1. 7.00 Understand marketing and business management.
7.02 Apply knowledge of business ownership to establish and continue business operations.

2. Business Ownership Sole Proprietorship Partnership Corporation
Franchise

3. Sole proprietorship A business owned and run by one person
The business is typically managed by the owner.
Formation varies by state.

4. Advantages Easy to start up Complete control of the business
Owner receives all the profits
Limited taxes (one time taxation)

5. Disadvantages Limited capital (money)
Unlimited liability (responsible for ALL debt)
The business is limited to the lifetime of the owner

6. Partnership
A business owned and controlled by two or more people who have entered a written agreement
The management of the company depends on the partnership agreement.

7. Advantages
More capital and credit available than a sole proprietorship
Combined resources (money, expertise)
Shared management responsibilities
Shared risk
Work load easier to manage than a sole proprietorship

8. Disadvantages Profits are shared Responsible for each others decisions
Potential for disagreement among partners
Unlimited liability (depending on type)

9. Types of Partnerships Limited Liability Partnership
Identifies some investors who cannot lose more than the amount of their investment
Investors are not allowed to participate in the day-to-day business management
General Partnerships – a partner plays an active role and has unlimited liability (every partnership must have at least one general partner).

10. Corporations
An organization owned by one or more shareholders and managed by a board of directors.
Ownership
Determined by purchase of stock
A stockholder, or shareholder, owns a ‘piece’ of the company
One share of common stock equals one vote

11. Advantages Easier to obtain capital Limited liability for shareholders
Life of the corporation is unlimited

12. Disadvantages Double taxation (profits and earnings)
Government regulations and legal restrictions
Decision-making shared among managers, board of directors, and shareholders

13. Specialized Corporations
Subchapter S (S-corporation)
treats partners as individuals by taxing them once
Limited Liability Company
Provides limited liability protection for owners
Nonprofit corporation
A group of people who join to do some activity that benefits the public

14. Corporation Terms
MERGER: Two individual businesses that combine to form one organization
CONSOLIDATION: A form of business growth in which a corporation acquires many smaller companies
EXPANSION: A business strategy in which growth is obtained by increasing the number of stores in which customers can buy a company's products and services.

15. Types of Corporations continued
Public-established for a governmental purposes
Examples
National Science Foundation
Export-Import Bank of the United States
Private-established by individuals for business or charitable purposes.
Enterprise Rent-A-Car
American Cancer Society

16. Franchise
Permission to operate a business to sell products and services in a set way
Begins with a parent company who owns the product or service and grants the right to another business
Franchiser: the company that owns the product
Franchisee: the company purchasing the right to run the business

17. Types of Franchises Business-format Product trade-name
Requires franchisee to sell products or service in a specific format
Product trade-name
Allows franchisee to sell specific products. This format is usually formed by automobile, appliance, and petroleum product