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CHAPTER 3 Entrepreneurship, New Ventures, and Business Ownership

CHAPTER 3 Entrepreneurship, New Ventures, and Business Ownership. L E A R N I N G O B J E C T I V E S. Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities. How to start a business Forms of business : Sole proprietorship Partnership

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CHAPTER 3 Entrepreneurship, New Ventures, and Business Ownership

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  1. CHAPTER 3 Entrepreneurship, New Ventures, and Business Ownership

  2. L E A R N I N G O B J E C T I V E S • Explain entrepreneurship and describe some key characteristics of entrepreneurial personalities. • How to start a business • Forms of business : • Sole proprietorship • Partnership • Corporation 3. Evaluate the advantages and disadvantages of different kinds of ownership. 4. Discuss the reasons for success or failure in a business/activity.

  3. Entrepreneurship • Entrepreneurship • The process of seeking business opportunities under conditions of risk. • Entrepreneur • One who accepts the risks and opportunities of creating, operating, and growing a new business. • Successful Entrepreneurs: • Are resourceful and open-minded • Are concerned about good customer relations • Desire to be their own boss • Can deal with uncertainty and risk

  4. Types of Business Ownership Job creation • Small Business A business that is independent and that has relatively little influence in its market. • Importance of Small Business for the Economy. Innovation Contributions to big business

  5. Starting a Business 1. Buying an Existing Business • Less risk? 2. Franchising • Advantages for franchisee • Proven business opportunity • Access to management expertise • Disadvantages for franchisee • Start-up costs • Ongoing payments • Management rules and restrictions

  6. Starting a Business 2. Starting from Scratch • Preparing a Business Plan • Setting goals and objectives • Sales forecasting • Financial planning • Disadvantage: Risk of business failure • Advantage: Avoids problems of existing business. • Questions to Be Answered: • Who and where are my customers? How much will they pay for my product? How much/many products can I expect to sell? Who are my competitors? Why will customers buy my product rather than the competitors? Who is going to manage my business?

  7. Financing the Small Business • Personal resources • Loans from family and friends • Bank loans • Malaysian Industrial Development Finance Berhad (MIDF)

  8. Trends in e-commerce

  9. Advantages: Freedom Simple to form Low start-up costs Tax benefits Disadvantages: Unlimited liability: Owner is responsible for all debts Limited resources Limited fundraising capability Lack of continuity Forms of Business Ownership Sole Proprietorships Sole proprietorship: Owned by one person.

  10. Advantages: More talent and money. More fundraising capability. Relatively easy to form. Limited liability for limited partners. Tax benefits. Disadvantages: Unlimited liability for general partner(s). Disagreements among partners. Lack of continuity. Forms of Business Ownership Partnerships Partnership: owned by more than 1 person. General partnership- all will participate in the day to day operations. Limited partnership- not all will participate in the day to day operations.

  11. Advantages: Limited liability: owners’ financial responsibility is limited to their investment Continuity Stronger fundraising capability Disadvantages: Can be taken over against the will of its management Double taxation of profits. Complicated and expensive to form. Forms of Business Ownership Corporations • Corporation : business that is legally considered an entity separate from its owners and is liable for its own debts; owners’ liability extends to the limits of their investments.

  12. Question • Stockholders, Shareholder, Stakeholders. What are the differences? • State which form of business ownership the following company falls into: • Yuko Enterprise • OMG Sdn Bhd • Abric Bhd

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