1. Business Ownership & Structure
Becoming a Business Owner

2. Company
A business or association usually formed to manufacture or supply products or services.

3. Entrepreneur
A person who organizes, operates, and assumes the risk for a business venture.

4. Business & The economy
Goal: Discuss the Role of business in the U.S. Economy

5. Business Activity
Businesses make the goods and services you use each day. That includes the products and services used by other businesses as well as those needed by individual consumers.

6. Size of U.S. Businesses Most U.S. businesses are quite small.
19.5 million businesses have no employees other than the owner.
About 6.5 million companies employ fewer than 20 people.
Approx 182,000 large U.S. businesses employ 100 or more workers.

7. Roles of Business
Most important is to make and distribute products and services needed by consumers, government, and other businesses.
Provide employment for millions of people.
Businesses pay taxes

8. Impact on Community
When a new business opens, it pays wages to its workers. It also buys goods and services from other businesses in the area. This money hasn’t been in the community before. Employees and businesses in turn spend much of the money to purchase things they need.

9. Business Activities All businesses perform six basic activities.
Generating ideas
Raising capital
Employing and training personnel
Buying goods and services
Marketing goods and services
Maintaining business records.

10. Generate Ideas
A business begins with a new idea. A business must continue to improve and develop new ideas in order to stay successful.
Businesses must stay competitive with other firms that sell similar goods and services.
Research and develop help with new ideas and products.

11. Raising Capital Businesses need financial resources to operate.
This money is used to buy buildings and equipment, hire and train new workers.
A large amount of capital is needed to start a business. Some capital comes from owners; most is gotten from loans.
A business needs more capital as it develops and grows. Some of that capital will come from reinvested profits.
Capital will continued to be raised for growth.

12. Employing and Training Workers
Businesses need human resources.
As a business grows it will need to hire full-time and part-time employees.
Businesses have procedures for recruiting, hiring, and training employees. They pay wages, benefits, and employment taxes.
New employees receive training in order to perform their jobs correctly.
Further training will be necessary when procedures change, new tasks are added, or technology is used.

13. Buying Goods and Services
All businesses buy goods and services.
Businesses use many of the purchases for their own operations. Other purchases are resold.
Manufacturers of cars must buy steel, aluminum, and plastics to be used to build the body.
A retailer buys an assortment of products to sell to customers. It must also buy cleaning supplies used to operate the business.
Businesses also buy legal services, accounting services, lawn care and building maintenance.

14. Marketing Goods and Services
Marketing refers to the activities directed at providing the goods and services wanted by a business’s customers.
Without marketing, even the best products and services may not be sold.
Businesses must understand customer buying habits and perform many marketing activities.
A business must satisfy customers who usually can choose to buy from competitors selling similar products.

15. Maintaining Business Records
All businesses must have some type of record-keeping system.
Owners and managers need records to track performance and make decisions.
Customers need information about orders and payments.
Businesses are required by government to keep records and submit information. Technology makes record keeping easier and is usually more accurate.

16. Checkpoint Question:
What are the six activities completed by all businesses?

17. CONCEPT REVIEW!

18. COPYRIGHT
Protects the creative work of authors, composers, and artists
Copyright protection lasts for the life of the person receiving the copyright.
It also extends for 70 years after the person’s death.

19. TRADEMARKS
A word, letter, or symbol linked with a specific company or product.
Businesses register company names, emblems, and label designs with government.
Very valuable
Many are famous and often identified with a symbol called a logo. ™

20. PATENT When new products are created, the creator may obtain a patent.
Gives the inventor the sole right to make, use, or sell the item for 20 years.

21. PUBLIC UTILITY
An organization that supplies a service or product vital to all people
Telephone, water, electricity.
Serves a community.
Many utility companies are privately owned, usually government closely regulates them.
The rates they charge must be approved by government agencies.

22. MONOPOLY
Exists when a business has control of the market for a product or service
A public utility monopoly may benefit consumers by making sure they receive a needed service at a fair price.
Other monopolies are not good for the economy.
When competition is present, consumers get the best values at the fairest prices.

23. ANTITRUST LAWS
One government action meant to promote competition and fairness
Used to avoid monopolies
Laws that prevent unfair business practices such as:
False advertising
Deceptive pricing
Misleading labeling
Each of these hurts competition and reduces consumer choices.

24. TYPES OF BUSINESSES

25. Forms of Business Ownership
Section 2

26. Owning a business Many people think they would like to own a business.
The chance to be in control, make decisions, and invest money to make a profit is challenging and exciting.
However, the amount of control they have, how decisions are made, the sources of money for the business, and control over profits is not the same for every business owner.
The form of business ownership affects each of those aspects of business.

27. Three Major Types Businesses Ownership
Sole Proprietorship
Partnership
Corporation

28. Sole Proprietorship Owned and run by one person
Small firms such as jewelry stores, restaurants
Many U.S. businesses are in this group
Personal property is not legally considered separate.
Has complete responsibility for all business decisions

29. Advantages of Sole Proprietorship
Easy to start
You are the boss!!
Owner keeps all the profit.
Taxes are usually low because you have to pay them on personal profits.

