Being a business owner
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Being a Business Owner. Section 4.2. Read to Learn. The four main ways to become a business owner and the advantages and disadvantages of each The different forms of legal business ownership. Read to learn. How to prepare to finance a new business Factors that can affect business success.

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Being a business owner

Being a Business Owner

Section 4.2


Read to learn

Read to Learn

  • The four main ways to become a business owner and the advantages and disadvantages of each

  • The different forms of legal business ownership


Read to learn1

Read to learn

  • How to prepare to finance a new business

  • Factors that can affect business success


Main idea

Main idea

  • Knowing the factors that affect a business’s success will help you to launch a successful business


Key concepts

Key Concepts

  • Going into Business

  • Owning a Business

  • Operating Your Business


Key terms

Key Terms

Operating expenses

Income statement

Revenue

Gross Profit

Net Profit

  • Start up costs

  • Lease

  • Goodwill

  • Market outlook

  • Franchise

  • Sole proprietorship

  • Partnership

  • corporation


Going into business

Going into Business

Four Main Ways to Go into Business


Starting a new business

Starting a New Business


Starting a new business1

Starting a new business

  • Examples of start up costs include:

    • Renting or buying space

    • Buying equipment and supplies

    • Buying insurance

  • Key Term:

  • Start-up Costs:

  • The expenses involved in going into business


Buying an existing business

Buying an existing business

  • Before buying an existing business, determine whether the problems of the business can be fixed, and at what costs


Buying an existing business1

Buying an Existing business


Buying an existing business2

Buying an existing business


Buying an existing business3

Buying an existing business

  • When buying an existing business, you may be able to keep the existing lease.

  • Key Term:

  • Lease – a contract to use something for a specified period of time


Buying an existing business4

Buying an existing business

  • When buying an existing business, you may be able to take advantage of existing goodwill of existing customers.

  • Key Term:

  • Goodwill - Loyalty


Buying an existing business5

Buying an existing business

  • When buying an existing business, you should be aware of the market outlook

  • Key Term:

  • Market Outlook – The potential for future sales


Buying a franchise

Buying a franchise

  • Buying a franchise offers specific advantages

  • You agree to pay a percentage of your profits to the parent company

  • Key Term:

  • Franchise –

  • The legal right to sell a company’s goods and services in a particular area


Buying a franchise1

Buying a franchise


Buying a franchise2

Buying a Franchise


Joining a family business

Joining a family business


Joining a family business1

Joining a family business


Owning a business

Owning a business

  • As a business owner, you will have to decide if you will run the business yourself, or if you will share the work and risks.


Forms of legal ownership

Forms of legal ownership

Sole Proprietorship

Three basic forms of legal ownership

Partnership

Corporation


Forms of legal ownership1

Forms of legal ownership

  • Most businesses begin as a sole proprietorship.

  • The owner is responsible for all the business’s assets and debts

  • Key Term:

  • Sole Proprietorship- when the business is completely owned by one person


Forms of legal ownership2

Forms of legal ownership

  • In a partnership, all partners are liable for the debts of the business

  • Key Term:

  • Partnership- a legal arrangement in which two or more people share ownership


Corporation

Corporation

  • In a corporation, shareholders earn a profit based on the number of shares they own

  • Key Term:

  • Corporation – a business chartered by a state that legally operates apart from the owner(s)


Operating your business

Operating your business

  • Whatever type of business you launch, you will need money to finance …. Financing


Financing

Financing

  • A business plan gives specific information about your business


Financing1

financing

  • A financial plan spells out your start-up costs, operating expenses, and other costs for the first few months

  • Key Term:

  • Operating Expenses- the costs of doing business, such as the costs of manufacturing and selling the product


Ongoing operations

Ongoing operations

  • Financial records are needed for tax purposes and for seeding additional financing

  • The income statement is an essential business record

  • Key Term:

  • Income statement-

  • A summary of a business’s income and expenses during a specific period


Ongoing operations1

Ongoing operations

  • The first item in an income statement is revenue

  • Another item in the income statement is gross profit

  • The net profit is an important part of the income statement

  • Key Terms:

  • Revenue – The income from sales

  • Gross Profit – The difference between the cost of goods and their selling price

  • Net Profit – The amount left after operating expenses are subtracted from the gross profit


Ongoing operations2

Ongoing operations

  • The balance sheet summarizes a business’s assets, liabilities, and owners equity

  • Assets are anything of monetary value

  • Liabilities are debts a business owes

  • Net worth is the difference between assets and liabilities

  • A cash flow statement is a monthly plan that shows when you anticipate cash coming into the business and when you expect to pay out cash


Succeeding in business

Succeeding in business

Financing

Location

Factors of Succeeding in Business

Management

Competition


Location

Location

  • Factors that contribute to a successful business location include:

  • The type of businesses in the area

  • The condition of the streets and buildings

  • The cost of property

  • The location of competition

  • The location of your customers


Competition

Competition

  • To compete successfully, you must be familiar with your competitor’s product or service

  • You must also produce a better product than your competitors


Management

Management

  • Poor management is one of the main reasons for business failure


Exit ticket

Exit Ticket

  • 1. Name the four ways to become a business owner. Which one would you choose? Why?

  • 2. Explain the differences between a partnership and a corporation

3. Describe one of the documents you would need to prepare to apply for a business loan.


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