Types of businesses
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TYPES OF BUSINESSES. SOLE PROPRIETORSHIP, PARTNERSHIPS, CORPORATIONS. FIRST THING. THINK ABOUT PROJECTS FOR SCHOOL…DO YOU LIKE WORKING IN GROUPS OR INDIVIDUALLY? WHAT ARE THE CHALLENGES AND POSITIVES OF WORKING INDIVIDUALLY AND IN GROUPS?. FIRST THING #2.

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TYPES OF BUSINESSES

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Types of businesses

TYPES OF BUSINESSES

SOLE PROPRIETORSHIP, PARTNERSHIPS, CORPORATIONS


First thing

FIRST THING

  • THINK ABOUT PROJECTS FOR SCHOOL…DO YOU LIKE WORKING IN GROUPS OR INDIVIDUALLY?

  • WHAT ARE THE CHALLENGES AND POSITIVES OF WORKING INDIVIDUALLY AND IN GROUPS?


First thing 2

FIRST THING #2

  • S.P. MOST COMMON FORM OF BUSINESS OWNERSHIP

  • 16 MILLION SOLE PROPRIETORSHIPS IN USA

  • MANY FAIL, MANY LAUNCH EVERY DAY

  • PLAY SIGNIFICANT ROLE IN US ECONOMY

  • ENABLES MANY PEOPLE TO PARTICIPATE DIRECTLY IN ECONOMY

  • BARRIERS ARE LOW/POSSIBILITIES FOR EXPANSION ARE GREAT

  • 1. 16,154,000

  • 2. SERVICES


First thing 3

FIRST THING #3

  • CORP. RAISE INVESTMENT CAPITAL FROM BANKS, BONDS, STOCKS

  • SELLING STOCK IS VERY POPULAR

  • CORP GET MONEY/STOCK PURCHASERS BECOME PART OWNERS

  • 1. BOTH

  • 2. COMMON STOCK OWNERSHIP


Starting a business what you need

STARTING A BUSINESS: WHAT YOU NEED…

  • ENTREPRENUER: PERSON WHO ORGANIZES, MANAGES AND ASSUMES THE RISKS OF A BUSINESS

  • DECIDE ON BUSINESS ORGANIZATION

  • LEARN ABOUT LAWS REGULATIONS AND TAX CODES


Help from gov t for small businesses

HELP FROM GOV’T FOR SMALL BUSINESSES

  • FINANCIAL STARTUPS FOR NEW BUSINESSES

  • SMALL BUSINESS INCUBATORS: GENERATE JOB CREATION AND ECONOMIC GROWTH

  • SMALL BUSINESS ADMINISTRATION: SEE WEBSITE: WWW.SBA.GOV/STARTING/INDEXFAQS.HTML


Elements of business operations

ELEMENTS OF BUSINESS OPERATIONS

  • 1. EXPENSES: BUY INVENTORY, OTHER SUPPLY ITEMS…WAGES

  • 2. ADVERTISING

  • 3. RECORD KEEPING: TRACKING EXPENSES

  • 4. RISK: BALANCE RISKS VS ADVANTAGES OF BEING IN BUSINESS


Owning your own business

OWNING YOUR OWN BUSINESS

  • LIST 3 ADVANTAGES TO OWNING YOUR OWN BUSINESS

  • LIST 3 DISADVANTAGES TO OWNING YOUR OWN BUSINESS


Sole proprietorship

SOLE PROPRIETORSHIP

ADVANTAGES

DISADVANTAGES

OWNER KEEPS ALL PROFITS

DECISIONS CAN BE MADE QUICKLY

TAXES LOW

OWN BOSS

EASY TO GET CREDIT

UNLIMITED LIABILITY

HUGE TIME DEMANDS

MUST DEPEND ON OWN AND BORROWED FUNDS


The partnership

THE PARTNERSHIP

  • LIST 3 ADVANTAGES OF HAVING A PARTNER IN BUSINESS

  • LIST 3 DISADVANTAGES OF HAVING A PARTNER IN BUSINESS


Partnership

PARTNERSHIP

ADVANTAGES

DISADVANTAGES

LOSSES ARE SHARED

TAXES USUALLY LOW

COMBINE FUNDS OF SEVERAL PARTNERS

PROFITS ARE SHARED

DECISION MAKING CAN BE SLOW

MAY HAVE TROUBLE BORROWING MONEY

MUST BE REORGANIZED IF LOSE ONE PARTNER


Limited partnerships

LIMITED PARTNERSHIPS

  • PARTNERS ARE NOTE EQUAL

  • GENERAL PARTNER ASSUMES MANAGEMENT DUTIES…OTHER PARTNERS ARE LIMITED PARTNERS

  • LIMITED PARTNERS HAVE NO LIABILITY FOR LOSSES

  • NO SAY IN BUSINESS


Corporations

CORPORATIONS

  • WHAT IS THE DIFFERENCE BETWEEN A PARTNERSHIP, A SOLE PROPRIETORSHIP AND A CORPORATION?