30. Disadvantages of a Sole Proprietorship
All responsibility for expenses
Owner uses personal savings
Owner has limited business skills
Unlimited liability

31. Partnership
Business owned and managed by one or more persons who share risks and rewards.
Must have written agreement
Partners share profits or losses
Unlimited liability for the debts
Income is taxed only once.

32. Partnership Agreement
Contract that outlines the rights and responsibilities of each partner.
Legally binding.

33. Advantages of Partnerships
Easy to start.
Pay taxes only on personal profits.
Easier to obtain capital.
A variety of skills to the business
Business can run more efficient.

34. Disadvantages of Partnerships
Not only share the risks, but also the profits.
A partner may leave, thus business must be reorganized.
Unlimited legal and financial liability
Bad decision by one partner affects the other partner.

35. Corporation Business owned by a number of people
Operated under special permission from the state.
Acts as a single individual on behalf of its owners.
People become owners by purchasing shares of stock.

36. Private Corporation
A corporation that doesn’t sell shares to the public.
You can’t buy shares of a private company in the stock market.

37. Public Corporation
The stock of a public company is owned and traded by individual and institutional investors.
In contrast, the stock is held by company founders, employees, and sometime venture capitalists.

38. Certificate of Incorporation
Written permission to incorporate
Business must apply in the state in which it is located.

39. Stock Shares of ownership in a corporation.
Stockholders pay a set price for each share.
For each share of common stock
Stockholder gets share of profits
A vote on how the business is run.

40. Legal Entity Legally exists separate from its owners. IBM Texaco
General Motors

41. Shareholders Stockholders
People who own shares of stock in a corporation.

42. Advantage of a Corporation
Limited liability
Corporation doesn’t end if the owners sell shares of stock.
Can raise more capital by selling more shares.

43. Disadvantage of a Corporation
Often must pay more taxes
Owners are taxed on their income from the corporation.
Complex to start
More closely regulated by the government.
More complicated to run

44. REVIEW

45. What are 3 Major types of Business Ownerships?
Sole Proprietorship
Partnership
Corporation

46. What are Shareholders?

47. Alternate Ways to Do Business

48. Franchise
Contractual agreement to sell a company’s products or services in a designated geographic area.
Taco Bell, Blockbuster,
Franchisee invests money and pays franchisor an annual fee or a share of profits.

49. Advantage of opening a Franchise
Easy to start
Products are established and trusted.
Name of parent company can be a draw for customers.

50. Disadvantages of opening a Franchise
Franchisor is very strict about how things are run.
Limited in what products or services can be offered to customers.

51. Nonprofit Organizations
Type of business that focuses on providing a service rather than making a profit.
American Red Cross
Meals on Wheels
Private hospitals
Schools

52. Nonprofit Organizations Business procedures:
Has to register with the government
Might be run by a board of directors.
Doesn’t have to pay taxes.
Rely on government grants and donations for capital.
Donors don’t receive dividends; get a tax credit.

53. REVIEW

54. What is a Franchise?
Contractual agreement to sell a company’s products or services in a designated geographic area.

55. What is a non-profit organization?
Type of business that focuses on providing a service rather than making a profit.

56. TYPES OF BUSINESSES

57. Categories of Businesses
One way to group is by the different kinds of products they provide:
Producing raw goods
Processing raw goods
Manufacturing goods from raw or processed goods
Distributing goods
Providing services.;

58. What are 3 business categories?
Producers
Manufacturers
Service firms

59. Producers A business that gathers raw products in their natural state.
Farmer who grows wheat.
Miner who digs for iron ore
Petroleum worker who drills for crude oil.

60. Manufacturers Business
Make finished products out of processed goods that require no further processing.
Products are ready for the market.
Bakery makes bread out of flour

61. Intermediary Business It moves goods from one business to another.
It buys goods, stores them, and then resells them.
The middle man!

62. Wholesaler Also called a distributor
Buys goods from manufacturers in huge quantities and resells them in smaller quantities to customers (usually other companies).

63. Retailer
Purchases goods from a wholesaler and resells them to the consumer, or the final buyer of the goods.
Examples:
Service stations, auto dealers,

64. Service Businesses Business provides services rather than goods.
Products of a skill or an activity such as hair styling or car repair.
Employs about ¾ of the workforce and are rapidly increasing in numbers.

65. Fast Review What is the difference between a producer and a processor?
What does an intermediary do?

66. Investing
Certificate of Deposit
IRA
Mutual Funds

67. Securities Bonds, stocks, and other documents
Sold by corporations and governments to raise large sums of money.

68. Stocks
General ownership in a corporation and a right to share in its profits.

69. Certificates of DepositCD
Long-term deposit at a bank
Has certain restrictions
Pays higher interest rates than regular savings accounts.

70. Mutual Funds Funds set up and managed by investment companies
With the money an investment company receives from investors they buy and sell a wide variety of stocks or bonds.

71. IRA Individual Retirement Account
Investment account in which a person can set aside income up to a certain amount each year
Investor can usually deduct the contributions from taxable income

72. Bonds A debt instrument
A certificate representing a promise to pay a definite amount of money at a stated interest rate on a specified maturity date.

73. SEC
Security and Exchange Commission
Regulates the sale of securities.

74. SBA Small Business Administration www.sba.gov
An independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns.

75. QUESTIONS??