Entrepreneurs and
Business Organizations
Chapter 9
1
Entrepreneur: a person or group who invests, creates, or
takes on the risk of starting a new business or company. Or,
they might have an idea that they think they can profit from.
Entrepreneurs affect or help the economy by:
• Creating jobs
• Meeting consumer demand for products/services
• increasing economic growth
What is an entrepreneur?
2
What characteristics would you look
for in an entrepreneur?
Take a few moments are write down 4
characteristics in the space provided on your
note sheet
3
Problem-solving skills
Ability to motivate others
Ambitious
Willing to take risks
Self-confident
Perseverance
Energy and self-discipline
Organizational skills
Successful
Entrepreneurs are/have…
4
WHAT DO YOU THINK THE RISKS ARE
FOR STARTING A BUSINESS? WHAT
ABOUT THE REWARDS?
Take some time and think to yourself what these
things can be. Then get with a buddy and share your
thoughts.
5
Risks
Rewards
• Failure
• Raising the money for the
company
• Financial insecurity
• Hiring the right
employees
• Long hours
• Little to no pay
• Potential for increased
pay or profit
• Freedom in your life
• Enjoyment of your hobby
as your profession
• Be your own boss
Risks and Rewards of
Starting a Business
6
Sole Proprietorship: a business owned and managed by one
person.
Partnership: a business owned by two or more co-owners
who share profits.
Corporation: owned by public or private shareholders who
own stock
3 Main Types of
Businesses
7
Advantages
Disadvantages
• Easy start-up
• Unlimited liability
• Little paperwork
• Business name, permits,
licenses
•
•
•
•
Few restrictions
Make all decisions
Keep profits
File individual taxes
• No business taxes
• You pay all losses
• Personally responsible for
all debt
• Create LLCs for protection
• Limited Liability Company
• Limited growth potential
• Limited life
• Easy to close down
Sole Proprietorship
8
Partnerships have 2 or more owners who share the profits
and liabilities of the company.
Common partnerships include:
• Family owned business
• Law firms
• Medical practices
Partnerships
9
General Partnerships (GP): all owners share total liability for
debts and are involved in all decisions
Limited Partnership: there is at least one general partner and at
least one limited partner.
• Limited partner: referred to as a “silent partner”. This person
contributes financial capital (money) to the business but does not
have a say in day-to-day operations. They only lose what they
invest.
Limited Liability Partnership (LLP): owners act like GPs but
have limited liability
Different Types of
Partnerships
10
Advantages
Disadvantages
• Easy start- up, just need
legal agreement: Articles of
rules and regulation
• Few restrictions
• Share decision-making
power
• Opportunities for
specialization
• File individual taxes
• Larger growth potential
• Unlimited liability for GP
• Conflict between partners
• Continuity issues
• Partners may die or leave
the business
• Banks more willing to loan
out to multiple partners
Advantages and Disadvantages
of Partnerships
11
A business becomes a corporation when it is owned by
shareholders who purchased shares of the company’s stock.
Venture Capitalist: someone who invests money into a new
promising business and receives share of ownership of the
company. They provide capital (money) so that a company
can grow its business
Corporations
12
Privately Owned: owned
by one person or a very
small group. Stocks sold
to a select group of
people
Publically Owned: offers
stock to the general
public and has many
shareholders
Two Types of
Corporations
13
Corporations have business in multiple countries
Multinational
Corporations
14
Advantages
Disadvantages
• Limited liability
• Complex start up
• Loss of control
• Shareholders only lose what
they invest
• Larger growth potential
• Professional management
• Long business life
• Board of directors make
decisions, business founder
• Increased government
regulation
• Stockholder meetings required
• Double taxation
• Business pays taxes as well as
shareholders
Advantages and Disadvantages
of Corporations
15
Franchise: In which one company has many individual outlets to
sell its products or services
Cooperatives: business that is owned and operated by a group of
individuals for their shared benefit. The goal is to make goods
and services more affordable, not to make a profit.
• Must have some sort of membership to take advantage of
shared benefits.
Non-profit: Functions like a business aside from the fact that
making a profit is not the goal. They are established to support a
public or private goal.
• Foundations, associations, booster clubs
Franchises, Cooperatives,
and Non-Profits
16
Advantages
Disadvantages
• Company expands with
each new franchise
• Cheaper for the company to
open new locations itself
• New owners receive a
support system
• Better chances for profit
• A customer base already
exists
• Must pay fees to open the
franchise
• Must pay royalties (on
top of usual costs of
operations)
• Lack of independence in
terms of running the
business
Advantages and disadvantages
of Franchises
17
Rights
Responsibilities
•
•
•
•
•
•
•
•
•
Right to advertise
Hire and fire employees
Screen employees
Be compensated for
property lost
• Govt must pay for property
they take
• Right to protect intellectual
property
• Trademarks, patents
Obtain permits and licenses
Pay taxes
Deal honestly
Honor contracts
Create an equal opportunity
workplace
• Produce safe products
• Protect whistle-blowers
Rights and Responsibilities
of Businesses
18
There are things that companies are legally able to do, but this does not
mean that they should do those things.
Morality is starting to play a big role in the business market. Do you
notice a growing trend in companies appealing to your morals?
Corporate Responsibility: taking responsibility for a company’s actions
that impact
Corporate Citizen: something that business strive to be by being
considerate of the interests of their stakeholders (those who have an
interest in or are affected by a company’s actions)
Business Ethics: ways in which companies address corporate
responsibility. They are principles that guide the actions of the
company and its employees.
• Business Ethics: What not to do
Business Ethics: Legal vs. Ethical
19
Consumer Sovereignty: power of
consumers to affect the decisions of
a company.
Consumers communicate their
power through their spending. What
consumers spend their money shows
what they want.
Must Think About the
Consumers
20