1. 1 5 & 6. Small Business, Entrepreneurship & Franchises Part I

2. 2 Three Common Forms Of Business Ownership Sole proprietorship Partnership Corporation

3. 3 Sole Proprietorships Advantages Disadvantages –Ease of start-up – Unlimited liability –Profit retention – Lack of continuity –Flexibility – Lack of money –Tax advantages – Limited mgmt. skills –Secrecy – Difficulty hiring

4. 4 Partnerships General partners vs. limited liability partners –Limited partnership – Master limited partnership Articles of partnership Advantages Disadvantages –Ease of startup – Unlimited liability –Availability of capital/credit – Lack of continuity –Retention of profits – Disagreements –Personal interest – Frozen investment –Combined skills –Tax advantages

5. 5 Corporations Corporate ownership –Closed corporation –Open corporation Forming a corporation –Where to incorporate? –The corporate charter Stockholders rights: dividends, pre-emptive rights, voting by proxy –Organizational meeting –Corporate structure Board of directors Corporate officers

6. 6 Corporations (Cont.) Advantages Disadvantages –Limited liability– Expense of formation –Ease of raising capital– Gov. regulation –Ownership transfer– Double taxation –Perpetual life– Lack of secrecy –Specialized management

7. 7 Other Types Of Business Ownership S-Corporations Limited liability companies (LLC’s) Government-owned corporations Not-for-profit corporations Cooperatives Joint ventures Syndicates Employee-owned corporations

8. 8 Corporate Growth Growth from within Growth through mergers & acquisitions Hostile mergers –Corporate raider –Tender offer –Proxy fight –Poison pill Horizontal mergers Vertical mergers Conglomerate mergers