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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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Presentation Transcript
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
  • 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
  • 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
  • People who actually have ownership in the corporation and have limited liability
  • Stock – unit of ownership in the


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
  • 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