1. Introduction to Business & Marketing
Business Ownership
Introduction to Business & Marketing

2. Objectives Define entrepreneurship.
Understand the importance of small businesses in the economy.
Identify the major types of business ownership.
Compare advantages and disadvantages of the different types of business ownership.

3. Entrepreneurship
Entrepreneurship is the process of starting and managing your own business.
An entrepreneur is someone who attempts to earn money and make profits by taking the risk of owning and operating their business.

4. Entrepreneurship Advantages Disadvantages Personal freedom
Personal satisfaction
Potential for increased income
Risk / potential of loss
Long, irregular hours
Need for daily discipline

5. Characteristics of Entrepreneurs
Risk taker
Decision maker
Hard worker
Ambitious
Goal setter
Enjoys challenges
Can adapt to changes

6. Importance of Small Business
Small businesses provide 55% of jobs.
There are 1/2 million business started each year – only the strong survive!

7. Types of Business Ownership
Sole Proprietorship
Partnership
Corporation
Limited Liability Company (LLC)

8. Sole Proprietorships
About 3/4 of all businesses in the United States are sole proprietorships.
A sole proprietorship is a business owned by one person.
Sole proprietors usually have a special skill by which they can earn a living (i.e. plumbers, contractors, wedding planners, etc.).

9. Sole Proprietorships Advantages Disadvantages Easy to start up
Able to make all decisions for the business
Keep all profits
Unlimited liability
Owner is responsible for company’s debts
Limited access to credit or financing
Owner may not have all the skills or expertise necessary
Business dissolves when the owner dies

10. Partnerships
A partnership is a business owned by two or more people who share its risks and rewards.
A partnership agreement outlines the rights and responsibilities of each partner.

11. Partnerships Advantages Disadvantages All partners share the risk
Easy to start up
Easier to obtain money
Each partner contributes funds
Bank more likely to lend
Each partner brings different skills and talents to the business
All partners share the risk
May be held responsible for partner’s mistakes
Unlimited liability
Personality conflicts can affect decision making

12. Corporations
A corporation is a company that is registered by a state and operates apart from its owners.
The owner must get a corporate charter (business license) from the state where the main office will be located.
To raise money, the owners can sell stock (shares in the company) to stockholders.
The company must have a board of directors to govern the corporation.

13. Did You Know? Most “big name” businesses are corporations.
Only 15 – 20 percent of all businesses in the United States are corporations.
Corporations are responsible for 80% of all business that is conducted in the United States.

14. Corporations Advantages Disadvantages Limited liability
Owners are only responsible for the capital they invested
Easy to raise money by selling stock
Business continues after owner’s death
Professionally managed (hire experts)
Double taxation
Company pays tax on income
Stockholders pay tax on profits
More government regulations
Difficult and costly to start up
Complex business to run

15. Subchapter S Corporation
One type of corporation
Small business that is taxed like a partnership or sole proprietorship but has up to 35 shareholders

16. Limited Liability Company
Also known as LLC
Relatively new form of ownership
Hybrid of a partnership and corporation
Owners protected from personal liability
Profits / losses pass directly to owners without taxation to the company itself

17. Franchises
A franchise is a legal agreement to use the name and sell the products of a parent company in a designated geographic area.
Franchisee: person who buys the rights to operate the business
Franchisor: recognized company that allows independent owners to use their name
The franchisee pays the franchisor an annual fee and a share of the profits.

18. Franchises Advantages Disadvantages High initial cost
Owner receives thorough business training
Uses a tested management system
Owner is guaranteed a certain geographic area
Usually widely recognized names
High initial cost
Owner has to follow strict rules and regulations
Judged by performance of peers

19. Did You Know?
Many businesses start as one form of business ownership, but move into other forms later.
Example: Ben & Jerry’s started as a partnership, became a Subchapter S Corporation, and then eventually became the corporation we know today.