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Business Ownership. Introduction to Business & Marketing. Objectives. Define entrepreneurship. Understand the importance of small businesses in the economy. Identify the major types of business ownership. Compare advantages and disadvantages of the different types of business ownership.

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business ownership

Business Ownership

Introduction to Business & Marketing

objectives
Objectives
  • Define entrepreneurship.
  • Understand the importance of small businesses in the economy.
  • Identify the major types of business ownership.
  • Compare advantages and disadvantages of the different types of business ownership.
entrepreneurship
Entrepreneurship
  • Entrepreneurship is the process of starting and managing your own business.
  • An entrepreneur is someone who attempts to earn money and make profits by taking the risk of owning and operating their business.
think about it
Think About It…
  • Who are some famous entrepreneurs that you know? What business did they start?
  • Who are some entrepreneurs you know personally? What business did they start?
  • WHY do you think these people decided to start their own business?
entrepreneurship1
Entrepreneurship

Advantages

Disadvantages

  • Personal freedom
  • Personal satisfaction
  • Potential for increased income
  • Risk / potential of loss
  • Long, irregular hours
  • Need for daily discipline
think about it1
Think About It…

What personality traits, qualities, or skills are needed in order to be a successful entrepreneur?

characteristics of entrepreneurs
Characteristics of Entrepreneurs
  • Risk taker
  • Decision maker
  • Hard worker
  • Ambitious
  • Goal setter
  • Enjoys challenges
  • Can adapt to changes
types of business ownership
Types of Business Ownership
  • Sole Proprietorship
  • Partnership
  • Corporation
  • Limited Liability Company (LLC)
importance of small business
Importance of Small Business
  • Small businesses provide 55% of jobs.
  • There are 1/2 million business started each year – only the strong survive!
sole proprietorships
Sole Proprietorships
  • About 3/4 of all businesses in the United States are sole proprietorships.
  • A sole proprietorship is a business owned by one person.
  • Sole proprietors usually have a special skill by which they can earn a living (i.e. plumbers, contractors, wedding planners, etc.).
sole proprietorships1
Sole Proprietorships

Advantages

Disadvantages

  • Easy to start up
  • Able to make all decisions for the business
  • Keep all profits
  • Unlimited liability
  • Limited access to credit or financing
  • Owner may not have all the skills or expertise necessary
  • Business dissolves when the owner dies
partnerships
Partnerships
  • A partnership is a business owned by two or more people who share its risks and rewards.
  • A partnership agreement outlines the rights and responsibilities of each partner.
partnerships1
Partnerships

Advantages

Disadvantages

  • Easy to start up
  • Easier to obtain money
    • Each partner contributes
    • Bank more likely to lend
  • Each partner brings different skills and talents to the business
  • All partners share risk
    • May be held responsible for partner’s mistakes
  • Unlimited liability
  • Personality conflicts can affect decision making
corporations
Corporations
  • A corporation is a company that is registered by a state and operates apart from its owners.
  • The owner must get a corporate charter (business license) from the state where the main office will be located.
  • To raise money, the owners can sell stock (shares in the company) to stockholders.
  • The company must have a board of directors to govern the corporation.
did you know
Did You Know?
  • Most “big name” businesses are corporations.
  • Only 15 – 20 percent of all businesses in the United States are corporations.
  • Corporations are responsible for 80% of all business that is conducted in the United States.
corporations1
Corporations

Advantages

Disadvantages

  • Limited liability
    • Owners are only responsible for the capital they invested
  • Easy to raise money by selling stock
  • Business continues after owner’s death
  • Professionally managed (hire experts)
  • Double taxation
    • Company pays tax on income
    • Stockholders pay tax on profits
  • More government regulations
  • Difficult and costly to start
  • Complex business to run
sweet webquest
Sweet WebQuest!

Candy Companies & Types of Businesses

subchapter s corporation
Subchapter S Corporation
  • One type of corporation
  • Small business that is taxed like a partnership or sole proprietorship but has up to 35 shareholders
limited liability company
Limited Liability Company
  • Also known as LLC
  • Relatively new form of ownership
  • Hybrid of a partnership and corporation
    • Owners protected from personal liability
    • Profits / losses pass directly to owners without taxation to the company itself
franchises
Franchises
  • A franchise is a legal agreement to use the name and sell the products of a parent company in a designated geographic area.
  • Franchisee: person who buys the rights to operate the business
  • Franchisor: recognized company that allows independent owners to use their name
  • The franchisee pays the franchisor an annual fee and a share of the profits.
franchises1
Franchises

Advantages

Disadvantages

  • Owner receives thorough business training
  • Uses a tested management system
  • Owner is guaranteed a certain geographic area
  • Usually widely recognized names
  • High initial cost
  • Owner has to follow strict rules and regulations
  • Judged by performance of peers
did you know1
Did You Know?
  • Many businesses start as one form of business ownership, but move into other forms later.
  • Example: Ben & Jerry’s started as a partnership, became a Subchapter S Corporation, and then eventually became the corporation we know today.
top 10 franchises
Top 10 Franchises

Online Article with Worksheet