1. Proprietorships/Partnerships Chapter 5

2. Objectives Describe characteristics of successful entrepreneurs Outline responsibilities of owning your own business List advantages and disadvantages of proprietorships and partnerships Describe legal points to consider when selecting a name for a business

3. Characteristics of Entrepreneurs Many people dream about owning their own business Hundreds of young entrepreneurs have started their own firms –Dell Computer - Michael Dell –Microsft - Bill Gates –Amazon.com - Jeff Bezos Entrepreneurs must invest months or even years of hard work before they earn a profit

4. Remember - half of new businesses end before the 6th year Remember - businesses often fail for financial reasons BUT many close because owners were not well suited to be entrepreneurs Entrepreneurs are uniquely different, but they also have some common personal characteristics Fact - some entrepreneurs who are successful often experienced unsuccessful start-ups. –They learnedd from their mistakes and started over

5. Who knows an entreprenuer? –What type of business is it? –What hours and days does the owner work? –What taks does the owner perform? –How did the owner get started in the business?

6. General description of an entrepreneur –Self-starter –plenty of energy –enjoys working on their own –like to take charge of situations –usually work hard for long periods in order to meet their goals –creative thinkers –come up with new ideas/new ways to solve problems –like people –people like them –community leaders

7. Prosperous entrepreneurs –Obtain work experience in the types of businesses they launch –They’re well informed about financial, marketing and legal matters No magic age for starting a business What you need is: –funds –general knowledge about business –work experience –business opportunity

8. Business Plan Written document that describes the nature of the business, the company’s goals and objectives, and how they will be achieved –Single MOST important task one must face after deciding to start a business –Needs a great deal of thought –Bankers will ask to see if they give you $$$ Help to see more clearly the risks and responsibilities involved in starting a business

9. 3 Reasons why businesses fail They did not prepare a business plan Their plan was unrealistic They wrote the plan only because the bank required it TO BE SUCCESSFUL - you need to start with well-designed, realistic plan

10. Responsibilities of ownership Become aware of the risks - a business plan will do this As result of knowing the risks, you’ll be able to anticipate problems and take preventive action A business plan causes the owner to become more REALISTIC about the responsiblities of ownership

11. Ownership con’t Expenses (rent, equipment, salaries) Must find customers Persuade those customers to pay a fair price Assume responsibility for damage that may occur to your merchandise Fees for licenses, taxes, insurance, gas, repairs, other operating expenses Hire, train and supervise employees Need to carefully consider ALL of the responsibilities of owning a business before doing it

12. Proprietorship One person owned business –16 million in US Proprietor –Owns and manages –Performs day to day operations Can receive help from employees Furnishes –Expertise –Money –Management Entitled to all profits

13. Assets – property owned by the business –Owner has full claim to these Unless he owes money to creditors (liabilities) If so, they have first claim Balance sheet –Financial position –Shows assets, liabilities and capital (net worth, equity) –Take Assets (items owned) subtract liabilities (money owed) = capital (net worth)

14. PROPRIETORSHIP Owner is boss Owner receives all profits Owner personally knows employees and customers Owner can act quickly in decision making Owner is free from red tape Owner usually pays less income tax than a corporation Owner may lack necessary skills and abilities Owner may lack funds Owner bears all losses Illness or death may close the business AdvantagesDisadvantages

15. Generally a successful proprietorship is one that –Is small enough to be managed by the proprietor or a few people –does not require a large amount of capital

16. Business Name Either type of business can be conducted under the name of the owner or owners Law prohibits the use of and Company or & Co. unless such indicates additional partners Can do business under a trade or artificial name Need to properly register name and business

17. Business Plan