Business Ownership and Operations Chapter 6 pp. 84-97 Introduction to Business

Introduction to Business Learning Objectives Name the three forms of business ownership. Compare the types of ownership. Describe alternative ways to do business. Identify the different types of businesses. continued Introduction to Business

Introduction to Business Why it’s Important You need to understand business ownerships and operations before starting a business . Introduction to Business

Types of Business Ownership 1. The three different ways you can own a business are: Sole proprietorship Partnership Incorporation Introduction to Business

Introduction to Business Sole Proprietorship Sole proprietorship 2. A ____________________ is a business owned by only ________person. one Introduction to Business

Sole Proprietorship Advantages 3. The advantages to having your own business are: It’s easy to start You get to be your own boss You get to keep all the profits The taxes are usually low Introduction to Business

Sole Proprietorship Disadvantages 4. The disadvantages to having your own business are: You have to pay for _______________ You might have to use your __________________ or ____________ from the bank You might lack _____________________ Everything yourself Personal savings Borrow money Business skills Introduction to Business

Sole Proprietorship Disadvantages 5. A serious disadvantage to owning a sole proprietorship is that you have ____________________, or ____________________________ ________________. Unlimited liability Full responsibility for your company’s debts Introduction to Business

Introduction to Business Partnership partnership 6. A _____________ is a business owned by ____________________ who share the risks and rewards. 7. To start a partnership you need to draw up a _______________________, which is a ____________________________ Two or more persons Partnership agreement Contract that outlines the rights and responsibilities of each partner Introduction to Business

Partnership Advantages 8. The advantages to partnership are: You might need only a __________ to start and have to ______________ only on your ___________________. Each of your partners _______________ ____________ to start the business. license pay taxes personal profits. can contribute money continued Introduction to Business

Partnership Advantages Banks are often more willing to lend money to _______________________________. Your partners can _________________ to the business . partnerships than sole proprietorships bring difference skills Introduction to Business

Partnership Disadvantages 9. The disadvantages to partnership are: You not only _______________ with your partners, you also______________________ You might not ______________ with your partners. You share ____________________________ with your partners. Share the risks Share the profits get along Unlimited legal and financial liability Introduction to Business

Graphic Organizer Similarities and Differences Between Partnerships and Sole Proprietorships Partnerships Both Sole Proprietorships Quicker decision- making Owner keeps all profits Owner is own boss Relatively easy to get credit Shared decision- making Pride in owning and running business Easy to set up Low taxes Unlimited liability for debts Huge time demands Increased diversity of experience Shared losses Combined funds Introduction to Business

Introduction to Business Corporation corporation 10. A _________________ is a business owned by many people but treated by __________________________. law as one person Introduction to Business

Introduction to Business Corporation 11. To form a corporation, you need to get ______________________a from the _______________ your headquarters is in. corporate charter state Introduction to Business

Introduction to Business Corporation 12. To raise money, you can sell ____________, or ___________________________________. 13. For each share of common stock, the stockholder gets a __________________ and __________ on how the business is run. 14. You also must have a ________________ who control the corporation. stock shares of ownership in your corporation share of the profits a vote board of directors Introduction to Business

Corporation Advantages 15. A major advantage of a corporation is its _________________________. 16. If your company loses money, the ________________________________ Another advantage is that the corporation __________________________________ limited liability stockholders lose only what they invested doesn’t end if the owners sell their shares Introduction to Business

Corporation Disadvantage 18. A disadvantage of a corporation is that you often have to ________________. 19. The _________________________ corporations. 20. It is __________________________ than a sole proprietorship or a partnership and running a corporation can be much more complicated. pay more taxes Government closely regulates more difficult to start a corporation Introduction to Business

Introduction to Business Figure 6.1 GENERATIONS OF FAMILY-OWNED BUSINESSES Family-owned businesses are sometimes kept in the family for more than one generation. What percentage of families have had their family-owned businesses for two or more generations? Introduction to Business

Introduction to Business Fast Review What are some of the advantages of a sole proprietorship? 2. What is the difference between a sole proprietorship and a partnership? Easy to start, you can be your own boss, you keep all the profits, and you pay taxes only once on the income from the business sole proprietorship is owned by one person and a partnership is owned by two or more people Introduction to Business

Introduction to Business Fast Review If a partner makes a bad business decision, what responsibility do the other partners have? 4. What are the disadvantages of a corporation? All other partners share responsibility of a bad decision It’s more complex to start, it’s more closely regulated by the government, it’s more complicated to run, and you pay more taxes. Introduction to Business

Alternative Ways to Do Business 21. Franchises, cooperatives, and nonprofit organizations offer you ____________________ to do business. other ways Introduction to Business

Introduction to Business Franchise A ____________________________ ________________________________ ___________________________in a designated geographic area. franchise is a contractual agreement to sell a company’s products or services Introduction to Business

Introduction to Business Franchise 23. To run a franchise you have to _______________________________________ or __________________________ 24. In return, the franchisor offers a __________________________________. 25. You can ________________________ yourself, as a sole proprietor, as a partnership with someone else, or even as a corporation. Invest money and pay the franchisor an annual fee a share of the profits well-known name and a business plan can operate a franchise Introduction to Business

Introduction to Business Franchise Advantage 26. An advantage of opening a franchise is that it’s ___________________. 27. The __________________________ can be a _________________ for customers. easy to start name of the parent company big draw Introduction to Business

Franchise Disadvantage 28. The disadvantage of running a franchise is that the franchisor is often ________________________________. very strict about how the business is run Introduction to Business

