1. Entrepreneurs and Business Organizations
Chapter 9

2. What is an entrepreneur?
Entrepreneur: a person or group who invests, creates, or takes on the risk of starting a new business or company. Or, they might have an idea that they think they can profit from.
Entrepreneurs affect or help the economy by:
Creating jobs
Meeting consumer demand for products/services
increasing economic growth
What is an entrepreneur?

3. What characteristics would you look for in an entrepreneur?
Take a few moments are write down 4 characteristics.

4. Successful Entrepreneurs are/have…1. 2. 3. 4. 5. 6. 7. 8.
Is there anybody in here who is thinking about or who wants to start their own business?
Successful Entrepreneurs are/have…

5. WHAT DO YOU THINK THE RISKS ARE FOR STARTING A BUSINESS
WHAT DO YOU THINK THE RISKS ARE FOR STARTING A BUSINESS? WHAT ABOUT THE REWARDS?

6. Risks and Rewards of Starting a Business
Failure
Raising the money for the company
Financial insecurity
Hiring the right employees
Long hours
Little to no pay
Potential for increased pay or profit
Freedom in your life
Enjoyment of your hobby as your profession
Be your own boss
Is there anybody in here who is thinking about or who wants to start their own business?
There is always the risk of your business failing. Maybe people don’t like the product you’re selling. Raising money for your company is also pretty risky. You might not generate enough capital (money) to start up your business, buy your inputs, etc., Even if you do get your business up and running, that risk of failure means that you are going to face some financial insecurity. You might not be making enough money. You also have to deal with making sure you hire good employees. Bad employees could be a liability. As representatives of your business they are responsible for making your business look good. Starting your on business also means working long hours….you have little to no pay, especially during the first several years of start up. Of course, the flip side of that is once your business takes off and starts doing well, then now you’re making tons of money.
Risks and Rewards of Starting a Business

7. 3 Main Types of Businesses
Sole Proprietorship: a business owned and managed by one person.
Partnership: a business owned by two or more co-owners who share profits.
Corporation: owned by public or private shareholders who own stock
3 Main Types of Businesses

8. Sole Proprietorship Advantages Disadvantages Easy start-up
Little paperwork
Business name, permits, licenses
Few restrictions
Make all decisions
Keep profits
File individual taxes
No business taxes
Easy to close down
Unlimited liability
You pay all losses
Personally responsible for all debt
Create LLCs for protection
Limited Liability Company
Limited growth potential
Limited life
Create your Sole Proprietorship-What is your business and in what industry?

9. Partnerships have 2 or more owners who share the profits and liabilities of the company.
Common partnerships include:
Family owned business
Law firms
Medical practices
Partnerships

10. Different Types of Partnerships
General Partnerships (GP): all owners share total liability for debts and are involved in all decisions
Limited Partnership: there is at least one general partner and at least one limited partner.
Limited partner: referred to as a “silent partner”. This person contributes financial capital (money) to the business but does not have a say in day-to-day operations. They only lose what they invest.
Limited Liability Partnership (LLP): owners act like GPs but have limited liability
Llps you see with doctors, dentists, lawyers, accountants. Owners want responsibilities of GP but are protected by limited liability
Different Types of Partnerships

11. Advantages and Disadvantages of Partnerships
Easy start- up, just need legal agreement: Articles of rules and regulation
Few restrictions
Share decision-making power
Opportunities for specialization
File individual taxes
Larger growth potential
Banks more willing to loan out to multiple partners
Unlimited liability for GP
Conflict between partners
Continuity issues
Partners may die or leave the business
Advantages and Disadvantages of Partnerships

12. A business becomes a corporation when it is owned by shareholders who purchased shares of the company’s stock.
Venture Capitalist: someone who invests money into a new promising business and receives share of ownership of the company. They provide capital (money) so that a company can grow its business
Corporations

13. Two Types of Corporations
Privately Owned: owned by one person or a very small group. Stocks sold to a select group of people
Publically Owned: offers stock to the general public and has many shareholders
Private: select group = family members
Two Types of Corporations

14. Multinational Corporations
Corporations have business in multiple countries
Multinational Corporations
List 3 Multinational Corporations.

15. Advantages and Disadvantages of Corporations
Limited liability
Shareholders only lose what they invest
Larger growth potential
Professional management
Long business life
Complex start up
Loss of control
Board of directors make decisions, business founder
Increased government regulation
Stockholder meetings required
Double taxation
Business pays taxes as well as shareholders
Professional management: board of directors, specialized employees
Business pays taxes on profits shareholders pay taxes on dividends
Advantages and Disadvantages of Corporations

16. Franchises, Cooperatives, and Non-Profits
Franchise: In which one company has many individual outlets to sell its products or services
Cooperatives: business that is owned and operated by a group of individuals for their shared benefit. The goal is to make goods and services more affordable, not to make a profit.
Must have some sort of membership to take advantage of shared benefits.
Non-profit: Functions like a business aside from the fact that making a profit is not the goal. They are established to support a public or private goal.
Foundations, associations, booster clubs
Non profits benefit from tax exemptions
Franchises, Cooperatives, and Non-Profits

17. Advantages and disadvantages of Franchises
Company expands with each new franchise
Cheaper for the company to open new locations itself
New owners receive a support system
Better chances for profit
A customer base already exists
Must pay fees to open the franchise
Must pay royalties (on top of usual costs of operations)
Lack of independence in terms of running the business
Company can expand cheaply and without having to manage the stores itself. Basically just selling rights to use its name and brand
New owner receives management training, budget training,
Advantages and disadvantages of Franchises

18. Rights and Responsibilities of Businesses
Right to advertise
Hire and fire employees
Screen employees
Be compensated for property lost
Govt must pay for property they take
Right to protect intellectual property
Trademarks, patents
Obtain permits and licenses
Pay taxes
Deal honestly
Honor contracts
Create an equal opportunity workplace
Produce safe products
Protect whistle-blowers
Rights and Responsibilities of Businesses

19. Business Ethics: Legal vs. Ethical
There are things that companies are legally able to do, but this does not mean that they should do those things.
Let's Get Ethical
Morality is starting to play a big role in the business market. Do you notice a growing trend in companies appealing to your morals?
Corporate Responsibility: taking responsibility for a company’s actions that impact
Corporate Citizen: something that business strive to be by being considerate of the interests of their stakeholders (those who have an interest in or are affected by a company’s actions)
Business Ethics: ways in which companies address corporate responsibility. They are principles that guide the actions of the company and its employees.
What are examples of things that businesses can legally do but shouldn’t?
How many of you tend to buy from companies who don’t test on animals? Or one-for-one companies? Organic? Made from recycled material?
Can you name examples of corporate responsibility? Recent examples?
Business Ethics: Legal vs. Ethical

20. Must Think About the Consumers
Consumer Sovereignty: power of consumers to affect the decisions of a company.
Consumers communicate their power through their spending. What consumers spend their money shows what they want.
Must Think About the Consumers