Business in the U.S. Economy Forms of Business Ownership

1. BUSINESS ORGANIZATION Business in the U.S. Economy Forms of Business Ownership Organizational Structure for Businesses

2. Contingent worker- employee with no long term obligation (short term or temporary worker)PERCENT OF BUSINESSES BY EMPLOYEE SIZE

3. BUSINESS ACTIVITIES • Generating ideas • Raising capital • Employing and training personnel • Buying goods and services • Marketing goods and services • Maintaining business records

4. TYPES OF BUSINESSES • Producer- Create products and services Example: Extractor, Farmer, manufacturers • Intermediaries- Selling goods & services Example: Retail clothing store, COSTCO • Service business- Offer something intangible Example: Dentist, Teacher

5. 3 TYPES OF BUSINESS OWNERSHIP • Sole Proprietorship- 1 owner Example: Duncan’s Landscape (small business) • Partnership- 2 or more owners Example: Law office of Smith & Williams • Corporation- A legal entity where the owners are shareholders (stock ownership) Example: Apple, Wal-Mart

6. 3 TYPES OF BUSINESS OWNERSHIP Sole Proprietorship- Unlimited Liability- Owner is 100% responsible for the business Partnership- Partnership Agreement- Legal Document that defines the details of each partner Corporation- Articles of Incorporation- Legal documents that defines the details of the corporation. Stock- shares of ownership in a corporation Limited Liability- The risk is limited to your investment.

7. Forms of Ownership

8. Checkpoint  • Which form of business ownership is the most complex and difficult to form? • The corporation is more complex to begin than other business forms. • Forming a corporation requires much more bureaucracy, is more subject to government regulations, requires the organization of a board, and must have clearly defined bylaws.

9. OTHER FORMS OF OWNERSHIP • Franchise- a chain business that you can purchase for a fee. Any 3 of the ownerships can invest in a franchise EXAMPLE: McDonalds, Sport Clips,

10. Checkpoint  • What are the other specialized forms of business ownership? • Limited liability partnership • Joint venture • S corporation • Limited liability company (LLC) • Nonprofit corporation

11. KEY TERMS • Mission Statement- a written objective of the company’s goals and vision • Goal- the objective, what are you wanting to accomplish • Policies- rules of the business • Procedures- methods of activities that support the mission statement and goals. • Organization chart- chain of command chart, who is in charge of who and what

12. BUSINESS ORGANIZATION CHART

13. (3 types of ownership, advantages/ disadvantages/legal documents)Sole ProprietorshipAdvantage- 100% profit, easy to startDisadvantage- 100% liability & risk, long hoursLegal Docs: Assumed Name Certificate, SS# or Tax IDPartnershipAdvantage- shared responsibility and riskDisadvantage- shared profitsLegal Docs: Partnership Agreement, Tax IDCorporation-Advantage – limited liability, more resourcesDisadvantage- double taxation, limited profitsLegal Docs: Corporate Resolution, Articles of Incorporation, Tax ID

14. Page 2A & 2B (ONLINE RESEARCH)FRANCHISE RESEARCH (2)www.entrepreneur.com/franchiseCORPORATION RESEARCH

15. Entrepreneurship and Small Business Management Becoming an Entrepreneur Small Business Basics Starting a Small Business

16. KEY TERMS • Entrepreneur- the individual that is a risk taker and innovator. • Entrepreneurship- the business that is creative and risky. • Characteristics: Creative, confident, goal-oriented, motivated, hard-working • Risks: Unproven idea, little management experience, long-hours with no guarantee of a profit

17. KEY TERMS • Venture Capital- Money provided by large investors to finance new products and new businesses that have a good chance to be very profitable *Innovation- a brand new creation or invention *Improvements- a significant design change or addition on an existing product

18. Small Business- a business with less than 500 employees (typically just a few people) • Not all business owners and managers are entrepreneurs. • Entrepreneurs have unique skills and personal characteristics. • 3 CHARACTERISTICS OF A SMALL BUSINESS: The owner is usually the manager Usually only 1 or 2 locations Typically serves a small market

19. 3 Reasons most small businesses fail • Lack of money • Lack of management experience • Not keeping adequate records

20. Employment Growth by Business Size, 1990–2005

21. Checkpoint  • What are the sources of financing that entrepreneurs use for their new businesses? • Personal savings • Friends and family • Venture capital • Bank loans

22. KEY TERMS • Small Business Administration (SBA)- a government agency that helps small business owners develop business plans and obtain financing

23. Common Types of Small Businesses as Percent of All Small Businesses

24. BUSINESS PLAN Business Plan- a written description of the business idea and how it will be carried out. 5 ELEMENTS 1)Description of the business & goals 2)Customer Analysis- knowing your customer 3)Operations Plan- organizing the business 4)Marketing Plan- marketing & advertising 5)Financial Plan- Creating a Budget: start up, short term & long term

25. Checkpoint  • What are the “strategic alternatives” in a business plan? • Strategic alternatives are alternative plans for production, staffing, financing, and so on. • Even the best business plan cannot predict every possible circumstance. • An alternate plan allows a business to be prepared for the unforeseeable.

26. FINANCING THE SMALL BUSINESS • Types of financing • Start-up financing- the money and details of getting the business started: inventory, supplies • Short-term financing- the money needed for the first year of expenses • Long-term financing- a 3-5 year plan of success for the business, identify long term financial needs.

27. Checkpoint  • In addition to owner-supplied capital, what are several other sources of financing for a small business? • Borrowed money may come from banks, finance companies, or other individuals, such as friends and family. • Some suppliers may also be willing to extend credit.

28. Entrepreneur- ONLINE RESEARCH • WHO INSPIRES YOU? • WHAT IDEAS INSPIRE YOU?