6 basic activities of business
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6 Basic Activities of Business. Generate ideas Raise capital (owners equity or loans) Employing & Training personnel Buy goods & services Necessary equipment Accounting, legal & advertising services Marketing goods & services Maintain business records. Types of Businesses.

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6 Basic Activities of Business

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6 Basic Activities of Business

  • Generate ideas

  • Raise capital (owners equity or loans)

  • Employing & Training personnel

  • Buy goods & services

    • Necessary equipment

    • Accounting, legal & advertising services

  • Marketing goods & services

  • Maintain business records


Types of Businesses

Producers- create the products and services used by individuals and other businesses.

  • Extractors

  • Farmers

  • manufacturers


Intermediaries- businesses involved in selling the goods and services of producers to consumers and other businesses.

  • Retailers

  • Wholesalers


Service Business- carries out activities that are consumed by its customers.

  • Dentists

  • Physicians

  • Attorneys

    Service businesses are the fastest growing part of the U.S. economy. Currently, 60% of all businesses are service-producing businesses.


Ownership Opportunities

  • Sole Proprietorship

  • Partnership

  • Corporation

  • Franchise


Sole Proprietorship

  • A business owned and operated by one person.

  • Most common form (approximately 70% of all U.S. businesses)

  • SP usually have a special skill by which they can earn a living


Entitled to all profits

Easy to start

Make all business decisions

Taxed less than other forms

COMPLETE CONTROL!

Must provide $ & management

Responsible for all debts

Unlimited Liability--Creditors can take your personal assets

Difficult to expand

Advantages & Disadvantages


Partnership

  • A business owned and controlled by two or more people who have entered into a written agreement.

  • Least common form of U.S. businesses (10%)


Combines skills of owners

May offer more money (expansion)

Taxed less heavily than a corporation

Owners may not agree, yet the actions of one partner are legally binding

Share debt

Business is dissolved if one partner dies

Advantages & Disadvantages


Corporation

  • A business that is chartered by a state and legally operates apart from the owner or owners.

  • Most complicated form of

    business ownership

  • Raise money through 2 methods:

    • Sell stock (represents legal ownership of a corporation) to stockholders

    • Sell bonds (a written promise to repay the amount borrowed)


Limited liability

Professional management

Easy to expand

Easy to enter or leave

Owners receive dividends if profitable

Complex to form

Increased government regulation

Higher taxes on corporation & individuals

Detailed accounting & record keeping

Advantages &Disadvantages


Franchise

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


Top Ten Franchises of 2011

Hampton Hotels

Ampm

McDonald’s

7-eleven

Supercuts

Days Inn

Vanguard Cleaning Systems

Servpro

Subway

Denny’sEntrepreneur Inc.


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