Equity Financing

Equity financing is a strategy for obtaining capital that involves selling a partial interest in the company to investors. The equity, or ownership position, that investors receive in exchange for their funds usually takes the form of stock in the company.


Ergonomics is the process of changing the work environment (equipment, furniture, pace of work, etc.) to fit the physical requirements and limitations of employees, rather than forcing workers to adapt to jobs that can, over time, have a debilitating effect on their physical well-being. Companies of all shapes and sizes have increasingly recognized that establishing an ergonomically sensitive work environment for employees can produce bottom-line benefits in cutting absenteeism, reducing health care costs, and increasing productivity.

Estate Tax

Estate taxes are taxes due to the federal government upon the death of the owner of a business or estate. At first glance, IRS figures indicate that the tax has a far greater impact on wealthy individuals than on small business owners, but representatives of the latter group insist that it has long been a dreaded levy that packs a deceptive punch among small businesses.

European Union (EU)

The European Union (EU), formerly known as the European Community (EC), was formed in the 1950s to encourage and oversee political and economic cooperation between numerous European nations. In the nearly half-century since it was formed, the EU has gradually succeeded in becoming the dominant governing economic body in Europe, and it now affects every aspect of business in its member states.

Expense Accounts

Expense accounts, also called expense allowances, are plans under which companies reimburse employees for business-related expenses. These expenses include travel, entertainment, gifts, and other expenses related to the employer's business activity.

Export-Import Bank

The United States Export-Import (Ex-Im) Bank, originally established in 1945, is an independent agency that was created to help finance U.S. exports to industrializing and developing markets by providing loans, credit guarantees, and insurance.


Exporting is the practice of sending or carrying merchandise to a foreign country for trade or sale. International business is a potentially lucrative area for many businesses, but the small business owner should be aware that establishing oneself in a foreign market is a complex, time-consuming task.

Exporting—Financing and Pricing

One of the most important elements in establishing a successful exporting business is understanding financing and pricing issues associated with international trade. Production costs and product pricing are profoundly interrelated aspects of any business venture; an enterprise has to fully understand its marketing, production, distribution, and other operating costs if it hopes to make an informed decision regarding pricing strategies for its product line.

Facility Layout and Design

Facility layout and design is an important component of a business's overall operations, both in terms of maximizing the effectiveness of production processes and meeting employee needs and/or desires. Writing in Production and Operations Management, Howard J.

Facility Management

In an article for Managing Office Technology, Kit Tuveson defined facility management as "the coordination of the physical workplace with the people and work of an organization. It integrates the principles of business administration, architecture, and the behavioral and engineering sciences." In the most basic terms, facility management encompasses all activities related to keeping a complex operating.


Factoring is a form of financing in which a business sells its receivables to a third party or "factor company" at a discounted price. Under this arrangement, the factor agrees to provide financing and other services to the selling business in return for interest and fees on the money that they advanced against receivables invoices.

Family Limited Partnership

Family limited partnerships (sometimes known as FLPs) are an increasingly popular succession planning alternative utilized by owners of family businesses who want to pass the establishment on to their children without being hit by heavy federal taxes. Neil Alexander, writing in Best's Review, described the family limited partnership as "a legal agreement that allows business owners and their children to address several tax, business-succession, and estate-planning needs all at once.

Family and Medical Leave Act

The Family and Medical Leave Act (FMLA) provides employees who qualify with up to 12 work weeks of unpaid, job-protected leave in a 12-month period for specified family and medical reasons. It also requires group health benefits to be maintained during the leave as if employees continued to work instead of taking leave.

Family-Owned Businesses

A family-owned business is any business in which two or more family members are involved and the majority of ownership or control lies within a family. Family-owned businesses may be the oldest form of business organization, and today they are recognized as important and distinct participants in the world economy.

Feasibility Study

A feasibility study is a detailed analysis of a company and its operations that is conducted in order to predict the results of a specific future course of action. Small business owners may find it helpful to conduct a feasibility study whenever they anticipate making an important strategic decision.