Corporations1

CORPORATIONS

ADVANTAGES

DISADVANTAGES

OWNER’S TIME NOT NEEDED FOR MAKING MONEY

LIMITED LIABILITY

RESPONSIBILITIES SHARED AMONG MANY

SATISFACTION FROM OWNERSHIP

EASY TO RAISE FUNDS

UNLIMITED LIFETIME

SLOW DECISION MAKING

HIGHER TAXES

SHAREHOLDERS HAVE LITTLE SAY IN RUNNING OF COMPANY


Corporations2

CORPORATIONS

  • MUST FILE FOR PERMISSION W/GOVT TO OBTAIN CHARTER

  • CHARTER SPECIFIES NUMBER OF SHARES OF STOCK

  • SHARES ARE CERTIFICATES OF OWNERSHIP

  • SOLD TO STOCKHOLDERS


Intro to stock market

INTRO TO STOCK MARKET

  • BUY LOW SELL HIGH

  • FALLS 7X FASTER THAN IT RISES

  • BULL VS BEAR…DON’T FORGET THE PIGS

  • THE MARKET IS FICKLE AND IS AN INDICATOR OF THE FUTURE


Stockholders

STOCKHOLDERS

  • MONEY FROM STOCKHOLDERS USED TO SET UP/EXPAND CORPORATION

  • IF SUCCESSFUL CORPORATIONS MAY ISSUE DIVIDENDS

    • CHECK REPRESENTING A PORTION OF CORPORATE EARNINGS TO EACH STOCKHOLDER


Common stock

COMMON STOCK

  • BASIC OWNERSHIP OF A CORPORATION

  • USUALLY RECIEVES ONE VOTE FOR EACH SHARE OF STOCK OWNED


Preferred stock

PREFERRED STOCK

  • NONVOTING OWNERSHIP OF CORPORATION

  • DO NOT HAVE RIGHT TO ELECT REPS TO BOARD OF DIRECTORS


Stock returns

STOCK RETURNS

  • MAKE MONEY IN 2 WAYS

  • 1. DIVIDENDS

  • 2. SELLING STOCK FOR MORE THAN IT WAS PAID FOR


Capital gains and losses

CAPITAL GAINS AND LOSSES

  • PERSON BUYS STOCK AT $20 AND SELLS IT FOR $30.

  • PROFIT OF $10 IS CALLED A CAPITAL GAIN

  • IF A PERSON SELLS AT LOWER COST----CAPITAL LOSS


Bonds

BONDS

  • CERTIFICATE ISSUED BY A COMPANY/GOVT IN EXCHANGE FOR BORROWED MONEY

  • BONDS MATURES OVER TIME

  • DOES NOT MAKE BONDHOLDER PART OWNER


Savings bonds

SAVINGS BONDS

  • WAY FOR GOVT TO BORROW $

  • SAFE FORM OF INVESTMENT

  • PERSON BUYING SAVINGS BOND PAYS ½ THE AMOUNT

  • BOND INCREASES EVERY 6 MONTHS UNTIL IT MATURES TO FULL VALUE


Brokers

BROKERS

  • PERSON WHO ACTS AS GO BETWEEN FOR BUYERS AND SELLERS OF STOCKS


Stock exchanges

STOCK EXCHANGES

  • LARGEST STOCK MARKET IS NYSE…

  • REGIONAL EXCHANGES AND INTERNATIONAL EXCHANGES

  • TO BE LISTED A CORPORATION MUST BE IN GOOD STANDING

  • LARGEST, MOST PROFITABLE CORPORATIONS IN THE COUNTRY


Over the counter markets

OVER THE COUNTER MARKETS

  • ELECTRONIC MARKETPLACE FOR STOCKS NOT LISTED ON ORGANIZED EXCHANGES

  • LARGEST ARE QUOTED ON NATIONAL ASSOCIATION OF SECURITIES DEALERS AUTOMATED QUOTATIONS (NASDAQ)

  • MERGED WITH AMERICAN STOCK EXCHANGE IN 1998

  • INVESTOR WOULD USE INTERNET/CALL BROKER TO START TRADING


Mutual funds

MUTUAL FUNDS

  • INVESTMENT COMPANY POOLS MONEY OF MAY INDIVIDUALS TO BUY STOCKS

  • LOSSES IN ONE AREA, MAY BE MADE UP IN ANOTHER

  • FIDELITY…401K

  • STOCKS ARE DIVERSIFIED


Health of stocks

HEALTH OF STOCKS

  • DOW JONES INDUSTRIAL AVERAGE: TRACKS STOCK OF30 LARGE AMERICAN COMPANIES TO MEASURE WELL BEING OF WHOLE MARKET

  • S AND P 500: USES PRICE CHANGES OF 500 STOCKS AS AN INDICATOR


Govt regulations

GOVT REGULATIONS

  • STOCK MARKET HEAVILY REGULATED

  • SEC ADMINISTERS ALL SECURITIES LAWS

  • INVESTIGATES DEALINGS

  • REQUIRES ALL ESSENTIAL INFO BE MADE AVAILABLE TO BUYERS


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