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Entrepreneurship

Entrepreneurship

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Entrepreneurship

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  1. Entrepreneurship Chapter 33

  2. What is entrepreneurship • The process of starting and managing your own business • Entrepreneurs – are people who organize, manage, and take a risk to own a business • Examples: Henry Ford – Ford Company • Ray Kroc – McDonalds • Bette Graham – Liquid Paper • Terri Tuttle - Baxters • Tyler Megargel – Crayola Coloring Sheets

  3. Risks of Entrepreneurship? • Losing money – your investment • No guarantee for success: Lots of time and effort

  4. Main Advantages of Entrepreneurship • Personal freedom – Not controlled by anyone else, can set own schedules • Personal satisfaction – Doing what you enjoy • Increased income – rewards for hard work • Increased self-esteem – From being successful

  5. Disadvantages of Entrepreneurships • Potential loss of income – could lose money • Long and irregular hours • Necessity for strong self-discipline – • May have to do tedious, time-consuming tasks such as cleaning, answering phones, paperwork

  6. Why is entrepreneurship important to our economy??? • Small businesses provide 55% of jobs for our labor force • Small businesses produce 50% of the Gross Domestic Product (goods and services produced in the U.S. using our labor and property) • Offer consumers choices of goods and services • Improve products and processes • Challenge existing businesses to become better • Generates jobs

  7. Characteristics of Sole Proprietorship • Owned and operated by one person • The most common form of business ownership • Approximately 70% of all U.S. businesses fall into this category

  8. Advantages of Sole Proprietorship • Gets to keep all of the profits • Relatively easy to start • Get to make all business decisions on own • Taxed less than any other business • More freedom from government regulation

  9. Disadvantages of Sole Proprietorship • Unlimited liability – you have all of the responsibility for the debt • Limited assets such as money to reinvest in business • Making all of decisions can be hard

  10. Partnership • Characteristics – legal agreement between 2 or more people to start a business • Only 10% of businesses in U.S. • Should have a partnership agreement – done by an attorney

  11. Types of partnership • General Partnership – each partner shares in the profits and losses (unlimited liability) • Limited Partnership – each partner is limited for any debts only up to the amount of investment; Limited partners typically have no voice in the decisions of the business

  12. Advantages of Partnership • Combines the skills of the owners • Have more money to work with • Taxed less heavily than a corporation

  13. Disadvantages of Partnership • Owners may not always agree • Partners actions are legally binding on other partners • Business is dissolved if one partner dies

  14. Corporation • Characteristics: • Business that is chartered by the state • Legally operates apart from the owner or owners • Most complicated • Have a board of directors who make decisions for the corporation

  15. Stockholders • People who actually have ownership in the corporation and have limited liability • Stock – unit of ownership in the corporation

  16. Advantages of Corporation • Owners have limited liability • Easier for corporation to raise money • People can easily enter and leave the business • Each operation area is typically professionally managed

  17. Disadvantages of corporation • Complex to form • Increased government regulation • Higher taxes on profits • Intricate accounting and record keeping

  18. Legal Steps to starting a business • Sole proprietorships and partnerships - File for a “Doing Business As” (DBA) – your county government recognizes that your business exists. • Corporations – File for “Articles of Incorporation” – with securities bureau in state department of commerce (name, address, purpose, directors, and amount of stock to each director)

  19. Legal Steps (cont.) • Local licenses – zoning ordinances, building codes, safety standards • Obtain a state license – protects people from unqualified people practicing in a business • Examples: Doctors, accountants, cosmetologists, barbers, marriage counselors, and pharmacists

  20. Franchises • An agreement to operate a business in the name of a recognized company • Franchisee – the person purchasing the franchise • Franchisor – the owner of the franchise • Must run the franchise per the franchisor’s specifications • http://www.culvers.com/franchise/how.aspx • http://www.steaknshakefranchise.com/costs-and-qualifications-requirement-information.php