The Business of Free Enterprise
Entrepreneur—A person who takes a risk to create a new product or to develop a better way to operate a business. A true free enterprise system must encourage people to be entrepreneurs.
Charles Darrow Ray Kroc Henry Ford Clarence Birdseye Debbie Fields King Gillette Liz Claiborne
Some start at an early age. Some develop and sell ordinary products. Some find new ways to sell.
Some spot new markets and develop new products for them. Some work to perfect ideas they had for years. Some work within an existing business.
Unexpected Opportunities Changing Market Conditions Improving a Product or Process Providing an Alternative Good or Service Identifying Popular Trends
Small Business—Annual sale under $3.5 Million. Have many advantages over big businesses
Ability to adapt to change more quickly. Ability to satisfy special markets.
Poor management Inadequate Financing Inability to hire highly qualified workers
Sole Proprietorship Partnership Corporation
S Corporations Not-For-Profit Corporations Government-Owned Corporations Limited Liability Companies Cooperatives Franchises
Small business that can have no more than 35 stockholders. Do not have to pay higher level of corporate taxes.
Serve an educational, social, charitable, or religious purpose. Not subject to income tax.
Government usually opens a corporations when the market doesn’t adequately supply a needed good or service. Example: Federal Deposit Insurance Corporation (FDIC)
Combine the advantages of a corporation and a partnership. Popular among internet start-up companies.
Associations of individual companies that perform business functions for their members. Housing Consumer Producer
A license to operate and individually owned business as if it were a large chain of stores. McDonald’s, Subway