Marketing Essentials
n Chapter 33 Entrepreneurial Concepts
Section 33.2 Logistics of
Business Ownership
Chapter 33 n Entrepreneurial Concepts
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SECTION 33.2
Logistics of Business Ownership
What You'll Learn
 How to discuss business ownership
opportunities
 How to identify forms of business ownership
 The legal steps to take in establishing a
business
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SECTION 33.2
Logistics of Business Ownership
Why It's Important
Considering whether and how to become
an entrepreneur requires knowledge of the
several forms of business organization,
along with the legal steps for establishing
a business.
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SECTION 33.2
Logistics of Business Ownership
Key Terms
 franchise
 corporation
 sole proprietorship
 stockholders
 unlimited liability
 foreign corporation
 partnership
 Subchapter S corporation
 general partnership
 DBA
 limited partnership
 Articles of incorporation
Chapter 33 n Entrepreneurial Concepts
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SECTION 33.2
Logistics of Business Ownership
Business Ownership Opportunities
About 150,000 businesses are started each
year. There are four ways to enter business:
 develop a new business
 purchase a franchise business
 purchase an existing nonfranchise
business
 take over the family business
Slide 1 of 5
Chapter 33 n Entrepreneurial Concepts
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SECTION 33.2
Logistics of Business Ownership
Business Ownership Opportunities
Starting Your Own Business This approach
gives you many options. You can start the
business of your choice, decide where to
locate, and how to set it up. You do not have
to take on bad debts, a bad reputation,
|or a poor location. However, you must
establish every aspect of your business
and create and build a reputation.
Slide 2 of 5
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SECTION 33.2
Logistics of Business Ownership
Business Ownership Opportunities
Purchasing an Existing Business
When you buy a nonfranchise business,
you usually receive little or no help from the
previous owner. You must investigate why the
business is being sold, examine the business
records and the condition of the property and
inventory, and determine the business's
reputation.
Slide 3 of 5
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SECTION 33.2
Logistics of Business Ownership
Business Ownership Opportunities
Purchasing a Franchise Business
A franchise is a legal agreement to operate a
business in the name of a recognized company.
The franchisee buys a business operation from
a franchisor, the owner of the recognized
company. The franchisor does all business
planning—management training, advertising,
and merchandising. Most franchises are initially
very expensive to operate.
Slide 4 of 5
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SECTION 33.2
Logistics of Business Ownership
Business Ownership Opportunities
Taking Over the Family Business
As with purchasing any existing business,
you must review business records, the overall
condition of the property and inventory, and
determine the business's reputation. In
addition, you need to explore potential
conflicts and concerns with family members.
Slide 5 of 5
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SECTION 33.2
Logistics of Business Ownership
Forms of Business Organization
The legal form of business organization you
select may make the difference between
business success and business failure.
Your choices of business organization are:
 sole proprietorship
 partnership
 corporation
Chapter 33 n Entrepreneurial Concepts
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SECTION 33.2
Logistics of Business Ownership
Sole Proprietorship
A sole proprietorship—the most common form of
business ownership—is owned and operated by
one person.
 Example: Plumbers, auto mechanics, writers
 Advantages: Complete control, owner keeps all
profits, easy to start, taxed less than other
businesses
 Disadvantages: Unlimited liability—the owner
is personally responsible for all debts and legal
judgments
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SECTION 33.2
Logistics of Business Ownership
The Partnership
A partnership is a legal agreement between two
or more people to be jointly responsible for the
success or failure of a business. A partnership is
subject to relatively little regulation and is fairly
easy to establish. There are two types of
partnerships:
 general
 limited
Slide 1 of 2
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SECTION 33.2
Logistics of Business Ownership
The Partnership
General Partnership Each partner shares
in the profits and losses. Each partner has
unlimited liability for business debts.
Limited Partnership Each partner is liable
for any debts only up to the amount of his or
her investment in the company. One general
partner has unlimited liability.
Slide 2 of 2
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SECTION 33.2
Logistics of Business Ownership
The Corporation
A corporation is a business that is chartered
by a state and legally operates apart from
the owner(s). The value of a corporation is
divided into equal units called shares of
stock which are owned by stockholders.
The company can own assets and borrow
money without directly involving the
shareholders.
Slide 1 of 4
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SECTION 33.2
Logistics of Business Ownership
The Corporation
Corporations can be incorporated in any U.S.
state. A foreign corporation is incorporated
under the laws of a different state from the one
in which it does business.
A subchapter S corporation is a small
business that is taxed like a partnership or
proprietorship.
Slide 2 of 4
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SECTION 33.2
Logistics of Business Ownership
The Corporation
There are four key advantages to corporations:
 The owners have limited liability.
 It is easier for a corporation to raise
money for expansion.
 Stockholders can easily enter and leave
the business.
 Each operation area of the business can
be professionally managed.
Slide 3 of 4
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SECTION 33.2
Logistics of Business Ownership
The Corporation
There are disadvantages to corporations:
 Formation is complex.
 Increased government regulation.
 Higher taxes on the profits of the
corporation and on each stockholder.
 Accounting and record keeping are
intricate.
Slide 4 of 4
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SECTION 33.2
Logistics of Business Ownership
Legal Steps in Establishing Your Business
When you establish a sole proprietorship or
partnership, you must file for a DBA (Doing
Business As) at your local county clerk's office.
This registers your business and protects your
business name.
When forming a corporation, you must file
Articles of Incorporation with the corporation
and securities bureau in your state department
of commerce.
Slide 1 of 2
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SECTION 33.2
Logistics of Business Ownership
Legal Steps in Establishing Your Business
Depending on what business you enter and
where you locate, you may have to obtain
one or more licenses. Individual states license
doctors, attorneys, accountants, cosmetologists,
barbers, marriage counselors, and pharmacists
to protect the public from unqualified people
and to maintain the health and welfare of
the citizens.
Slide 2 of 2
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33.2 ASSESSMENT
Reviewing Key Terms and Concepts
1. What are four ways to enter into a
business?
2. What are the three basic forms of business
ownership?
3. What legal steps must you take to establish
a sole proprietorship or partnership?
4. What legal steps must you take to establish
a corporation?
5. What is a Subchapter S corporation?
Chapter 33 n Entrepreneurial Concepts
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33.2 ASSESSMENT
Thinking Critically
Which of the four ways to enter a business
would you use to start your own business?
Explain your decision.
Chapter 33 n Entrepreneurial Concepts
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33.2 Graphic Organizer
Similarities and Difference Between
Partnerships and Sole Proprieterships
Similarities
Shared
decision making
Increased
diversity of
experience
Shared losses
Combined
funds
Pride in
owning and
running business
Easy to set up
Low taxes
Unlimited liability
for debts
Huge time
demands
Quicker
decision making
Owner keeps
all profits
Owner is
own boss
Relatively easy
to get credit
Chapter 33 n Entrepreneurial Concepts
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Marketing Essentials
End of Section 33.2
Chapter 33 n Entrepreneurial Concepts
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