Business Notes - Unit 1

Types of Businesses 

• Profit 

• Exist to make money, required to pay taxes

• Non- Profit 

• Purpose of furthering a social cause and providing public benefit 

Supply and Demand

• Demand 

• The quantity of a good or service that consumers can buy at a given price.

• Law of the Demand - As prices increase, demand decreases; as prices decline, demand increases.

• Supply

• The quantity of goods and services that businesses are willing and able to provide within a range of prices that people would be willing to pay.

• The law of Supply states that as prices increase, producers are willing to supply more of a good; as prices decrease, they provide less.

• The Equilibrium Price 

• The point when supply equals demand 

• The market is balanced and neither a surplus nor a shortage exists.

Types of Business Ownership 

• Sole-Proprietorship 

• A business that is owned and operated by one person

• The owner is responsible for all operations of the business and assumes all risks

• Advantages - Able to keep all profits, make all decisions, quickly take a new direction when an opportunity arises, and easily open and shut down. 

• Disadvantages - Owner is on their own, risky, difficult to have funding to expand, responsible for paying all debt/liabilities of the business - (Unlimited Liability) 

• Partnership 

• A form of business ownership in which two or more people own and operate the business together as a team. The team must be in a verbal or written agreement and share business losses.

• Advantages- Easy to organize, cheaper to start, easier to borrow from the bank

• Disadvantages: Unlimited Liability for all business debts, where both people are 100% liable for the debt; conflicts can arise in partnerships; and it is more difficult to close down. 

• Corporation 

• A company that has to act as a single entity as such in law, created by individuals, stockholders and shareholders with the purpose of operating for profit, owned by its shareholders who elect a board of directors to oversee its operations 

• Advantages-  The owners are shareholders and have limited liability, can raise funds quickly, and can continue after you die (continue into the family)

• Disadvantages- Employees may not be committed to the business, must publish annual reports stocks can go up and down 

• Franchise 

• A business whereby the owner licences its operations along with its product branding

• Advantages- Supply training and financial knowledge, provide packaging, and advertising.

• Disadvantages- Expensive to buy, follow a lot of rules and guidelines, if a franchisor's business fails, so will the franchisee’s business  

Management 

• Leading

• Should Motivate, inspire and guide someone to perform, their job and meet the organization's goals 

• Planning

• Determine the organization's goals and how to achieve them to their fullest 

• Mission statements and business vision 

• Controlling 

• It involves monitoring an organization's performance 

• Managers should take corrective action to ensure things improve 

• Organizing 

• Managers are responsible for organizing people and resources 

• Employees must also java the necessary resources to complete their jobs