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Business Ownership

Business Ownership. Introduction to Business & Marketing. Types of Business Ownership. Entrepreneurship Sole Proprietorship Partnership Corporation Limited Liability Company (LLC ) Franchises. 1. Entrepreneurship.

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Business Ownership

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  1. Business Ownership Introduction to Business & Marketing

  2. Types of Business Ownership • Entrepreneurship • Sole Proprietorship • Partnership • Corporation • Limited Liability Company (LLC) • Franchises

  3. 1. Entrepreneurship • Entrepreneurship- the process of starting and managing your own business • An entrepreneur is someone who starts and manages their own business

  4. Entrepreneurship Advantages Disadvantages • Personal freedom • Personal satisfaction • Potential for increased income • Risk • Long, irregular hours • Need for daily discipline

  5. 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?

  6. Think About It… What personality traits, qualities, or skills are needed in order to be a successful entrepreneur?

  7. Characteristics of Entrepreneurs • Risk taker • Decision maker • Hard worker • Ambitious • Goal setter • Enjoys challenges • Can adapt to changes

  8. Entrepreneurs

  9. 2. Sole Proprietorships • A business owned by one person • About 3/4 of all businesses in the United States • Usually have a special skill by which they can earn a living: • Plumbers • Contractors • Wedding planners

  10. 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

  11. Sole Proprietorships

  12. 3. Partnerships • Owned by two or more people who share its risks and rewards • A partnership agreement outlines the rights and responsibilities of each partner

  13. 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

  14. Partnerships Larry Page and Sergey Brin - Google Evan Williams and Biz Stone - Twitter Ben Cohen and Jerry Greenfield - Ben & Jerry’s

  15. 4. Corporations • Registered by a state and operates apart from its owners • The owner must get a corporate charter from the state • The owners can sell stockto stockholders • The company must have a board of directors

  16. Did You Know? • Most “big name” businesses are corporations • Only 15 – 20% of all businesses in the U.S. are corporations • Corporations are responsible for 80% of all business conducted in the United States

  17. 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

  18. Corporations

  19. 5. Limited Liability Company • Also known as LLC • 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

  20. Limited Liability Company

  21. 6. Franchises • A legal agreement o 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

  22. 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

  23. Franchises

  24. 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

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