1. CHAPTER OBJECTIVES © SOUTH-WESTERN EDUCATIONAL PUBLISHING PROPRIETORSHIPS AND PARTNERSHIPS nDescribe characteristics of successful entrepreneurs. nOutline responsibilities of owning your own business. nList advantages and disadvantages of proprietorships. nList advantages and disadvantages of partnerships. nDescribe legal points to consider when selecting a name for a business. 55

2. © SOUTH-WESTERN EDUCATIONAL PUBLISHING CHARACTERISTICS OF ENTREPRENEURS nSelf-starters nEnergetic nIndependent nTake charge people nCreative thinkers nPersonable nExperienced nWell informed

3. © SOUTH-WESTERN EDUCATIONAL PUBLISHING GETTING A BUSINESS STARTED nPrepare a business plan nAssume the responsibilities of business ownership

4. © SOUTH-WESTERN EDUCATIONAL PUBLISHING Nature of the Business nDetailed description of products and/or services nEstimation of risk based on analysis of industry nSize of business nLocation of business nBackground of entrepreneur(s) Goals and Objectives nBasic results expected in the short and long run nResults expressed as sales volume or profits Marketing Plan nCustomers and demand for the product or service nPrices for the product or service nComparison of product or service with competitors Financial Plan nInvestment needed to start and maintain business nProjected income, expenses, and profit nCash start-up and cash flow needs ELEMENTS OF A BUSINESS PLAN Organizational Plan nLegal form of ownership nLegal factors: licenses, leases, contracts nOrganization chart nJob descriptions and employee skills needed nPhysical facilities: building, equipment, tools

5. © SOUTH-WESTERN EDUCATIONAL PUBLISHING PROPRIETORSHIP nOwner is boss nOwner receives all profits nOwner personally knows employees and customers nOwner can act quickly in decision making nOwner is free from red tape nOwner usually pays less income tax than a corporation nOwner may lack necessary skills and abilities nOwner may lack funds nOwner bears all losses nIllness or death may close the business AdvantagesDisadvantages

6. © SOUTH-WESTERN EDUCATIONAL PUBLISHING PARTNERSHIP nSkills and abilities pooled nSources of capital increased nCredit position improved nContribution of goodwill nIncreased concern in business management nLess tax burden that corporations nReduction in competition nRetirement from management nOperating economies nUnlimited financial liability nDisagreement among partners nEach partner bound by contracts of others nUncertain life nLimited sources of capital nUnsatisfactory division of profits nDifficulty in withdrawing from partnership AdvantagesDisadvantages