SOLE PROPRIETORSHIP A oneowner business The owner is solely responsible for the ventures operation Sole Proprietorship ADVANTAGES Youre your own boss Keep all the profits Control over ID: 618248
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Slide1
Forms of Business OwnershipSlide2
SOLE PROPRIETORSHIP
A one-owner business. The owner is solely responsible for the venture’s operation.Slide3
Sole Proprietorship
ADVANTAGES:
You’re your own boss!
Keep all the profits
Control over
decisions
DISADVANTAGES:
Need all the skills yourself
Work hard, long hours
Difficult to raise money for start-up
Unlimited Liability
- personal assets are used to cover debts of business
Slide4
Sole
Proprietorship Example
eBay
The eBay concept was launched by Pierre
Omidyar
. This company started as a sole proprietorship and has grown into a
large
corporation. Slide5
Sole Proprietorship
Amazon
The founder of Amazon,
Jeff
Bezos
started his company as a sole proprietor before it also became a major corporation. Slide6
Article: SOLE PROPRIETORSHIP - STILL THE RISKIEST TYPE
Of
all the types of business organizations that fail and go out of business, individual ownership still ranks the highest. There are several reasons for this. Most individuals lack sufficient money (capital) to invest in the best store equipment and merchandise to sell. Also, privately owned businesses are usually managed entirely by one person. Although that person may be highly skilled, most people do not have the proper business skills such as accounting, salesmanship, marketing, and a knowledge of proper money management that is necessary to survive in a highly competitive and selective marketplace. The greatest risk to sole proprietorship is unlimited liability. In good times, the owner reaps all of the profits. But, in bad times, the owner must bear all of the losses as well. If the business debts become too great, and the suppliers demand payment through the courts, that individual’s personal property such as a house, car, or boat, can all be sold to pay for the debts.
Despite
the disadvantages, people still continue to operate their own businesses. The freedom of being one’s own boss and the satisfaction derived from watching ideas grow into a success, motivate hundreds of people each year.Slide7
Waterloo Region Small Business Centre
Check out the
Waterloo Region Small Business Centre and click on YOUTH and click on SUMMER COMPANY. Answer the questions on your worksheet.Slide8
2. PARTNERSHIP
Two or more people combine their funds and abilities to carry on a business, for profit
.
Google founders Sergey
Brin
& Larry PageEXAMPLES OF FAMOUS PARTNERSHIPS:
Visit this
website
and identify businesses that started
out
as partnerships.Slide9
Partnership
Google
Larry Page and Sergey Brin met at Stanford
Universityin
the mid-1990s and decided they wanted to start a company together
..Slide10
Partnership
Apple Inc.
Apple was founded in
1976. It started
as a partnership
and has grown into one of today’s largest corporations. Slide11
Partnership
ADVANTAGES:
Share workload
More ideas
More money for start-up
Share
losses
DISADVANTAGES:
Share profits
Conflict between partners
Unlimited Liability
- personal assets are used to cover debts of business
Slide12
Partnership Agreement:
A written partnership is NOT necessary by law but it will protect both parties in the event of disputes.
Items to include:
Name and location of the business.
Terms of the Partnership
:
Amount invested by each partner
Duties of each partner
How profits will be splitSlide13
Famous Partnerships
Visit this website and list four businesses you didn’t realize started out as a partnership.Slide14
3. CORPORATION
This is a company that is incorporated (allowed) by the government to carry on a business for profit.Slide15
The corporation is owned by shareholders, who buy shares and elect a Board of Directors.
Shareholders are allowed 1 vote for each share owned and are liable only to the extent of their investment in the shares.
Corporations must form a
Charter.
This must include
:
Business Name
Purpose
Location
Capital (money invested)
Number of shares issued
Names of directorsSlide16
In the eyes of the law, a business that is a corporation has a legal existence of its own. It is an “
artificial person
” with an unlimited life.
A corporation has the same legal rights as a person—to sign contracts, to purchase or own property, to sue or be sued.
A corporation is distinct from its shareholders.
Large businesses become corporations to raise money. This can be used for purchasing land, equipment, inventory, build factories, or hire more employees.Slide17
Corporation
A legal entity that exists independently of its ownersSlide18
Corporation
ADVANTAGES:
Limited Liability - shareholders only liable to amount invested in shares
More capital available
Professional Management
Potential for growth
DISADVANTAGES:
High legal costs
Lots of government “red tape”
Lack of privacySlide19
Board of Directors
:
Responsible to shareholdersDetermines products or services
Decides how profits will be used
Appoints the executive
Profits
:
Belong to the shareholders
Returned to shareholders through a dividend
Amount of dividend you receive depends on number of shares you ownSlide20
CROWN CORPORATIONS:
A Crown Corporation is a business owned and operated by the federal, provincial, or municipal government
It is organized like any other corporation, except the government owns most or all of the shares.
The government appoints the Board of Directors and determines corporate goals.Slide21
Why have Crown Corporations?
They provide essential services to Canadians
Examples:
Sometimes, these businesses do NOT make a profit. Taxes are used to cover the corporation’s losses.
They provide competition with larger private businesses to help regulate some of Canada’s economic conditions.
Examples:Slide22
Shares and Dividends
ABC Company: 100,000 shares were sold. At the year end, the company made $300,000 in profit.
The Board of Directors had a decision to make. They decided to reinvest $150,000 back into the corporation and they decided to give $150,000 back to the shareholders in dividends.
Calculate the dividend per share:
This means that for every share you own, you get * in dividends.Slide23
Jenn has 2,000 shares in ABC Company. How much will her dividend cheque be for?Slide24
4. CO-OPERATIVE
A co-operative is a business owned by the member or by customers who buys the product / uses service. The motive for operating a co-operative is typically service not profit.Slide25
Members run the co-operatives and each member of a co-operative only gets one vote regardless of the number of shares owned. For example, if Molly has 60 shares in Mountain Equipment Co-op, she gets 1 vote.
Profits of a co-operative are distributed according to how much the member purchases (distributed as a “patronage refund”). Slide26
5. FRANCHISE
The franchisor licenses the rights to its name, operating procedure, designs, and business expertise to another business (the franchisee).
The franchisee buys a license to operate a ready-made business and is often provided with a fully operational facility.
Therefore, the person who owns the Wings Up store on Erbsville Road is the
What company has the greatest number of franchises worldwide? Slide27
Identify and describe five requirements that a franchisee must meet:
Pay a franchising fee
2. Invest a minimum amount of capital
3. Follow a procedures manual
4. Help pay for national advertising
5. Purchase equipment/supplies from set spotSlide28
Top Franchise Ranking
Visit this website
https://www.entrepreneur.com/franchise500 and identify the 2017 Franchise ranking. Use this information to complete the table on your worksheet: