Presentation on theme: "Read to Learn The four main ways to become a business owner and the advantages and disadvantages of each The different forms of legal business ownership."— Presentation transcript:
8 Buy an Existing Business Four Main Ways to Go into Business Going into BusinessStart a New BusinessBuy an Existing BusinessFour Main Ways to Go into BusinessBuy a FranchiseJoin a Family Business
9 Starting a New Business RewardsYou do not inherit a previous owner’s mistakes.You can develop your own reputation.You can build the business your way.You get personal satisfaction.ChallengesStarting a new business requires more time and effort.Start-up costs can be high.Borrowing money may be difficult.Risk can be high.
10 Starting a New Business Examples of start-up costs include:start-up coststhe expenses involved in going into businessRenting or buying spaceBuying equipment and suppliesBuying insurance
11 Buying an Existing Business Before buying an existing business, determine whether the problems of the business can be fixed, and at what costs.
12 Buying an Existing Business AdvantagesYou can save on start-up costs by taking advantage of the previous owner’s business agreements.You may be able to purchase the existing equipment.If the business was successful, you can build on that success.You can benefit from existing positive reputation and a trained staff.
13 Buying an Existing Business DisadvantagesThe location might be poor.The competition might be taking business away.The potential for future sales may be poor.Expensive repairs might be necessary.The business may have a poor reputation.
14 Buying an Existing Business When buying an existing business, you may be able to keep the existing lease.leasea contract to use something for a specified period of time
15 Buying an Existing Business When buying an existing business, you may be able to take advantage of existing goodwill of existing customers.goodwillloyalty
16 Buying an Existing Business When buying an existing business, you should be aware of the market outlook.market outlookthe potential for future sales
17 Buying a franchise offers specific advantages. the legal right to sell a company’s goods and services in a particular areaYou must agree to pay a percentage of your profits to the parent company.
18 Buying a Franchise Advantages You get a recognized product name. You have established procedures and management systems.You benefit from a business reputation and customer goodwill.You receive training and support services.You benefit from the company’s advertising.Financing can be more easily obtained.
19 Buying a Franchise Disadvantages Profits are shared with the parent company.You must follow the parent company guidelines.There may be less personal satisfaction.
20 Joining a Family Business AdvantagesRelatives can help you finance the business.Family members are loyal and trust each other.Family members work as a team.Relatives can teach you the business.Customers are likely to give you the same trust and goodwill.
21 Joining a Family Business DisadvantagesNot all families work well together.Difficulties at work can affect family relationships.
22 Owning a BusinessAs a business owner, you will have to decide if you will run the business yourself, or if you will share the work and risks.
23 Forms of Legal Ownership Sole ProprietorshipThree Basic Forms of Legal OwnershipCorporationPartnership
24 Forms of Legal Ownership Most businesses begin as a sole proprietorship.sole proprietorshipwhen the business is completely owned by one personThe owner is responsible for all the business’s assets and debts.
25 Forms of Legal Ownership In a partnership, all partners are liable for the debts of the business.partnershipa legal arrangement in which two or more people share ownership
26 Forms of Legal Ownership In a corporation, shareholders earn a profit based on the number of shares they own.corporationa business chartered by a state that legally operates apart from the owner(s)
27 Operating Your Business Whatever type of business you launch, you will need money to finance it.
28 Information in a Business Plan FinancingA business plan gives specific information about your business.Information in a Business PlanProduct descriptionBusiness locationNumber of employeesSalariesDescription of the competitionMarketing planTimetable
29 FinancingA financial plan spells out your start-up costs, operating expenses, and other costs for the first few months.operating expensesthe costs of doing business, such as the costs of manufacturing and selling the product
30 Ongoing OperationsFinancial records are needed for tax purposes and for seeking additional financing.
31 The income statement is an essential business record. Ongoing OperationsThe income statement is an essential business record.income statementa summary of a business’s income and expenses during a specific period
32 The first item in an income statement is revenue. Ongoing OperationsThe first item in an income statement is revenue.revenuethe income from sales
33 Another item in the income statement is gross profit. Ongoing OperationsAnother item in the income statement is gross profit.gross profitthe difference between the cost of goods and their selling price
34 The net profit is an important part of the income statement. Ongoing OperationsThe net profit is an important part of the income statement.net profitthe amount left after operating expenses are subtracted from the gross profit
35 Ongoing OperationsThe balance sheet summarizes a business's assets, liabilities, and owner equity.Assets are anything of monetary value.
36 Ongoing OperationsLiabilities are debts a business owes.Net worth is the difference between assets and liabilities.
37 Ongoing OperationsA cash flow statement is a monthly plan that shows when you anticipate cash coming into the business and when you expect to pay out cash.
38 Succeeding in Business FinancingLocationFactors of Succeeding in BusinessManagementCompetition
39 Factors that contribute to a successful business location include: The type of businesses in the areaThe condition of the streets and buildingsThe cost of propertyThe location of competitionThe location of your customers
40 CompetitionTo compete successfully, you must be familiar with your competitor’s product or service.You must also produce a better product or service than your competitors.
41 Skills Needed for Management Poor management is one of the main reasons for business failure.ReadingWritingListeningSpeakingMath
42 When the game is finished, close the Quick Quiz window and click here for the next slide >>
43 Section After You ReadName the four ways to become a business owner. Which one would you choose? Why?Buy an existing business, start your own business, buy a franchise, or take over a family business.
44 Explain the differences between a partnership and a corporation. Section After You ReadExplain the differences between a partnership and a corporation.A partnership is a legal arrangement in which two or more people share direct ownership, while a corporation is a business that legally operates apart from the owners.
45 Section After You ReadDescribe one of the documents you would need to prepare to apply for a business loan.You would need to provide a business plan and a financial plan.