1. Business Types and Ownership

2. Business Types Businesses are categorized into two main categories
For-Profit
Non-Profit

3. Non-profit and Not-for profit What’s the Difference?
Non-profit – an organization is formed soley for the purpose of serving the public and not for generating profit.
Not-for profit - does not seek a profit but may have surplus which must be used to preserve and expand its operations

4. For-profit Business
The goal is to make a profit by supplying goods and services to meet consumer demands
Profit- is the income left after all costs and expenses are paid
Expenses- are those expenditures that are involved in running a business, such as wages, supplies, marketing, etc.

5. Business Types
Costs – the amount of money required for each stage of production, such as the cost of raw materials.
GOAL – to make a profit while keeping expenses and costs down.
Revenue – Expenses = Profit (or Loss)

6. Large and Small Business
Are most businesses large or small?
Large Business – more than 500 people
Small-Medium Business (SMB) – less than 500 people.

7. Forms of Business Ownership
Five main types of Business Ownership
Sole Proprietorships
Partnerships
Corporations
Co-operatives
Franchises

8. Sole Proprietorship …owned by one person
…monies for business come from owner’s pocket or in the form of a loan from the bank
…owner enjoys all the profits
…owner also is responsible for all the losses – unlimited liability

9. Can you think of any sole proprietorships?

10. Advantages …easier to administer (run) the business …less expensive
…business income is taxed as personal income
Disadvantages
Unlimited liability – you can LOSE EVERYTHYING!

11. Partnership
…is operated by two or more individuals who want to share costs and responsibilities of running a business.
There are 2 types of
partnerships
General Partnership
Limited Partnership

12. Partnership General Partnership Limited Partnership Is most common
Unlimited liability for all partners
Limited Partnership
Only responsible for paying back the amount they invested or put into the partnership

13. Partnership Advantages Disadvantages
Partners could have complementary skills (eg. sales expert and accountant)
May have more money to invest into the business than in the case of a sole proprietorship
Disadvantages
Partners may disagree on many elements of the business that could lead to legal issues (violation of the partnership agreement, law suits against your partner)

14. Corporations
Corporations – a business that has been granted legal status with rights, privileges and liabilities that are distinct/separate from those of the people who work for the business.
Corporations can be as small as 1 person or as large as a multinational

15. Corporations
Most corporations are owned by individuals, families or small groups
Large corporations are divided into shares or stocks because having it run by 1 or 2 people would inefficient.
Once shares have sold, the corporation becomes publicly owned.

16. Corporations Individuals who buy shares are called shareholders.
The more shares a shareholder owns the more control they have
Due to a large number of owners (shareholders) a board of directors is put in place to run the corporation

17. Corporations Shareholders have limited liability
If the company makes a profit it can put it back into the company to expand operations and pay the rest out as a dividend
Dividend = Total Profit / Total Number of Shares

18. Corporations
Types of Corporations;
- Private Corporation
- Public Corporation
- Crown Corporation

19. Corporations Private Corporation
only a few people control all the shares, or stock, and therefore, the business
Shares/stock are not listed on the stock exchange
- eg. Sobeys, Costco Wholesale Canada, McCain foods

20. Corporations Public Corporation Crown Corporation
Raises money by making shares available on the stock
Shareholders become owners in the business (eg. 10 shares = 10 votes)
Eg. Coke, RIM, Apple, TD Bank, etc.
Crown Corporation
Business operated by the provincial or federal government
Provides services to local citizens
Eg. Via Rail, Canadian Broadcasting Company, Atomic Energy of Canada

21. Co-operative
…is owned by the workers or by members who buy the products or use the services that the business offers.
Regardless of how many shares a member owns they each have 1 vote (unlike a corporation)
Profits are distributed based on how large of a monetary contribution they give to the company.
Eg. a member who buys $5,000 worth of goods or services will receive a dividend 5 times as large as someone who buys $1,000 worth of goods and services

22. Co-operative Examples of co-operatives
Gay Lea Foods Cooperative of Canada
Canadian University Press
Farmers

23. Franchises
The franchiser (ex. McDonalds) licenses the rights to its name, operating procedure, designs and business expertise to another business, the franchisee (Joe Shmoe who wants to own his own McDonalds restaurant)

24. Franchises
You are the owner of Starbucks and you want to eventually have a Starbucks on every block in North America. What rules would you put in place for franchisees to allow you to maximize profit and prevent them from discrediting your company ?

25. Franchises Continued
The franchiser and franchisee are independent businesses affiliated for the agreement only.
A franchisee must pay a franchise fee in addition to a monthly fee (ex. 5% of sales)
A franchisee must also pay local and national advertising costs (ex. 1% of sales)
All supplies must be purchased through the franchise

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