1. Identifying Different Types of Businesses  The first step in becoming an entrepreneur is to think about the type of business you want to start.  A manufacturing business, or manufacturer, takes materials and builds goods that it can sell to others.  A wholesaling business, or wholesaler, buys goods in large quantities and resells them in smaller batches to retailers.  A retailing business, or retailer, buys goods, often from wholesalers, and sells them directly to consumers.  Retailing businesses include traditional stores that people visit in person and online stores that sell from the Internet. 1 Unit Different Types of Businesses 2

2. Service Businesses and Nonprofit Organizations  A service business provides services to customers for a fee.  Some businesses don’t fall into any of the four basic types.  Farming is a special type of business.  Mining is referred to as an extraction business because it takes resources from the environment and converts them into a form that can be sold to manufacturers.  Nonprofit organizations operate to serve the good of society. They earn money through donations, government grants, or the sale of goods and services. All earnings must be used to support the organization’s social mission. 2 Unit Different Types of Businesses 2

3. Identifying Types of Business Ownership  As an entrepreneur, you are responsible for selecting the type of business ownership that gives your business the best opportunity for success.  A sole proprietorship is a business that is owned by a single individual. The owner collects all profit from the business and has unlimited liability for its debt.  In a partnership, at least two individuals share the management, profit, and liability for the business.  In a general partnership, all partners have unlimited liability.  In a limited partnership, one general partner has limited liability. The other partners are investors only and have no say in how to run the company on a day-to-day basis. 3 Unit Different Types of Businesses 2

4. Corporations and Cooperatives  In a corporation, the business is considered a type of person or entity under the law.  The business owners, called shareholders or stockholders, have limited liability.  A share of stock is a unit of ownership in a corporation. Corporations sell shares to raise money to operate the business.  Some corporations pay a dividend to shareholders, which is a portion of the corporation’s profit.  A corporation that conducts business in at least two different industries is called a conglomerate.  A cooperative is a business owned, controlled, and operated for the mutual benefit of its members. 4 Unit Different Types of Businesses 2

5. Analyzing Trends in Business Opportunities  An entrepreneur must analyze the trends in business opportunities.  During the 1950s and 1960s, America experienced a boom in franchising.  After 1950, manufacturing began to be less important in the U.S. economy.  By 1970, service, wholesale, and retail businesses accounted for the majority of America’s economic production.  In the past decade, most new businesses were in the service and trade businesses.  Staying aware of things going on around you can help you recognize potential business opportunities and identify trends. 5 Unit Different Types of Businesses 2

6. Chapter Review  A manufacturing business takes materials and builds goods that it can sell to others.  A wholesaling business buys goods in large quantities and resells them in smaller batches to retailers.  A retailing business buys goods, often from wholesalers, and sells them directly to consumers.  A service business performs an activity for a fee.  Nonprofit organizations operate to serve the good of society.  A sole proprietorship is a business that is owned by a single individual. 6 Unit Different Types of Businesses 2

7. Chapter Review (continued)  In a partnership, two or more individuals share the management, profit, and liability for the business.  In a corporation, the business is considered a type of person or entity under the law.  A corporation that conducts business in at least two different industries is called a conglomerate.  A cooperative is a business owned, controlled, and operated for the mutual benefit of its members.  An entrepreneur must analyze the trends in business opportunities. 7 Unit Different Types of Businesses 2