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6 Basic Activities of Business

6 Basic Activities of Business. Generate ideas Raise capital (owners equity or loans) Employing & Training personnel Buy goods & services Necessary equipment Accounting, legal & advertising services Marketing goods & services Maintain business records. Types of Businesses.

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6 Basic Activities of Business

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  1. 6 Basic Activities of Business • Generate ideas • Raise capital (owners equity or loans) • Employing & Training personnel • Buy goods & services • Necessary equipment • Accounting, legal & advertising services • Marketing goods & services • Maintain business records

  2. Types of Businesses Producers- create the products and services used by individuals and other businesses. • Extractors • Farmers • manufacturers

  3. Intermediaries- businesses involved in selling the goods and services of producers to consumers and other businesses. • Retailers • Wholesalers

  4. Service Business- carries out activities that are consumed by its customers. • Dentists • Physicians • Attorneys Service businesses are the fastest growing part of the U.S. economy. Currently, 60% of all businesses are service-producing businesses.

  5. Ownership Opportunities • Sole Proprietorship • Partnership • Corporation • Franchise

  6. Sole Proprietorship • A business owned and operated by one person. • Most common form (approximately 70% of all U.S. businesses) • SP usually have a special skill by which they can earn a living

  7. Entitled to all profits Easy to start Make all business decisions Taxed less than other forms COMPLETE CONTROL! Must provide $ & management Responsible for all debts Unlimited Liability--Creditors can take your personal assets Difficult to expand Advantages & Disadvantages

  8. Partnership • A business owned and controlled by two or more people who have entered into a written agreement. • Least common form of U.S. businesses (10%)

  9. Combines skills of owners May offer more money (expansion) Taxed less heavily than a corporation Owners may not agree, yet the actions of one partner are legally binding Share debt Business is dissolved if one partner dies Advantages & Disadvantages

  10. Corporation • A business that is chartered by a state and legally operates apart from the owner or owners. • Most complicated form of business ownership • Raise money through 2 methods: • Sell stock (represents legal ownership of a corporation) to stockholders • Sell bonds (a written promise to repay the amount borrowed)

  11. Limited liability Professional management Easy to expand Easy to enter or leave Owners receive dividends if profitable Complex to form Increased government regulation Higher taxes on corporation & individuals Detailed accounting & record keeping Advantages & Disadvantages

  12. Franchise • An agreement to operate a business in the name of a recognized company.

  13. Top Ten Franchises of 2011 Hampton Hotels Ampm McDonald’s 7-eleven Supercuts Days Inn Vanguard Cleaning Systems Servpro Subway Denny’s Entrepreneur Inc.

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