Goals
Describe the characteristics of successful entrepreneurs. (5.1)
Some characteristics of successful entrepreneurs are that they are independent, creative, well experienced, and they are energetic.
Discuss the responsibilities of owning your own business (5.1)
Some important responsibilities of owning your own business are getting a budget to start a business. The best method to get money is from advertising and marketing to increase profits quickly.
Explain the advantages and disadvantages of proprietorships (5.2)
Some advantages of proprietorships are that the owner receives all profits and that they pay less income tax than corporations.
Describe the types of businesses suited to being proprietorships (5.2)
The best types of businesses suited to being proprietorships are small-scale businesses for example, dentists, pool cleaners, mechanics.
Explain advantages and disadvantages of partnerships (5.3)
Some advantages of partnerships is that the amount of capital is increased when starting a business, there is a less tax burden than proprietorships. Some disadvantages of a partnership is that the profit has to be split amongst a group of people and that there are limited sources of capital.
Describe the types of businesses suited to the partnership form of business (5.3)
The businesses suited to partnerships are ones that require a lot of capital to start, for example, a clothing store, or a food store.
Characteristics of Entrepreneurs
Self- starters
Energetic
Independent
Take-charge
Creative
Personable
Experienced
Well-informed
Getting a Business Started
Business plan - a blueprint detailing all of the specifics relative to your business
Government support
Small Business Administration (SBA)
Responsibilities of business ownership
Most of startup budget must come from advertising and marketing when you first open
Amount will decrease over time
Intrapreneurs
Elements of a Business Plan
Nature of the business
Detailed description of products and/or services
Estimation of risk based on analysis of industry
Size of business
Location of business
Background of entrepreneur(s)
Goals and Objectives
Basic results expected in short and long run
Results expressed as sales volume or profits
Marketing Plan
Customers and demand for the product or service
Prices for the product or service
Comparison of product or service with competitors
Financial Plan
Investment needed to start and maintain business
Projected income, expenses, and profit
Cash start-up and cash flow needs
Organizational Plan
Legal form of ownership
Legal factors: licenses, leases, contracts
Organization chart
Job descriptions and employee skills needed
Physical facilities: building, equipment, tools
Proprietorship
Proprietorship (aka sole proprietorship) - business owned and managed by one person, who furnishes expertise, money, and management and is entitled to all profits
Advantages of Proprietorship
Owner is boss
Owner receives all profits
Owner personally knows employees and customers
Owner can act quickly in decision making
Owner is free from red tape
Owner usually pays less income tax than a corporation
Tax rate 12-30%
More money = higher tax rate
Disadvantages of Proprietorship
Owner may lack necessary skills and abilities
Owner may lack funds
Owner bears all losses
Illness or death may close business ‘
Partnership
Partnership - business owned by two or more people
General partnership - each partner is personally liable for all debts incurred by partnership
Limited partnership - liability of each partner is restricted to amount of partner’s investment
Advantages of Partnerships
Skills and abilities pooled
Sources of capital increased
Credit position improved
Contribution of goodwill
Increased concern in business management
Lower tax burden than corporations
Reduction in competition
Retirement from management
Operating economies
Disadvantages of Partnerships
Unlimited financial liability
Disagreement among partners
Each partner bound by contracts of others
Uncertain life
Limited sources of capital
Unsatisfactory division of profits
Difficulty in withdrawing from partnership
8/20/2024
Pg. 116
They like to make sure others do most of the work
All of the above
It gives out loans and grants to small businesses.
A large business would want to have an employee with entrepreneurial skills because they are experienced and have important skills to increase a businesses profit
Pg. 120
Owner deals with limited red tape
Owners may need to close the business in case of illness
It keeps track of all the finances and shows the owner’s equity
It is good because it gives the owners full control of their business and they pay less income tax than a corporation
Pg. 128
Partners have limited liability
Reduce competition
Each partner is limited to the amount of partner’s investment
They have many owner and want to share the profits
Chapter 5 Proprietorships and Partnerships
Goals
Describe the characteristics of successful entrepreneurs. (5.1)
Some characteristics of successful entrepreneurs are that they are independent, creative, well experienced, and they are energetic.