Federal Trade Commission (FTC)

The Federal Trade Commission (FTC) was established as an independent administrative agency pursuant to the Federal Trade Commission Act of 1914. The purpose of the FTC is to enforce the provisions of the Federal Trade Commission Act, which prohibits "unfair or deceptive acts or practices in commerce." The Clayton Antitrust Act (1914) also granted the FTC the authority to act against specific and unfair monopolistic practices.

Fica Taxes

Federal Insurance Contribution Act (FICA) taxes, which include contributions to federal Social Security and Medicare programs, must be paid by all American workers, whether they are employed by a company or are self-employed. Small businesses that employ persons other than the owner or partners are required to withhold FICA taxes—along with regular income taxes—from the wages paid to employees, remit these taxes to the Internal Revenue Service (IRS), and make regularly scheduled reports to the IRS about the amount of taxes owed and paid.

Fiduciary Duty

Fiduciary duty is a legal requirement of loyalty and care that applies to any person or organization that has a fiduciary relationship with another person or organization. A fiduciary is a person, committee, or organization that has agreed to accept legal ownership or control and management of an asset or group of assets belonging to someone else.

Finance Companies

Commercial finance companies have in recent years become a favorite option for entrepreneurs seeking small business loans. These institutions generally charge higher interest rates than banks and credit unions, but they also are more likely to approve a loan request.

Finance and Financial Management

Finance and financial management encompass numerous business and governmental activities. In the most basic sense, the term finance can be used to describe the activities of a firm attempting to raise capital through the sale of stocks, bonds, or other promissory notes.

Financial Analysis

Financial analysis is an aspect of the overall business finance function that involves examining historical data to gain information about the current and future financial health of a company. Financial analysis can be applied in a wide variety of situations to give business managers the information they need to make critical decisions.

Financial Planners

A good financial planner will conduct an in-depth interview to gather information about the client's income, expenses, assets, liabilities, future goals, and risk tolerance. Then the planner will use this information to develop a detailed, written financial plan specifically for the client.

Financial Ratios

Financial ratios illustrate relationships between different aspects of a small business's operations. They involve the comparison of elements from a balance sheet or income statement, and are crafted with particular points of focus in mind.

Financial Statements

Financial statements are written records of business finances, including balance sheets and profit and loss statements. They stand as one of the most essential components of business information, and as the principal method of communicating financial information about an entity to outside parties.


A firewall is a computer security device that is situated between a small business's internal network and the Internet. It can work at either the software or the hardware level to prevent unwanted outside access to the company's computer system.

Fiscal Year

A fiscal year is any 52-week period used consistently by an organization for the purposes of financial reporting and policy setting. It may or may not correspond with the typical calendar year of January to December.

Fixed and Variable Expenses

Fixed and variable expenses are the two main components of a company's total overhead expense. Fixed costs are those that do not fluctuate with changes in production activity level or sales volume, such as rent, insurance, dues and subscriptions, equipment leases, payments on loans, depreciation, management salaries, and advertising.

Flexible Benefit Plans

Flexible benefit plans allow employees to choose the benefits they want or need from a package of programs offered by an employer. Flexible benefit plans may include health insurance, retirement benefits such as 401(k) plans, and reimbursement accounts that employees can use to pay for out-of-pocket health or dependent care expenses.

Flexible Spending Account (FSA)

A flexible spending account (FSA) is a tax-deferred savings account established by an employer to help employees meet certain medical and dependent-care expenses that are not covered under the employer's insurance plan. Established under Section 125 of the Internal Revenue Code, FSAs were once known as medical Individual Retirement Accounts (IRAs).

Flexible Work Arrangements

Flexible work programs are work arrangements wherein employees are given greater scheduling freedom in how they fulfill the obligations of their positions. The most commonplace of these programs is flextime, which gives workers far greater leeway in terms of the time when they begin and end work, provided they put in the total number of hours required by the employer.

Flow Charts

A flow chart, or flow diagram, is a graphical representation of a process or system that details the sequencing of steps required to create output. A typical flow chart uses a set of basic symbols to represent various functions, and shows the sequence and interconnection of functions with lines and arrows.

Focus Groups

A focus group is a marketing research tool in which a small group of people (typically eight to ten individuals) engages in a roundtable discussion of selected topics of interest in an informal setting. The focus group discussion is typically directed by a moderator who guides the discussion in order to obtain the group's opinions about or reactions to specific products or marketing-oriented issues, known as test concepts.


Forecasting can be broadly considered as a method or a technique for estimating many future aspects of a business or other operation. Planning for the future is a critical aspect of managing any organization, and small business enterprises are no exception.

Fortune 500

The term Fortune 500 refers to an annual listing by Fortune magazine of the top 500 public companies in the U.S., as ranked by sales, assets, earnings, and capitalization. This list ranks only public companies, or those which have issued securities through an offering and which are traded on the stock market.

401(K) Plans

A 401(k) plan is a tax-deferred, defined-contribution retirement plan. The name comes from a section of the Internal Revenue Code that permits an employer to create a retirement plan to which employees may voluntarily contribute a portion of their compensation on a pre-tax basis.


Franchising is a kind of licensing arrangement wherein a business owner, known as the "franchisor," distributes or markets a trademarked product or service through affiliated dealers, who are known as "franchisees." While these franchisees own their establishments, terms of franchising agreements typically require them to share operational responsibilities with the franchisor.

Free-Lance Employment/Independent Contractors

Free-lance employees, also known as independent contractors, are individuals who work on their own, without a long-term contractual commitment to any one employer. A free-lance employee usually performs services or completes work assignments under short-term contracts with several employers, or clients, who have the right to control only the final result of the individual's work, rather than the specific means used to get the work done.

Gender Discrimination

Gender discrimination, also known as sexual discrimination, is the practice of letting a person's sex unfairly become a factor when deciding who receives a job, promotion, or other employment benefit. It most often affects women who feel they have been unfairly discriminated against in favor of a man.


Globalization is the process by which the economies of countries around the world become increasingly integrated over time. This integration occurs as technological advances expedite the trade of goods and services, the flow of capital, and the migration of people across international borders.


Goodwill is a type of intangible business asset. It is defined as the difference between the fair market value of a company's assets (less its liabilities) and the market price or asking price for the overall company.

Government Procurement

Many small businesses maintain and increase their operations through reliance on local, state, and federal government contracts. While these businesses may also secure business through the offering of competitive bids on jobs offered by the private sector, small business owners should be aware of the differences in procuring work from the public and private sectors.

Graphical User Interface

A graphical user interface (GUI, pronounced "gooey") is a computer environment that simplifies the user's interaction with the computer by representing programs, commands, files, and other options as visual elements, such as icons, pull-down menus, buttons, scroll bars, windows, and dialog boxes. By selecting one of these graphical elements, through either use of a mouse or a selection from a menu, the user can initiate different activities, such as starting a program or printing a document.

Green Marketing

Environmentally-responsible or "green" marketing is a business practice that takes into account consumer concerns about promoting preservation and conservation of the natural environment. Green marketing campaigns highlight the superior environmental protection characteristics of a company's products and services, whether those benefits take the form of reduced waste in packaging, increased energy efficiency in product use, or decreased release of toxic emissions and other pollutants in production.

Green Production

Green production is a business strategy that focuses on profitability through environmentally friendly operating processes. Proponents of this management philosophy contend that green production is a sensible course to follow not only because of the benefits that it bestows on the natural environment, but also because of its fundamental strategic soundness.

Grievance Procedures

Grievance procedures are a means of dispute resolution that can be used to address complaints by employees against management or to settle disputes between a company and its suppliers, customers, or competitors. The best-known application of grievance procedures is as a formal process outlined in labor union contracts.