Nonprofit Organization 29. A ________________________ is a type of business that focuses on providing a service rather than making a profit. Like a corporation, a nonprofit organization has to _______________ ___________________ and might be run by a board of directors. nonprofit organization register with the government Introduction to Business

Nonprofit Organization 31. Because it doesn’t make a profit, a nonprofit organization _____________ ______________________ 32. Donors ___________ receive dividends like investors, but they can _______________________________ doesn’t have to pay taxes don’t deduct their donations from their taxes Introduction to Business

Introduction to Business Cooperative 33. A ________________ is an organization ________________________________ for the purpose of saving money on the purchase of certain goods and services. cooperative owned and operated by its members Introduction to Business

Introduction to Business Cooperative A cooperative is like a corporation in that it ________________________ from the individual businesses. 35. A ___________________________ and choose a board of directors to run it. exists as a separate entity cooperative can sell stock Introduction to Business

Introduction to Business Cooperative Cooperatives can save money by _______________________________ __________________________. 37. Cooperatives ___________________ than regular corporations do. buying insurance, supplies and advertising as a group pay less taxes Introduction to Business

Introduction to Business Fast Review What are some examples of franchise businesses? What types of assistance does the franchisor give a franchisee? Fast-Food (McDonald’s, Rita’s), photocopy services (Mailboxes etc.) Management training, advertising, and a system of operations Introduction to Business

Introduction to Business Fast Review How is a nonprofit organization like and unlike a corporation? What are some advantages of a cooperative? They are alike because both needs to register with the government and might be run by a board of directors. Unlike in that it doesn’t pay taxes and gets money through grants and donations pool resources and save money as group Introduction to Business

Introduction to Business Types of Businesses 38. One way to classify businesses is to group them by the kind of products they provide: Producing raw goods Processing raw goods Manufacturing goods from raw or processed goods Distributing goods Providing services continued Introduction to Business

Introduction to Business Producers 39. A ___________________is a business that gathers __________________ in their natural state. 40. ___________________ are materials gathered in their original state from _____________________ such as land and water. producer raw products Raw materials natural resources Introduction to Business

Introduction to Business Processors Processors 41. ______________ change raw materials into ____________________. 42. Processed goods : more finished products are made from raw goods and may require further processing. Introduction to Business

Introduction to Business Manufacturers Manufacturers 43. _____________________ are businesses that make _______________ out of processed goods. 44. The finished products ________________________________ _________________________________. finished products need no further processing and are ready for market. Introduction to Business

Introduction to Business Intermediaries intermediary 45. An _________________is a business that moves goods from one business to another. 46. It buys goods, ___________________ __________________________________ stores them, and then resells them Introduction to Business

Introduction to Business Intermediaries 47. A _________________ also known as a distributor, distributes goods. This is one type of intermediary 48. Wholesalers ___________________________ and resell them in _______________ to their customers, usually other companies. wholesaler buy goods from manufacturers in huge quantities smaller quantities Introduction to Business

Introduction to Business Retailer 49. A _______________ purchases goods from a wholesaler and resells them to the ________________________________ ________________________. retailer consumer, or the final buyer of the goods Introduction to Business

Introduction to Business Service Businesses 50. Service businesses _________________ rather than goods. 51. Services _____________________ ___________________, such as hairstyling and car repair. provide services are the products of a skill or an activity Introduction to Business

Introduction to Business Service Businesses 52. Some service businesses ________________, such as medical clinics and law firms. 53. Some _________________________, such as taxi companies and copy shops. meet needs provide conveniences Introduction to Business

Introduction to Business Fast Review What is the difference between a producer and a processor? 2. Describe the activities performed by businesses. producer – gathers or create raw products. processor – changes raw products into more finished products. Activities include producing, processing, manufacturing, and distributing goods and providing services. Introduction to Business

Introduction to Business Fast Review What does an intermediary do? 4. Give examples of service businesses. moves products between businesses and the public hairstylists, car repair shops, law firms, newspapers, internet services Introduction to Business

Introduction to Business What’s the aim of joining forces and starting an organization? What’s the benefit of going into business for yourself? continued Introduction to Business

Introduction to Business Can a business have a contractual agreement with its customers? Introduction to Business

Business Ownership and Operations End of Chapter 6 Business Ownership and Operations pp. 84-97

Introduction to Business Key Words sole proprietorship unlimited liability partnership corporation stock limited liability franchise continued Introduction to Business

Introduction to Business Key Words nonprofit organization cooperative producer processors manufacturers intermediary continued Introduction to Business

Introduction to Business Key Words wholesaler retailer Introduction to Business

Introduction to Business Making an Ethical Decision What are the advantages and disadvantages of “going solo” in a business venture? How can having a partner help launch and grow a business? Are there any drawbacks? continued Introduction to Business

Introduction to Business Making an Ethical Decision Are you obligated to invite a person into a partnership if that person was involved in inventing a product you want to sell? What if that person decided to start the business without you? Introduction to Business

Introduction to Business Manufacturing Products Compaq Computers and Cisco Systems don’t build their own products anymore. These companies rely on Flextronics, a company that specializes in manufacturing electronics, to build their equipment. continued Introduction to Business

Introduction to Business Manufacturing Products This allows Compaq and Cisco to focus on creating new products. Flextronics has grown into a global contractor that produces $10.5 billion a year in electronic gizmos. continued Introduction to Business

Introduction to Business Analyze What do Compaq Computers and Cisco Systems give up when they rely on an outside manufacturer? Introduction to Business