New firm planners do some serious thinking about what legal form to choose for their new endeavor1. This means determining what the status of the business will be in the eyes of the law. The choice has very important consequences2. Three legal forms (1. single proprietorship3, 2. partnership, 3. corporation) are available4 to small firms. […]

The capital of a business consists of those funds used to start and run the business. The funds may be either the owner’s (equity capital1) or creditor’s (debt capital2). Capital is also classified, depending on its use, as fixed or working. Fixed Capital3 refers to items bought once and used for a long period of […]

The total demand for the goods or services offered by any small firm can be divided into established demand1 and newly created demand, sometimes called promoted demand2. Established demand is that volume of sales which comes without conscious outside promotion by the firm. People buy because they have had positive experiences with the firm’s products, […]

FACTORS AFFECTING INDIVIDUAL PRICES. The prices that any firm can charge for its merchandise are subject to many influences. Some or all of the following considerations may apply in a particular case: 1. Fair trade laws, 2. Nationally advertised prices, 3. Desired customer clientele1, 4. Competitor price policies, 5. Market strategy2, 6. Manufacturers’ suggested prices, […]

There are few axioms in the world of business, but one of them is "if you sell on credit you will increase sales, even to the same customers to whom you previously sold for cash only". This alluring proposition has great appeal to small business firms. Sales are the foundation of profits, and anything that […]

1) How would you explain the statement "The world operates on credit"? 2) What kind of policy would you establish to handle delinquent accounts’? Why?

Risk can be defined as the chance of damage, injury, or loss. Every business firm operates with daily risks, and the small firm is no exception. The small firm is characteristically less able to absorb losses from risks. These facts make it very important that every small firm understands the risks to which it is […]