Imagine that the principal from the high school you attended (and graduated from) called to invite you to make a presentation to a newly founded entrepreneurship club at the school. What would you tell this group of high school students about owning their own business as a career option?

Question 6

Describe the significance of triggering events in entrepreneurship. Give examples.

Question 7

How is small business management different from entrepreneurship?

Question 8

Why would an entrepreneur be concerned about harvesting a business that has not yet been started?

Question 9

Why might personality characteristics be good predictors of who will be a successful entrepreneur?

Question 10

If a friend told you that entrepreneurs are highrisk takers, how would you set the story straight?

Question 11

Explain why people who own a small business may not enjoy pure independence.

Question 12

If personal characteristics or personality traits do not predict who will be a successful entrepreneur, why are they significant to the study of entrepreneurship or small business management? Which characteristics do you think are most important?

Question 13

Think of an activity that you love to do; it could be a personal interest or a hobby. How could you turn your passion for this activity into a business? What questions would you have to answer for yourself before you took this step? What triggering events in your personal life would it take for you to start this business?

Question 14

Sole proprietorships account for 76 percent of all U.S. businesses and generate 6 percent of all business revenue. Only 18 percent of all sole proprietorships are incorporated, but they generate 90 percent of all revenue. What do these statistics tell you about the two forms of ownership?

Question 15

"Gardeners love this crap." That's the slogan for Pierce Ledbetter's Memphis, Tennessee-based company, Zoo Doo. In 1990, while still a student at Cornell University, Ledbetter returned home to Memphis and talked the managers at the local zoo into selling him composted animal manure from the enormous amounts produced by the zoo's animals daily. Why would any sane individual want animal manure? Well, it's extremely rich in soil nutrients. Wanting to cash in on the gardening craze just beginning to sweep across the United States, Ledbetter saw a marketing opportunity. He began selling his "Zoo
Doo" in attractively designed pails. He even had the unique idea of having the manure compressed into various animal-shaped sculptures that gardeners could place in their gardens to decompose naturally and organically. His designs caught the eye of garden centers and mass merchandisers across the United States. Ledbetter's Zoo Doo now claims sales of about $1.5 million.
But having a great product and a great slogan isn't enough to make any small business a success. It's important to choose a form of business ownership that best meets your individual needs, goals, and constraints.
Factors such as availability of adequate funding, amount of management expertise, product liability possibilities, and willingness to share decision making can influence which form of ownership is most appropriate.
Put yourself in Pierce Ledbetter's shoes (and watch where you step!). Discuss the advantages and disadvantages of organizing Zoo Doo as a sole proprietorship, a partnership, or a corporation. Think of all the possible factors that might influence your choice.

Question 16

Under what conditions would you consider joining a partnership? Why would you avoid becoming a partner?

Question 17

"Gardeners love this crap." That's the slogan for Pierce Ledbetter's Memphis, Tennessee-based company, Zoo Doo. In 1990, while still a student at Cornell University, Ledbetter returned home to Memphis and talked the managers at the local zoo into selling him composted animal manure from the enormous amounts produced by the zoo's animals daily. Why would any sane individual want animal manure? Well, it's extremely rich in soil nutrients. Wanting to cash in on the gardening craze just beginning to sweep across the United States, Ledbetter saw a marketing opportunity. He began selling his "Zoo
Doo" in attractively designed pails. He even had the unique idea of having the manure compressed into various animal-shaped sculptures that gardeners could place in their gardens to decompose naturally and organically. His designs caught the eye of garden centers and mass merchandisers across the United States. Ledbetter's Zoo Doo now claims sales of about $1.5 million.
But having a great product and a great slogan isn't enough to make any small business a success. It's important to choose a form of business ownership that best meets your individual needs, goals, and constraints.
Factors such as availability of adequate funding, amount of management expertise, product liability possibilities, and willingness to share decision making can influence which form of ownership is most appropriate.
Now that you've looked at the various ways to organize Zoo Doo, it's time to convince your management professor at Cornell University of your decision. Write a letter describing the approach you've decided to take in organizing your Zoo Doo business and why.