B. OVERVIEW OF SMALL BUSINESS 3.00 Explain the legal environment of small business Compare forms of business ownership Franchises & Family Owned (The logos used in this PowerPoint were copied directly from corporate websites. They have not been altered in any way.)

 Other than starting your own company How else could you get into owning a Business?

Alternate Ways to Starting a Business Buy an existing business. Enter a family business. Own a franchise business. What would be some of the advantages of buying an existing business?

Advantages of Buying an Existing Business Existing businesses already have customers, suppliers, and procedures. Seller of the business may be willing to train the new owner. There are existing financial records. Financial arrangements may be easier. What would be some of the disadvantages?

Disadvantages of Buying an Existing Business Business may be for sale because it is not making a profit. Problems may be inherited with the purchase of an existing business. Many entrepreneurs may not have the capital needed to purchase an existing business. What are some advantages of entering a family business?

Advantages to Entering a Family Business There is a certain sense of pride and accomplishment that comes from being part of a family endeavor. A business can remain in the family for generations. Some people enjoy working with relatives. The efforts of running a family business give one the benefit of knowing that their efforts are helping those whom they care about. What are some of the disadvantages?

Disadvantages to Entering a Family Business Senior management positions are often held by family members who may not be the best qualified. It may be difficult to retain qualified employees who are not members of the family. Family politics may affect decisions regarding the business. It is often difficult to separate business life and private life in family-run businesses. It is often difficult to set policies and procedures and to make decisions.

Franchise Business  What is a franchise business?  Give me some examples?

Own a Franchise Business Franchise : A legal agreement that gives an individual the right to market a company’s products or services in a particular area. Franchisee : A person who purchases a franchise agreement. Franchisor : The person or company who sells a franchise. Initial franchise fee : The fee the franchise owner pays in return for the right to run the business. Are there advantages of owning a franchise?

Advantages of Purchasing a Franchise Business An established product or service is being provided. Franchisors often offer management, technical, and other assistance. Equipment and supplies may be less expensive. A guarantee of consistency attracts customers. What are some disadvantages?

Disadvantages of Purchasing a Franchise Business The cost of franchises may be high, which can reduce profits. Franchise owners are limited in the decisions they can make regarding the business. The performance of other franchises impact on the franchisee. The franchise agreement may be terminated by the franchisor.

Corporation A business that is chartered by a state and legally operates apart from its owners. What are some of the advantages of a corporation?

Advantages of Corporations Can raise money by issuing shares of stock. Offers owners limited liability. Owners are liable only up to the amount of their investments. People can easily enter or leave the business by buying or selling their shares of stock. The business can hire experts to professionally manage each aspect of the business. What are some of the disadvantages?

Disadvantages of Corporations Legal assistance is needed to start a corporation. Start-up is costly. Corporations are subject to more government regulations than partnerships or sole proprietorships. A lot of paperwork is involved in running a corporation. Income is taxed twice.

Types of Corporations C-corporation : The most common form of corporation. It protects the entrepreneur from being personally sued for the actions and debts of the corporation. Subchapter S corporation : A corporation that is taxed like a sole proprietorship or partnership. Nonprofit corporation : Legal entities that make money for reasons other than the owner’s profit. Limited Liability Company (LLC): A new form of business ownership that provides limited liability and tax advantages.

Definition of Public Goods: a public good is a good which, if it is produced, provides a benefit to people even if they do not pay for it. PUBLIC GOOD