1. Chapter 5 Proprietorships
and Partnerships
Chapter 5 Proprietorships
©2008 Thomson/South-Western
1 and Partnerships

2. Lesson 5.1 Entrepreneurship
Goals
 Describe the characteristics of successful
entrepreneurs.
 Discuss the responsibilities of owning your
own business.
Chapter 5 Proprietorships
2 and Partnerships

3. Characteristics of Entrepreneurs
 Creative
 Personable
 Experienced
 Well informed
Chapter 5 Proprietorships
 Self-starters
 Energetic
 Independent
 Take-charge
3 and Partnerships

4. Getting a Business Started
– Small Business Administration (SBA)
 Responsibilities of business ownership
 Intrapreneurs
Chapter 5 Proprietorships
 Business plan
 Government support
4 and Partnerships

5. Elements of a Business Plan
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 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)
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 Basic results expected in the short and long run
 Results expressed as sales volume or profits MMaarrkkeettiinngg PPllaann
 Customers and demand for the product or service
 Prices for the product or service
 Comparison of product or service with competitors
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 Investment needed to start and maintain business
 Projected income, expenses, and profit
 Cash start-up and cash flow needs
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 Legal form of ownership
 Legal factors: licenses, leases, contracts
 Organization chart
 Job descriptions and employee skills needed
 Physical facilities: building, equipment, tools
Chapter 5 Proprietorships
and Partnerships

6. Lesson 5.2 Proprietorship
 Explain the advantages and disadvantages
of proprietorships.
 Describe the types of businesses suited to
being proprietorships.
Chapter 5 Proprietorships
6 and Partnerships

7. Proprietorship (also called sole
proprietorship) — business owned and
managed by one person, who furnishes
expertise, money, and management and is
entitled to all profits
Chapter 5 Proprietorships
Proprietorship
7 and Partnerships

8. 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.
Chapter 5 Proprietorships
8 and Partnerships

9. Disadvantages of Proprietorship
 Owner may lack necessary skills and
abilities.
 Owner may lack funds.
 Owner bears all losses.
 Illness or death may close the business.
Chapter 5 Proprietorships
9 and Partnerships

10. Goals
 Explain advantages and disadvantages of
partnerships.
 Describe the types of businesses suited to
the partnership form of business.
Chapter 5 Proprietorships
Lesson 5.3 Partnership
10 and Partnerships

11. 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
Chapter 5 Proprietorships
Partnership
11 and Partnerships

12. Advantages of Partnerships
 Lower tax burden than
corporations
 Reduction in
competition
 Retirement from
management
 Operating economies
Chapter 5 Proprietorships
 Skills and abilities
pooled
 Sources of capital
increased
 Credit position
improved
 Contribution of goodwill
 Increased concern in
business management
12 and Partnerships

13. Disadvantages of Partnerships
 Limited sources of
capital
 Unsatisfactory division
of profits
 Difficulty in withdrawing
from partnership
Chapter 5 Proprietorships
 Unlimited financial
liability
 Disagreement among
partners
 Each partner bound by
contracts of others
 Uncertain life
13 and Partnerships