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Entrepreneurship. Chapter 33. What is entrepreneurship. The process of starting and managing your own business Entrepreneurs – are people who organize, manage, and take a risk to own a business Examples: Henry Ford – Ford Company Ray Kroc – McDonalds Bette Graham – Liquid Paper

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Entrepreneurship

Entrepreneurship

Chapter 33


What is entrepreneurship
What is entrepreneurship

  • The process of starting and managing your own business

  • Entrepreneurs – are people who organize, manage, and take a risk to own a business

    • Examples: Henry Ford – Ford Company

      • Ray Kroc – McDonalds

      • Bette Graham – Liquid Paper

      • Terri Tuttle - Baxters

      • Tyler Megargel – Crayola Coloring Sheets


Risks of entrepreneurship
Risks of Entrepreneurship?

  • Losing money – your investment

  • No guarantee for success: Lots of time and effort


Main advantages of entrepreneurship
Main Advantages of Entrepreneurship

  • Personal freedom – Not controlled by anyone else, can set own schedules

  • Personal satisfaction – Doing what you enjoy

  • Increased income – rewards for hard work

  • Increased self-esteem – From being successful


Disadvantages of entrepreneurships
Disadvantages of Entrepreneurships

  • Potential loss of income – could lose money

  • Long and irregular hours

  • Necessity for strong self-discipline –

  • May have to do tedious, time-consuming tasks such as cleaning, answering phones, paperwork


Why is entrepreneurship important to our economy
Why is entrepreneurship important to our economy???

  • Small businesses provide 55% of jobs for our labor force

  • Small businesses produce 50% of the Gross Domestic Product (goods and services produced in the U.S. using our labor and property)

  • Offer consumers choices of goods and services

  • Improve products and processes

  • Challenge existing businesses to become better

  • Generates jobs


Characteristics of sole proprietorship
Characteristics of Sole Proprietorship

  • Owned and operated by one person

  • The most common form of business ownership

  • Approximately 70% of all U.S. businesses fall into this category


Advantages of sole proprietorship
Advantages of Sole Proprietorship

  • Gets to keep all of the profits

  • Relatively easy to start

  • Get to make all business decisions on own

  • Taxed less than any other business

  • More freedom from government regulation


Disadvantages of sole proprietorship
Disadvantages of Sole Proprietorship

  • Unlimited liability – you have all of the responsibility for the debt

  • Limited assets such as money to reinvest in business

  • Making all of decisions can be hard


Partnership
Partnership

  • Characteristics – legal agreement between 2 or more people to start a business

  • Only 10% of businesses in U.S.

  • Should have a partnership agreement – done by an attorney


Types of partnership
Types of partnership

  • General Partnership – each partner shares in the profits and losses (unlimited liability)

  • Limited Partnership – each partner is limited for any debts only up to the amount of investment; Limited partners typically have no voice in the decisions of the business


Advantages of partnership
Advantages of Partnership

  • Combines the skills of the owners

  • Have more money to work with

  • Taxed less heavily than a corporation


Disadvantages of partnership
Disadvantages of Partnership

  • Owners may not always agree

  • Partners actions are legally binding on other partners

  • Business is dissolved if one partner dies


Corporation
Corporation

  • Characteristics:

    • Business that is chartered by the state

    • Legally operates apart from the owner or owners

    • Most complicated

    • Have a board of directors who make decisions for the corporation


Stockholders
Stockholders

  • People who actually have ownership in the corporation and have limited liability

  • Stock – unit of ownership in the

    corporation


Advantages of corporation
Advantages of Corporation

  • Owners have limited liability

  • Easier for corporation to raise money

  • People can easily enter and leave the business

  • Each operation area is typically professionally managed


Disadvantages of corporation
Disadvantages of corporation

  • Complex to form

  • Increased government regulation

  • Higher taxes on profits

  • Intricate accounting and record keeping


Legal steps to starting a business
Legal Steps to starting a business

  • Sole proprietorships and partnerships - File for a “Doing Business As” (DBA) – your county government recognizes that your business exists.

  • Corporations – File for “Articles of Incorporation” – with securities bureau in state department of commerce (name, address, purpose, directors, and amount of stock to each director)


Legal steps cont
Legal Steps (cont.)

  • Local licenses – zoning ordinances, building codes, safety standards

  • Obtain a state license – protects people from unqualified people practicing in a business

    • Examples: Doctors, accountants, cosmetologists, barbers, marriage counselors, and pharmacists


Franchises
Franchises

  • An agreement to operate a business in the name of a recognized company

    • Franchisee – the person purchasing the franchise

    • Franchisor – the owner of the franchise

    • Must run the franchise per the franchisor’s specifications

    • http://www.culvers.com/franchise/how.aspx

    • http://www.steaknshakefranchise.com/costs-and-qualifications-requirement-information.php


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