Business Structures and Terminology

Definitions of Key Terms

• Entrepreneur
  • An individual who starts and runs their own business, taking on financial risks in hopes of earning a profit.
• Intrapreneur
  • An employee within a company who uses entrepreneurial skills to innovate and drive new projects or ideas, supported by the organization.
• Freelancer
  • An independent contractor who provides services to multiple clients on a per-project basis, without long-term commitments.
• Human Capital
  • Refers to the skills, knowledge, and experience possessed by an individual.
• Proprietorship
  • The state or right of owning a business or holding property.
• Liability
  • The state of being legally responsible for something.
• Globalization
  • The process by which people and economies around the world are becoming increasingly interconnected.
• Certification
  • Official recognition that a person is qualified in their field.
• Labor Force
  • The portion of the population that has paid work or is seeking work.
• Offshoring
  • Relocating work and jobs to another country.
• Outsourcing
  • A business practice where work that was once done within a company is sent to outside contractors.
• Chief Executive Officer (CEO)
  • The highest-ranking person in charge of managing a corporation.
• Corporation
  • A business owned by shareholders who have limited liability for the firm’s debt.

Business Models Comparison

Types of Partnerships

• General Partnership
  • All partners share management and full liability.
• Limited Partnership
  • Some partners only invest money, don’t manage, and have limited liability.
• Limited Liability Partnership
  • All partners manage the business with limited liability; no one is personally responsible for business debts.

Partnership Strengths and Weaknesses

• Strengths:
  • Easy to form
  • No special business taxes
  • Shared decision-making
  • Easier to raise money than sole proprietorship
• Weaknesses:
  • Sole Proprietorship:
  • Unlimited liability (owner fully responsible)
  • Hardest to raise capital (only owner's money)
  • Business ends if owner dies
  • Partnership:
  • Shared liability (partners responsible for each other's debts)
  • Disagreements can arise
  • Business can end if a partner leaves or dies
  • Corporation:
  • Limited liability (owners not personally responsible)
  • Easiest to raise capital but expensive to set up
  • More rules to follow and less personal control

Business Structure Case Study Insights

Case Study 1: Local Café Startup

• Options:
  • Sole Proprietorship:
  • Cheap to start, full control, simple setup
  • Disadvantages: hard to get loans, business ends if owner quits
  • Partnership:
  • Shares costs and ideas, less pressure
  • Disadvantages: disagreements, shared profits
  • Corporation:
  • Funding from investors, potential to grow
  • Disadvantages: expensive, less personal control, profits taxed twice

Case Study 2: Tech Startup with a New App

• Options:
  • Sole Proprietorship:
  • Full control, easy to start
  • Disadvantages: hard to raise enough money, big personal financial risk
  • Partnership:
  • Shares workload, combines skills
  • Disadvantages: disagreements, can end if someone quits
  • Corporation:
  • Easier to get funding, personal assets protected
  • Disadvantages: expensive, more government regulations

Multiple Choice Questions Overview

1. Sole Proprietorship has unlimited liability and is hardest to raise capital.
2. In a General Partnership, all partners share management and liability.
3. A corporation raises capital more easily than other business models.
4. A weakness of partnerships is that one partner may be liable for another’s actions.
5. A limited partner typically only invests money and has limited liability.

Education and Skill Development

• Formal Education:
  • High school, college, trade school, certifications, professional courses
  • Structured programs to build knowledge and credentials.
• Informal Education:
  • Reading, self-study, mentorship, learning through experience
  • Important for developing skills and knowledge.
• Work Experience:
  • Part-time jobs, volunteer work, internships
  • Demonstrates skill application in real situations.
• Types of Skills:
  • Technical Skills: measurable skills specific to jobs (e.g., programming).
  • Soft Skills: interpersonal skills such as communication, teamwork, time management.