1. Types of Businesses
Unit 1
Chapter 2

2. Forms of Business Ownership
Sole Proprietorships
A sole proprietorship is a business owned by one person, normally referred to as a proprietor.
Unlimited liability
Is when the proprietor is financially responsible for all losses of the business and any debts owed to his creditors.
Forms of Business Ownership

3. Forms of Business Ownership
Partnerships
A partnership is a business that’s usually operated by two or more individuals who want to share the costs and responsibilities of running a business.
Partnership agreement – is the record of terms of the partnership. Examples of some famous ones are Baskin-Robbins, Proctor & Gamble, Black &Decker.
3 Types of Partnerships :
General Partnership – all partners have unlimited liability for the firm`s debts. Each partner could be held responsible for the other partner`s business-related debts.
Limited Partnership – partners have limited liability, which means they are only responsible for paying back the amount that they invested in the partnership. Even if the business fails, their personal savings and other assets cannot be used to pay the partnership`s debts.
Forms of Business Ownership

4. Forms of Business Ownership
Corporations
A corporation is a business that has been granted legal status with rights, privileges, and liabilities that are distinct from those of the people who work for the business.
Corporations may be small (one person) or as large as a multinational, also known as a transnational.
Shares (stock) are the small parts of ownership, that make up a corporation. These shares can be traded on the stock market.
Shareholders are individuals who buy shares and become owners of the company. The more share you have, the more control you have of a company.
Board of Directors is put in place to run the corporation, for the shareholders.
Dividend is paid to the shareholders, when a profit is made by the company. Not all profits are divided out like this. The amount of the dividend paid for each share is calculated by dividing the total profit paid out by the total number of shares owned by the shareholders. Example: 100 shares, company declares a $2.00 dividend at the end of the year, therefore, the total pay out is $
Forms of Business Ownership

5. Forms of Business Ownership
Types of Corporations
In a private corporation, only a few people control all the shares, or stock, and therefore, the business.
A public corporation raises money by making shares available to thousands of people through selling share on the stock exchange.
A Crown corporation is a business operated by the provincial or federal government.
Municipal corporations, like towns and cities, can also be incorporated. They provide services to the local citizens.
Forms of Business Ownership

6. Forms of Business Ownership
Co-operatives are businesses owned by the workers or by members who buy the products or use the services that the business offers. Profit is not their motive.
Franchises
In a franchise operation, one business, the franchiser, licenses the rights to its name, operating procedure, design, and business expertise to another business, the franchisee.
Forms of Business Ownership

7. Some questions to ask yourself when going into business is:
Why start your own business?
What different types of businesses are there?
What are your skills and interests?
Should your business be home-based? (SOHO – small office, home office)
Should your business be web-based? (e-commerce – electronic commerce)
- to conduct e-commerce, a business needs and actual space in which to operate. You will need a website, domain name, so that you can conduct on-line business. Web-pages are needed for advertising, and where you can record how many website hits you receive.
- you must also decide what to sell on-line.
You may also want to ask yourself, “Where can you find information about business? What are the start-up costs? Where can you find financing? What level of risk to expect? What steps are involved in running this business? And, What resources will you need?
Going into Business

8. International Business Structures
Joint Ventures are excellent opportunities to market your products or services to a wider audience.
International Franchises
Strategic alliances are agreements between businesses in which each business commits resources to achieve a common set of objectives.
Mergers occur when two or more companies join together, either because one has purchased a controlling interest in the other(s) or because the companies have combined their interests.
Offshoring is the relocation of some of a company’s operations to another country.
Multinational Corporations are business enterprises that conduct business in several different countries.
International Business Structures