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DSST Things to know_Intro to Business

Operates the 12 district banks of the federal reserve

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Operates the 12 district banks of the Federal Reserve System Oversees member banks in those districts Sets the nations general money and credit policies by: o Discount Rate – the rate charged to banks to borrow money (higher the rate the less the bank will borrow, less they can lend, slows the economy) o Reserve Requirement – Percentage of their deposits that member banks must hold in reserves against their deposits o Open Market Operations – mechanism to buy and sell bonds and securities on the open market (buying puts money into economy to stimulate, selling takes money out of the economy to slow it down) Entrepreneur Characteristics: Innovative Resourceful Risk takers Flexible Self motivated Able to work with others Good leaders Able to see the big picture Steps for Entrepreneur to create business plan: First Steps: Goals and objectives Sales forecasting Finance plan indicating income, breakeven point A budget Next: Securing funding o Typically owners savings, investments, family & friend loans
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o Venture Capital companies o (SBIC) small business investment companies o Angel investors o (SBA) Small Business Administration Loans Special purpose loans Micro loans Certified development company (504) loan program Small Business success Competent management Commitment to doing whatever to succeed Accurate reading for the demand of the product in the market Right place at the right time “ LUCK “ Small Business Failure Lack of planning upfront Inexperience or incompetent management Lack of commitment to business Weak financial and inventory control Lack of capital Economic Systems: Traditional Economy – rural, agrarian few exist Planned Economy – control by government over – who, what, how, price o Communist System – complete control o Socialist System – government control of social services and utilities Market Economy – individuals decide on all aspects of business o Free market o Free enterprise o Capitalist systems Mixed Economy – combination of Planned Economy and Market Economy – economic decisions made by business individuals with some government control and oversight (US, Great Britain, Germany) Market Forces – Set Prices – thru the Laws of Supply and Demand Demand is willingness and ability for consumer to buy goods and services Supply is willingness and ability of producer to produce goods and services Law of Supply – producers will produce more products as price increases and less product as the price decreases Law of Demand – consumers will buy more products as price decreases and less as the price increases Equilibrium Point or Market Price – a point at which a balance between supply and demand is reached Supply curve – indicates the amount of goods or services offered at differet price points Demand curve – show how many products will be bought at different prices
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