1. Business organizations How many of you want to own your own business?

2. Sole Proprietorships and Their Roles. Sole Proprietorship – business owned and managed by a single individual. (70 %) Entrepreneur Earns all profit Responsible for debts Most popular in U.S. Can you give any examples of businesses that might be Sole Proprietorships in your town?

3. Sole Proprietorships What is needed to start a business Entrepreneurial spirit Ambition Questions about yourself  Are you  Organized?  Responsible?  Energetic?  Goal oriented?  How to run a business?

4. Advantages of Sole Proprietorships Easy to start Vary from state to state Usually some minimum requirements Authorization = business license Site permit = Zoning laws Name = register the Name of Co.

5. Advantages of Sole Proprietorships Relatively few Regulations Depending on type of business you have to follow code Zoning laws  Ex McDonalds cant be right in the middle of a residential neighborhood Sole Receiver of Profit Owner gets all the profit Full Control Freedom to run business Fast and Flexible Can close if need be

6. Do now 1. What are some advantages to a Sole proprietorship? 2. What are the disadvantages of a Sole proprietorship?

7. Disadvantages of Sole Proprietorships Unlimited Personal Liability Legal obligation to pay debts Limited Access to resources Tough to get capital to expand businesses Lack of human capital Skills Don’t match needs of a business Lack of Permanence If the sole proprietor dies the business can cease to exist. Lack of fringe benefits for employees Vacation, retirement, health insurance Tough to keep good help.

8. Partnerships and Franchises Partnerships – is a business organization owned by two or more people who agree on specific divisions of labor. (9%) Three types General partnerships Limited partnerships Limited liability partnerships

9. General Partnerships Most common Share equally in responsibility and liability Ex. Doctors Lawyers Accountants Farms Family businesses

10. Limited Partnerships Only General partner has unlimited liability for the firms actions. Limited partners (only contribute money). not personally responsible will benefit from profit No role in management

11. Limited Liability Partnerships or LLP All partners are limited. Not liable for partners mistakes. Usually just professionals Lawyers Accountants Doctors

12. Advantages of Partnerships Easy and inexpensive to create articles of partnership (Rights and responsibilities) Uniform Partnership Act (UPA) Established rules for partnership Little regulation

13. Advantages of Partnerships Financial Impact Two people contributing assets (Money or valuables) Easier to borrow funds Attract and keep talented employees Partners pay taxes on the profit of the partnership Business itself does not pay taxes

14. Advantages of Partnerships Shared Decision making Each partner brings different strengths and skills. Each allocated part of the business to run

15. Disadvantages of Partnerships Sometimes Unlimited liability Potential conflict Lack of Permanence

16. Do now What are the three different types of partnerships? Which ones comes with the most liability for all partners? Which one has the least amount of liability?

17. Franchises Franchise – semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area 1. Name a few franchises that you know.

18. Advantages and disadvantages of a franchise Advantages Management training Standardized quality National advertising programs Financial assistance Centralized buying power Disadvantages High franchise fees and royalties Strict operation standards Purchasing restrictions Limited product line

19. Do now 1. What is the difference between a sole proprietorship and a partnership? 2. What are the three types of partnerships that we have studied? 3. How are they different? 4. What is a franchise? Give an example

20. Corporations Can you give me an example of a corporation? Corporations a legal entity, or being, owned by individual stockholders, each of whom has limited liability for the firms debt. Stock Their own legal identity

21. Types of corporations Closely held corporation Few people own stock Usually within a single family Stock rarely traded Publicly held corporations Buy or sell stock on the open market

22. Advantages and Disadvantages of Corporations Advantages Limited liability Stocks are easily transferrable Greater ability to gain capital Stock, bonds Management is hired Longevity Disadvantages Difficulty of start up Certificate of incorporation Double taxation LLC (exception) Loss of control More regulation S.E.C. (QUARTLY & ANNUAL STATEMENTS)

23. Corporate Structure Stock holders Elect board of directors Appoint corporate officers (COO, CEO, CFO, President) Officers run the company

24. Corporate Combinations Horizontal mergers Combination of two or more firms competing in the same market with the same good or service. Ex. AFL and the NFL Vertical Mergers Combination of two or more firms involved in different stages of producing the same good or service. Ex. Intel and Dell

25. Conglomerates A merger of more than three business that produce unrelated products. Cintas Uniforms First aid Shredding Industrial cleaning

26. Multi-national corporations A large corporation that produces and sells its goods and services in more than one country Advantages Spread technology, improve standard of living Disadvantages Loss of jobs in developed countries Influence culture and politics of nations

27. Do now What is the difference between a Corporation and a Franchise Can a Franchise Incorporate? What is the difference between a closely held corporation and a public corporation.

28. Cooperative organizations (Co-ops) Owned and operated by a group of individuals for their shared benefit Voluntary and open membership Control of the organization by its members Sharing of contributions and benefits

29. Co-ops Provide goods and services at prices members can afford. The Co-op Doesn’t pay income tax Members pay on earnings from the Co-op. Allowed to reinvest up to 80% of all earings on a Co-op.

30. Three types of Co-Ops Consumer A retail outlet owned and operated by consumers that sells merchandise to members at reduced prices Buy in bulk Pass savings onto members Can you give an example of a consumer co-op? Costco

31. Three types of Co-Ops Service Co-Ops provides a service rather than goods. Goal not to earn money but to get service for lowest price. Ex Credit unions only give loans and other service to members

32. Three types of Co-Ops Producer Co-Ops Try to get the highest possible price for their products An agricultural marketing cooperative that helps members sell their products Let farmers focus on growing their crops.

33. Non-Profits An institution that functions much like a business but does not operate for the purpose of generating profit. Most money is made by donations Can sell products but are not taxed For public good Tax exempt Can not issue stock or pay dividends All expenses have to go to the IRS No political donations

34. Business Associations Group organized to promote the collective business interest of an area or group of similar business. It keeps business informed Show how to run smoothly in a area Ex. Chamber of commerce Better Business Bureau

35. Trade Associations Nonprofit organizations that promote the interests of particular industries. Gives info on market trends Tries to protect industry Hire lobbyists to sway political opinion in their interests

36. Labor Unions Organized workers to improve working conditions, hours, wages, and fringe benefits for its members. Ex United Auto Worker Union UAW`