Business Ownership

1
Chapter 7

• Business Ownership
• Pages 97-116

2
Entrepreneurs

• Characteristics

• Examples

3
Disadvantages of a Small Business

• Poor Management
• Inexperienced managers
• Inadequate financing
• Smaller source of funding
• Inability to hire qualified workers
• Small pay scale
• Cannot compete with large firms

4
Chart--pg 104

• Employment by size of company
• List 3 main facts

5
Advantages of a Small Business

• Quickly adapt to change
• Discontinue products
• Change pricing
• Change hours of operation
• Ability to Satisfy Special Markets
• Ethnic groups
• Personal services maid, hair

6
Article Page 103

• E-companies are mostly dot-coms
• Examples
• Example amazon.com, yahoo.com
• Sell products on-line
• Sell hardware and software
• Browsers (internet explorer, netscape, safari)
• E-companies are grouped together by Fortune to
  measure the impact of the internet on our economy
  

7
Proprietorship business owned by one person

• Advantages
• Organization easiest to start, one decision
  maker
• Profits are owners
• Flexibility react quicklyno chain of command
• Personal Achievement success and recognition

• Disadvantages
• Unlimited Liability all debts are the owners
• Limited funds one source for funding
• Fragile Existence if owner dies so does
  business
• Limited Potential limits on size and growth,
  employee opportunities

8
Partnership business owned by two or more persons

• Advantages
• Organization easy to start, division of
  decision making power
• Potential Growth partners bring more to a
  business which increases the opportunity for
  growth
• Abilities Partners can offer ideas and talent
• Debts are divided

• Disadvantages
• Unlimited Liability all debts are the owners
• Limited funds some sources for funding, but
  still limited
• Organization held to the decisions of the
  partner(s)
• Profits are divided

9
Chartspage 111

• 7-2a Number of Firms
• Write 2 facts
• 7-2b Revenues of Firms
• Write 2 facts

10
Corporations A business managed on behalf of
its owners

• Ownership by shares of stock
• Some corporations have a small number of
  shareholders and some have very large numbers of
  shareholders.

11

• Advantages
• Limited liability to shareholders. Shareholder
  can only loose the cost of the shares if company
  goes out of business.
• Easy to transfer stock by buying and selling on
  the stock market
• Unlimited life. When shareholders die the stock
  is sold and company goes on.
• Easy to raise funds. Buying and selling stock is
  fairly quick and easy.

12

• Disadvantages
• Expenses are huge due to the largeness of the
  company. (Example Nike)
• Corporations are taxed twice once earnings and
  then again on dividends.
• Regulations are strict and much of the
  corporations earnings are public knowledge.

13
S Corporations

• Small corporation no larger than 35 stockholders.
• Taxes are less than a corporation.
• Expensive to set uplegal fees.

14
Not-for-Profit

• Rather than make a profit, these companies serve
  the community through social, charitable,
  religion and educational purposes.
• Not subject to income taxes
• -Examples Red Cross, United Way

15
LLC

• Limited Liability Corporations are companies
  where the owners have drawn up legal documents to
  protect their own private assets if the company
  were to be sued.
• It combines the advantages of a corporation and
  partnerships.
• Must have two or more members to form.
• Much legal work to set one upcostly.

16
Cooperatives

• Association of individuals or companies that
  perform business function for their members.
• Example Credit union, ocean spray
• Lower cost for loans due to being a member

17
Franchise

• License to operate an individually owned business
  as if it were part of a large chain of stores.
• Example Subway, McDonalds
• Easier to start than a new business due to the
  name being known and business decisions made for
  you.
• Percentage of sales goes to the corporation
  lending its name.