Discuss the responsibilities of owning your own business (5.1)
Some important responsibilities of owning your own business are getting a budget to start a business. The best method to get money is from advertising and marketing to increase profits quickly.
Explain the advantages and disadvantages of proprietorships (5.2)
Some advantages of proprietorships are that the owner receives all profits and that they pay less income tax than corporations.
Describe the types of businesses suited to being proprietorships (5.2)
The best types of businesses suited to being proprietorships are small-scale businesses for example, dentists, pool cleaners, mechanics.
Explain advantages and disadvantages of partnerships (5.3)
Some advantages of partnerships is that the amount of capital is increased when starting a business, there is a less tax burden than proprietorships. Some disadvantages of a partnership is that the profit has to be split amongst a group of people and that there are limited sources of capital.
Describe the types of businesses suited to the partnership form of business (5.3)
The businesses suited to partnerships are ones that require a lot of capital to start, for example, a clothing store, or a food store.
Characteristics of Entrepreneurs
Self- starters
Energetic
Independent
Take-charge
Creative
Personable
Experienced
Well-informed
Getting a Business Started
Business plan - a blueprint detailing all of the specifics relative to your business
Government support
Small Business Administration (SBA)
Responsibilities of business ownership
Most of startup budget must come from advertising and marketing when you first open
Amount will decrease over time
Intrapreneurs
Elements of a Business Plan
Nature of the business
Detailed description of products and/or services
Estimation of risk based on analysis of industry
Size of business
Location of business
Background of entrepreneur(s)
Goals and Objectives
Basic results expected in short and long run
Results expressed as sales volume or profits
Marketing Plan
Customers and demand for the product or service
Prices for the product or service
Comparison of product or service with competitors
Financial Plan
Investment needed to start and maintain business
Projected income, expenses, and profit
Cash start-up and cash flow needs
Organizational Plan
Legal form of ownership
Legal factors: licenses, leases, contracts
Organization chart
Job descriptions and employee skills needed
Physical facilities: building, equipment, tools
Proprietorship
Proprietorship (aka sole proprietorship) - business owned and managed by one person, who furnishes expertise, money, and management and is entitled to all profits
Advantages of Proprietorship
Owner is boss
Owner receives all profits
Owner personally knows employees and customers
Owner can act quickly in decision making
Owner is free from red tape
Owner usually pays less income tax than a corporation
Tax rate 12-30%
More money = higher tax rate
Disadvantages of Proprietorship
Owner may lack necessary skills and abilities
Owner may lack funds
Owner bears all losses
Illness or death may close business ‘
Partnership
Partnership - business owned by two or more people
General partnership - each partner is personally liable for all debts incurred by partnership
Limited partnership - liability of each partner is restricted to amount of partner’s investment
Advantages of Partnerships
Skills and abilities pooled
Sources of capital increased
Credit position improved
Contribution of goodwill
Increased concern in business management
Lower tax burden than corporations
Reduction in competition
Retirement from management
Operating economies
Disadvantages of Partnerships
Unlimited financial liability
Disagreement among partners
Each partner bound by contracts of others
Uncertain life
Limited sources of capital
Unsatisfactory division of profits
Difficulty in withdrawing from partnership
8/20/2024
Pg. 116
They like to make sure others do most of the work
All of the above
It gives out loans and grants to small businesses.
A large business would want to have an employee with entrepreneurial skills because they are experienced and have important skills to increase a businesses profit
Pg. 120
Owner deals with limited red tape
Owners may need to close the business in case of illness
It keeps track of all the finances and shows the owner’s equity
It is good because it gives the owners full control of their business and they pay less income tax than a corporation
Pg. 128
Partners have limited liability
Reduce competition
Each partner is limited to the amount of partner’s investment
They have many owner and want to share the profits