BUSINESS OWNERSHIPIntroduction to Business & Marketing

OBJECTIVESDefine 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.

ENTREPRENEURSHIPEntrepreneurship 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… 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?

ENTREPRENEURSHIP

Personal freedom

Personal satisfaction

Potential for increased income

Risk / potential of loss

Long, irregular hours

Need for daily discipline

AdvantagesDisadvantag

es

THINK ABOUT IT…

What personality traits, qualities, or skills are needed in

order to be a successful

entrepreneur?

CHARACTERISTICS OF ENTREPRENEURS

Risk takerDecision makerHard workerAmbitiousGoal setterEnjoys challengesCan adapt to changes

TYPES OF BUSINESS OWNERSHIP

Sole Proprietorship

Partnership

Corporation

Limited Liability Company (LLC)

IMPORTANCE OF SMALL BUSINESS

Small businesses provide 55% of jobs.

There are 1/2 million business started each year – only the strong survive!

SOLE PROPRIETORSHIPSAbout 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 PROPRIETORSHIPS

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

AdvantagesDisadvantag

es

PARTNERSHIPSA 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.

PARTNERSHIPS

Easy to start up

Easier to obtain moneyEach partner

contributesBank more

likely to lendEach partner

brings different skills and talents to the business

All partners share riskMay be held

responsible for partner’s mistakes

Unlimited liability

Personality conflicts can affect decision making

AdvantagesDisadvantag

es

CORPORATIONSA 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? 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.

CORPORATIONS

Limited liabilityOwners 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 taxationCompany pays

tax on incomeStockholders

pay tax on profits

More government regulations

Difficult and costly to start

Complex business to run

AdvantagesDisadvantag

es

SWEET WEBQUEST!Candy Companies & Types of Businesses

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

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

FRANCHISESA 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.

FRANCHISES

Owner receives thorough business training

Uses a tested management system

Owner is guaranteed a certain geographic area

Usually widely recognized names

High initial costOwner has to follow strict rules and regulations

Judged by performance of peers

AdvantagesDisadvantag

es

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 FRANCHISESOnline Article with Worksheet