This document discusses sole proprietorships and partnerships as forms of business ownership. It describes key characteristics of entrepreneurs like assuming risk and enjoying independence. It emphasizes the importance of preparing a thorough business plan before starting a venture to lay out goals, risks, and responsibilities. The plan should include details about the business concept, marketing, finances, organization, and facilities. Sole proprietorships are owned and managed by one individual who receives all profits but also assumes all debts. Partnerships involve two or more owners who must agree on responsibilities for the business to succeed.

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.