Unit 3 business mangement


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Unit 3 business mangement

  1. 1. Sole Proprietorships and Partnerships
  2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 12. Reference □ Evarard, Kenneth E., Burrow, James L. (2001). Business Principles and Management. Mason, OH: South- Western.