This chapter discusses different types of business ownership and operations. It describes sole proprietorships, partnerships, and corporations, including their advantages and disadvantages. For example, it notes that a sole proprietorship has unlimited liability for debts as its main disadvantage. The chapter also discusses franchises, nonprofits, cooperatives, and different types of businesses based on their production process or services provided. Finally, it outlines the five main functions of business as production, procurement, marketing, management, and finance/accounting.

1. Business Ownership
and Operations
Chapter 6
pp. 94-105

2. Chapter 6 - Business Ownership and Operations Slide 2
Learning Objectives
After completing this chapter, you’ll be
able to:
1. Describe the advantages and
disadvantages of the 3 main types of
business ownership.
2. Compare franchises, cooperatives,
and nonprofit organizations
Why It’s Important
You need to understand business
ownerships and operations before
starting a business.

3. Chapter 6 - Business Ownership and Operations Slide 3
Types of Business Ownership
• SOLE PROPRIETORSHIP
• Partnership
• Incorporation

4. Chapter 6 - Business Ownership and Operations Slide 4
SOLE PROPRIETORSHIP
• Business owned by only one person
ADVANTAGES
• Easy to start up
• Be your own boss
• Keep all the profits
• Taxes are usually low

5. Chapter 6 - Business Ownership and Operations Slide 5
DISADVANTAGES
• Pay for everything yourself
• May have to use personal savings
or borrow money from the bank
• You might lack business skills
SOLE PROPRIETORSHIP
HUGE DISADVANTAGE
• unlimited liability =
or “full responsibility” for
your company’s debts

6. Chapter 6 - Business Ownership and Operations Slide 7
Partnership
• Business owned by two or more
persons who share the risks and rewards
EQUALLY
To start up, need to create a partnership
agreement - a contract that outlines the
rights/responsibilities of each partner

7. Chapter 6 - Business Ownership and Operations Slide 8
ADVANTAGES
• “May” only need a license to start
• Pay taxes on your personal profits
• Each partner can add money to start up
• Banks are more willing to lend money
to partnerships than sole proprietorships
• Each partner brings different skills
Partnership

8. Chapter 6 - Business Ownership and Operations Slide 9
DISADVANTAGES
• You share not only the RISKS, but
PROFITS too
• Might not get along with your partners
• You share unlimited legal and financial
liability with your partners
Partnership

9. Chapter 6 - Business Ownership and Operations Slide 10
?????????????????????????
What is the number ONE disadvantage of a
sole-proprietorship?
UNLIMITED LIABILITY!

10. Chapter 6 - Business Ownership and Operations Slide 12
Corporation
• Business owned by many people but
treated by the law as one person
• To form, need to get a corporate
charter from the state your
headquarters is located in
• To raise $$, you can sell stock - or
shares of ownership in your corp.
• For each share of common stock,
stockholder gets a share of the profits
and a vote on how the business is run

11. Chapter 6 - Business Ownership and Operations Slide 13
• Must have a Board of Directors who
control the corporation
ADVANTAGES
• limited liability for you!
• If company loses $$, stockholders lose
only what they put in (risk for them)
• The corporation doesn’t end if the
owners sell their shares
Corporation

12. Chapter 6 - Business Ownership and Operations Slide 14
DISADVANTAGES
• Often have to pay more taxes
• Gov’t closely regulates corporations
• More difficult to start a corporation than
a sole proprietorship or a partnership
• Running a corporation can be much
more complicated
Corporation

13. Chapter 6 - Business Ownership and Operations Slide 16
??????????????????????????
Who is in control of making the decisions
for a corporation?
BOARD OF DIRECTORS

14. Chapter 6 - Business Ownership and Operations Slide 18
HOMEWORK!!
Rd. Pages 99-103
Do questions 1-3 on Pg. 103

15. Chapter 6 - Business Ownership and Operations Slide 19
Learning Objectives
After completing this chapter, you’ll be
able to:
1. Differentiate the 6 types of business.
2. Describe the 5 functions of business
Why It’s Important
You need to understand business
ownerships and operations before
starting a business.

16. Chapter 6 - Business Ownership and Operations Slide 20
Other ways to do Business
• Franchise
• Nonprofit Organization
• Cooperative

17. Chapter 6 - Business Ownership and Operations Slide 21
Franchise
- Contractual agreement to sell a
company’s products or services in a
designated geographic area

18. Chapter 6 - Business Ownership and Operations Slide 22
• You invest money and pay the
franchisor an annual fee or a share of
the profits
• Franchisor offers a well-known name
and a business plan
• Can operate a franchise yourself, as a
sole proprietor, as a partnership with
someone else, or even as a corporation
Franchise

19. Chapter 6 - Business Ownership and Operations Slide 23
Nonprofit Organization
• Focuses on providing a service
rather than making a profit
• Has to register with the Gov’t and
might be run by a board of directors
• Doesn’t have to pay taxes
• Donors don’t receive dividends like
investors, but they can deduct their
donations from their taxes

20. Chapter 6 - Business Ownership and Operations Slide 24
Cooperative
• organization owned and operated by its
members for the purpose of saving
money on the purchase of certain goods
and services
EXAMPLE: Ocean Spray Juice
Made up of a group of cranberry growers

21. Chapter 6 - Business Ownership and Operations Slide 26
Types of Businesses
Group businesses by products they
provide:
• Producing raw goods
• Processing raw goods
• Manufacturing goods from
raw or processed goods
• Distributing goods
• Providing services

22. Chapter 6 - Business Ownership and Operations Slide 27
Producers
- business that gathers raw products in
their natural state
Raw goods - are materials gathered
in their original state from natural
resources such as land and water

23. Chapter 6 - Business Ownership and Operations Slide 28
Processors
Processors change raw materials into
more finished products
Processed goods are made from raw
goods and may require further processing

24. Chapter 6 - Business Ownership and Operations Slide 29
Manufacturers
Manufacturers are businesses that make
finished products out of processed goods
The finished products need no further
processing and are ready for market.
STEEL
GLASS
PLASTIC

25. Chapter 6 - Business Ownership and Operations Slide 30
INTERMEDIARIES
An intermediary is a business that moves
goods from one business to another
It buys goods, stores them, and then
resells them.
WHOLESALER– stores and distributes
goods
Retailer– purchases from
wholesaler, resells to customer
customer

26. Chapter 6 - Business Ownership and Operations Slide 31
WHOLESALERS buy goods from
manufacturers in huge quantities and
resells them in smaller quantities to their
customers, usually other companies
INTERMEDIARIES

27. Chapter 6 - Business Ownership and Operations Slide 32
?????????????????????????????
Name the three types
of businesses raw
materials must go
through in order to
become a finished
product.
Producer
Processor
Manufacturer
Tell me the two
different types of
intermediaries
Wholesalers
Retailers

28. Chapter 6 - Business Ownership and Operations Slide 33
Service Businesses
Service businesses provide services
rather than goods.
Services are the products of a skill or
an activity, such as hairstyling and
car repair

29. Chapter 6 - Business Ownership and Operations Slide 35
5 Functions of Business
1. Production – creating/improving
goods/services
2. Procurement – buying/selling of produced
goods
3. Marketing – getting consumers to buy
product
4. Management – achieving company goals
through effective use of resources
5. Finance/Accounting – money management

30. Chapter 6 - Business Ownership and Operations Slide 36
HOMEWORK!!
Chapter Review on Pgs. 104-105
Questions 2-6