Groupthink occurs when the pressure to conform within a group interferes with that group's analysis of a problem and causes poor group decision making. Individual creativity, uniqueness, and independent thinking are lost in the pursuit of group cohesiveness, as are the advantages that can sometimes be obtained by making a decision as a group—bringing different sources of ideas, knowledge, and experience together to solve a problem.


Groupware is a category of software designed to help groups work together by facilitating the exchange of information among group members who may or may not be located in the same office. Often, groupware users are collaborating on the same project, although groupware can be used to share a variety of information throughout an entire organization and can also be extended to clients, suppliers, and other users outside the organization.

Health Insurance Options

Health insurance is a contractual agreement between an individual or group and an insurance provider through which the insurance provider agrees to pay for some or all of the health care costs incurred by the person or group in exchange for their regular payment of a sum known as a premium. In this way, the insurance company assumes the financial risk of reimbursing health care costs, but it is able to offset that risk by collecting premiums from a large number of people, many of whom will have very low medical expenses.

Health Maintenance Organizations and Preferred Provider Organizations

Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) administer the most common types of managed care health insurance plans. Managed care plans typically arrange to provide medical services for members in exchange for subscription fees paid to the plan sponsor—usually an HMO or PPO.

Health Promotion Programs

A health promotion program—sometimes known as a wellness program—is a type of employee benefit that encompasses the various efforts companies make to promote and maintain their employees' health. Examples of health promotion programs might include company-sponsored smoking cessation training, visits with a nutritionist to receive information about healthy cooking, discounted fitness center memberships, or free cholesterol testing.

High-Tech Business

High-technology businesses are those enterprises engaged in securing growth and revenue from industry sectors characterized by rapidly changing and advanced technology. In fact, advanced technology has come to be utilized in so many different industries that members of the business community now often regard it as its own unique industry subset, with applications across the spectrum of the world of commerce.

Home Offices

A home office is a space within an individual's personal residence that is used for business purposes. It may be a corner of a spare bedroom equipped with nothing more than a desk.

Home-Based Business

A home-based business is any enterprise for which the principal administrative and managerial activities take place within an individual's personal residence. People start home-based business ventures for a wide variety of reasons.


Hoteling is a form of "alternative officing" which allows employees who travel on business or work flexible hours to reserve desk space at the employer's offices as needed, rather than maintaining a permanent work space there. This allows the employer to make more efficient use of office space and thus reduce costs.


Hypertext Markup Language (HTML) is an authoring tool that is used in creating Internet Web pages. It is the preferred tool for those who wish to make their Web page more accessible and userfriendly because it is able to accelerate downloading over the Internet, although its quickness comes at the expense of formatting control.

Hubzone Empowerment Contracting Program

The HUBZone Empowerment Contracting Program is an initiative of the U.S. Small Business Administration (SBA) that gives preference in securing federal contracts to small businesses located in "historically underutilized business zones," or HUBZones.

Human Resource Management

Human Resource Management (HRM) is the term used to describe formal systems devised for the management of people within an organization. These human resources responsibilities are generally divided into three major areas of management: staffing, employee compensation, and defining/designing work.

Human Resource Management and the Law

The field of human resources management is greatly influenced and shaped by state and federal employment legislation. Indeed, regulations and laws govern all aspects of human resource management, including recruitment, placement, development, and compensation areas.

Human Resource Policies

Human resource policies are the formal rules and guidelines that businesses put in place to hire, train, assess, and reward the members of their work force. These policies, when organized and disseminated in an easily used form—such as an employee manual or large postings—can go far toward eliminating any misunderstandings between employees and employers about their rights and obligations in the business environment.

Income Statements

An income statement presents the results of a company's operations for a given reporting period. Along with the balance sheet, the statement of cash flows, and the statement of changes in owners' equity, the income statement is one of the primary means of financial reporting.