BUSINESS
OWNERSHIP
Introduction to Business & Marketing
TYPES OF BUSINESS OWNERSHIP
1.
Entrepreneurship
2.
Sole Proprietorship
3.
Partnership
4.
Corporation
5.
Limited Liability Company (LLC)
6.
Franchises
1. ENTREPRENEURSHIP
 Entrepreneurship
- the process of
starting and managing your own
business
 An
entrepreneur is someone who
starts and manages their own
business
ENTREPRENEURSHIP
Advantages
 Personal
freedom
 Personal
satisfaction
 Potential
for
increased income
Disadvantages
 Risk
 Long,
irregular
hours
 Need
for daily
discipline
THINK ABOUT IT…
What personality traits,
qualities, or skills are
needed in order to be a
successful entrepreneur?
CHARACTERISTICS OF ENTREPRENEURS
 Risk
taker
 Decision
 Hard
maker
worker
 Ambitious
 Goal
setter
 Enjoys
 Adapt
challenges
to changes
ENTREPRENEURS
2. SOLE PROPRIETORSHIPS
A
business owned by one person
 About
3/4 of all businesses in the
United States
 Usually
have a special skill by which
they can earn a living:
Plumbers
Contractors
Wedding planners

SOLE PROPRIETORSHIPS
Advantages



Easy to start up
Able to make all
decisions for the
business
Keep all profits
Disadvantages

Unlimited liability

financial liability is NOT
limited to investments in
the business – extends to
his/her total ability to
make payments
Limited access to credit
or financing
 Owner may not have all
the skills or expertise
necessary
 Business dissolves when
the owner dies

SOLE PROPRIETORSHIPS
3. PARTNERSHIPS

Owned by two or more people who
share its risks and rewards

A partnership agreement
outlines the rights and
responsibilities of each partner
PARTNERSHIPS
Advantages
 Easy
to start up
 Easier to obtain
money


Each partner
contributes
Bank more likely to
lend
 Each
partner brings
different skills and
talents to the
business
Disadvantages
 All
partners share
risk

May be held
responsible for
partner’s mistakes
 Unlimited
liability
 Personality
conflicts can
affect decision
making
PARTNERSHIPS
Larry Page and Sergey Brin - Google
Evan Williams and Biz Stone - Twitter
Ben Cohen and Jerry Greenfield - Ben & Jerry’s
4. CORPORATIONS
 Registered
by a state and operates apart
from its owners
 The
owner must get a corporate charter
from the state
 The
owners can sell stock to
stockholders
 The
company must have a board of
directors
DID YOU KNOW?

Most “big name” businesses are
corporations

Only 15 – 20% of all businesses in the
U.S. are corporations

Corporations are responsible for 80%
of all business conducted in the
United States
CORPORATIONS
Advantages
 Limited

liability
Owners are only
responsible for the
capital they invested
 Easy
to raise money
by selling stock
 Business continues
after owner’s death
 Professionally
managed (hire
experts)
Disadvantages
 Double
taxation
Company pays tax on
income
 Stockholders pay tax
on profits

 More
government
regulations
 Difficult and costly to
start
 Complex business to
run
CORPORATIONS
5. LIMITED LIABILITY COMPANY
 Also
known as LLC
 New
form of ownership
 Hybrid
of a partnership and
corporation

Owners protected from personal liability

Profits/losses pass directly to owners
without taxation to the company
LIMITED LIABILITY COMPANY
A
6. FRANCHISES
legal agreement to use the name and sell
the products of a parent company in a
designated geographic area
 Franchisee:
person who buys the rights to
operate the business
 Franchisor:
recognized company that
allows independent owners to use their name
 The
franchisee pays the franchisor an annual
fee and a share of the profits
FRANCHISES
Advantages
 Owner
receives
thorough business
training
 Uses a tested
management system
 Owner is guaranteed
a certain geographic
area
 Usually widely
recognized names
Disadvantages
 High
initial cost
 Owner has to follow
strict rules and
regulations
 Judged by
performance of
peers
FRANCHISES
DID YOU KNOW?

Many businesses start as one form of
business ownership, but move into
other forms later

Example: Ben & Jerry’s started as a
partnership, became a Subchapter S
Corporation, and then eventually
became the corporation we know today
CLASS ACTIVITY
Go
to Computer Lab to complete:
 Franchise
 Business
Worksheet
Organizational
Management Structure Worksheet