MGT100H1 Chapter Notes - Chapter 5: Tim Hortons, Limited Voting, Business Incubator
Chapter 5: Forms of Business Ownership and Organization
●Small businesses is an independently owned business that has fewer than 100 employees and
revenues less than $2 million. A small business is not usually the leading business in its field. It
meets industry-specific size standards for income or number of employees. A business is
classified as large when its number of employees or revenue exceeds these standards
●In what industries do small business play a significant role?
○Small businesses provide many jobs in construction, agriculture, wholesale trade,
services, and retail trade
●Discuss the contributions of small businesses to the economy
○Small businesses create new jobs and new industries. They often hire people who have
difficulty finding jobs at larger firms. Small firms give business people the opportunity and
outlet for developing new ideas. Sometimes these new ideas become entirely new
industries. Small businesses also develop new and improved goods and services
○How are new industries formed?
■When small businesses shift their focus to meet consumer interests and
preferences. Innovation and new technology can play a significant role.
■When both the business world and consumers see a need for change
●Why small businesses fail
○Management shortcomings
○Inadequate financing
■Most small businesses get their startup money from commercial banks and other
financial institutions
●Ex: credit lines and loans for nonresidential mortgages, vehicles,
specialized equipment, and leases
○Government regulation
■Small businesses often have difficulty paying the costs of government paperwork
because they have fewer staff and smaller budgets
■Taxes
●All employers pay provincial and federal income taxes, as well as
workers’ compensation insurance, pension payments, and
unemployment benefits
●Government has created tax incentives to help small businesses
○Include the small business investor tax credit
●The Business Plan: a foundation for success
○Business plan: formal document that details a company’s goals, methods used to achieve
these goals, and standards it will use to measure its achievements
■Executive summary: answers who, what, where, when, why, and how questions
for the business
■An introduction that includes a general statement of the concept, purpose, and
objectives of the business
■Separate financial and marketing sections that describe the firm's target market,
marketing plan, and detailed financial forecasts of the need for funds and when
the firm is expected to break even - the level of sales where revenues equal
costs
■Resumes of principals - especially important in plans written to obtain financing
■Addresses
●The company’s mission and vision of its founders
●Outline of why the company is unique
●The customers
●The competition
●Financial evaluation of the industry and market conditions
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Document Summary
Chapter 5: forms of business ownership and organization. Small businesses is an independently owned business that has fewer than 100 employees and revenues less than million. A small business is not usually the leading business in its field. It meets industry-specific size standards for income or number of employees. A business is classified as large when its number of employees or revenue exceeds these standards. Small businesses provide many jobs in construction, agriculture, wholesale trade, services, and retail trade. Discuss the contributions of small businesses to the economy. Small businesses create new jobs and new industries. They often hire people who have difficulty finding jobs at larger firms. Small firms give business people the opportunity and outlet for developing new ideas. Sometimes these new ideas become entirely new industries. Small businesses also develop new and improved goods and services. When small businesses shift their focus to meet consumer interests and preferences.
