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Unit 3 business mangement

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Transcript

  • 1. Sole Proprietorships and Partnerships
  • 2. Characteristics of Entrepreneurs
    • Entrepreneur – person who assumes the risk of starting, owning, and operating a business for the purpose of making a profit
    • Half of all businesses end within the first five or six years
    • Self-starters, enjoy working on their own
    • Obtain work experience in the field before starting businesses of their own
  • 3. Preparing a Business Plan
    • Should be done before starting a business
    • Business plan
      • Written document that describes the nature of the business, the company’s goals and objectives, and how they will be achieved
      • Helps lay out the risks and responsibilities involved in starting a business; helps decide if you should really go into business
  • 4. Reasons for Failure
    • Did not prepare a business plan
    • Unrealistic plan
    • Plan is just prepared because the bank required it
    • *Plan needs to be realistic and well-designed*
  • 5. Elements of a Business Plan
    • Nature of the business
      • Description of products and/or services, estimated risk, size/location of business, background of entrepreneur(s)
    • Goals and objectives
      • Results expected in the short term and in terms of sales volume/profits
    • Marketing plan
      • Customers and demand for the product/service, prices, competitor comparison
  • 6. Elements of a Business Plan (cont’d)
    • Financial plan
      • Investment needed to start/maintain business, projected income/expenses/profit, cash start-up and cash flow needs
    • Organizational plan
      • Legal form of ownership, legal factors (licenses, leases, contracts), organization chart, job descriptions/skills needs by employees, physical facilities (buildings, equipment, tools)
    • Click here to see a sample business plan
  • 7. Sole Proprietorship
    • Business owned and managed by one person
    • Over 16 million in the U.S.
    • Proprietor – owner/manager
      • Responsible for providing expertise, money, and management
      • Receives all profits earned by the business
      • Debts – creditors have first claim against the assets
        • Creditors – those to whom money is owed
    • Click here to read an article about the basics of the sole proprietorship
    • Click here to read an article about the advantages and disadvantages of sole proprietorships
  • 8. Partnership
    • Business owned by two or more people
    • After it is formed, statement of financial position (balance sheet) must be prepared
      • Includes total assets, liabilities, and capital of the owners at the start of the business
    • Key factor to its success – partners clearly agree upon each person’s responsibilities
  • 9. Partnership (cont’d)
    • Partnership – learn more by clicking here (often referred to as a general partnership)
      • Click here to read an article about the advantages and disadvantages of partnerships
    • Limited partnership – learn more by clicking here
  • 10. Businesses Suited for Partnerships
    • Sell more than one product or service
      • Each partner handles a specialized phase of the business
        • Example – restaurant where one partner focuses on food preparation while the other one is in charge of customer service
    • Also common for businesses that form as sole proprietorships
      • Example – accountants, financial consultants, lawyers
  • 11. Business Name
    • Can do business under the name or names of the owner or owners
    • Many states prohibit using and Company or & Co., unless it identifies additional partners
      • “ Company” must be identified by registration at a public recording office (ex. county clerk’s office)
      • Can do business under a trade name, but creditors must know all those responsible for the business
  • 12. Reference
    • Evarard, Kenneth E., Burrow, James L. (2001). Business Principles and Management. Mason, OH: South-Western.