1. Chapter 5 Proprietorships and Partnerships
BellWork
List some characteristics you think an entrepreneur should posses.
Chapter 5 Proprietorships and Partnerships

2. Chapter 5 Proprietorships and Partnerships
©2008 Thomson/South-Western

3. Lesson 5.1 Entrepreneurship
OBJECTIVES
Describe the characteristics of successful entrepreneurs.
Discuss the responsibilities of owning your own business.
Chapter 5 Proprietorships and Partnerships

4. Characteristics of Entrepreneurs
Entrepreneurs who prefer self-employment enjoy the freedom and independence that come with being their own bosses and making their own decisions.
Entrepreneurs are self-starters who have plenty of energy and enjoy working on their own.
Entrepreneurs obtain work experience in the types of businesses they launch.

5. Characteristics of Entrepreneurs
Self-starters
Energetic
Independent
Take-charge
Creative
Personable
Experienced
Well informed
Chapter 5 Proprietorships and Partnerships

6. Getting a Business Started
Starting a business entails many more responsibilities than simply being an employee does.

7. Prepare a Business Plan
Before starting a business, you need to prepare a business plan.
Is a written document that describes the nature of the business, its goals and objectives, and how they will be achieved.
Developing a business plan will help you see more clearly the risks and responsibilities involved in starting a business, and will help you decide whether you really want to go into the business.

8. Elements of a Business Plan
Nature of the Business
Detailed description of products and/or services
Estimation of risk based on analysis of industry
Size of business
Location of business
Background of entrepreneur(s)
Goals and Objectives
Basic results expected in the short and long run
Results expressed as sales volume or profits
Marketing Plan
Customers and demand for the product or service
Prices for the product or service
Comparison of product or service with competitors
Financial Plan
Investment needed to start and maintain business
Projected income, expenses, and profit
Cash start-up and cash flow needs
Organizational Plan
Legal form of ownership
Legal factors: licenses, leases, contracts
Organization chart
Job descriptions and employee skills needed
Physical facilities: building, equipment, tools
Chapter 5 Proprietorships and Partnerships

9. Government Support
The U.S. government has a strong support network to help entrepreneurs and small businesses.
The Small Business Administration (SBA) is a government supported agency that counsels, assists, and protects the interests of small businesses.
SBA also sponsors free consulting assistance through Small Business Development Centers (SBDCs). They provide help in researching and writing business plans.

10. Assume the Responsibilities of Business Ownership
By developing a workable business plan, entrepreneurs become aware of their risks.
Aspiring entrepreneurs should carefully consider the responsibilities of ownership before opening a business.
Ownership offers opportunities to make one’s decisions and to experience other rewards.

11. Intrapreneurs
People that take the responsibility of developing a new innovation in a larger company.
Most large businesses realize that they must be innovative in order to compete against the smaller start-up businesses.

12. Question
Which of the following is not characteristics of entrepreneurs?
They are self-starters
They like to make sure others do most of the work.
They enjoy working on their own
They usually work hard and for long periods
Answer: They like to make sure others do most of the work

13. Question Business plan is a written document that j
Describes that nature of business
Describes that company’s goals and objectives
Describes how goals and objectives will be achieved
All of the above
Answer: All of the above

14. Assignment
Research 2 companies and talk about the different elements of their business plan. Make sure that you discuss the nature of the business, their goals and objectives, marketing plan, financial plan, and organizational plan. Please refer to figure 5-1 on page 114, to see exactly what each section needs to indicate.

15. Lesson 5.1 Entrepreneurship
OBJECTIVES / Exit Ticket
Describe the characteristics of successful entrepreneurs.
Discuss the responsibilities of owning your own business.
Chapter 5 Proprietorships and Partnerships

16. Chapter 5 Proprietorships and Partnerships
BellWork
List some advantages and disadvantages of starting a proprietorship.
Chapter 5 Proprietorships and Partnerships

17. Lesson 5.2 Proprietorship
Objectives
Explain the advantages and disadvantages of proprietorships.
Describe the types of businesses suited to being proprietorships.
Chapter 5 Proprietorships and Partnerships

18. Nature of Proprietorship
The most common form of business organization is the proprietorship.
Proprietorship (also called sole proprietorship) — business owned and managed by one person (proprietor), who furnishes expertise, money, and management and is entitled to all profits
Provided that no debt are owed, a proprietor has full claim to the assets, or property owned by the business. If the proprietor has business debt, creditors (those whom money is owed) have first claim against the assets.

19. Advantages of 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.
Chapter 5 Proprietorships and Partnerships

20. Disadvantages of Proprietorship
Owner may lack necessary skills and abilities.
Owner may lack funds.
Owner bears all losses.
Illness or death may close the business.
Chapter 5 Proprietorships and Partnerships

21. Business Suited to Being Proprietorship
This kind of business is primarily concerned with providing personal services.
Ex: dentist, accountants, landscape, gardeners, painters, etc.
Not all proprietors run full-time businesses.
Up to a third of all proprietorships are part-time

22. Question
Advantages of proprietorships include all of the following except
Owner is their own boss
Owner receives all the profits
Owner deals with limited red tape
Owner pays more taxes than corporations
Answer: Owner pays more taxes than corporations

23. Question
Disadvantages of proprietorship include all of the following except
Owner is likely to have all of the skills needed for the business
Owner may lack funds
Owner bears all the losses
Owner may need to close the business in case of illness.
Answer: Owner is likely to have all of the skills needed for the business

24. Assignment
Research ten businesses in your area and determine if they are full-time or part-time proprietorships. Pick two of these businesses and based on the business that you picked, compare and contrast the two. Talk about why one might succeed and one might fail. Where they are located, etc.

25. Lesson 5.2 Proprietorship
Objectives / Exit Ticket
Explain the advantages and disadvantages of proprietorships.
Describe the types of businesses suited to being proprietorships.
Chapter 5 Proprietorships and Partnerships

26. Chapter 5 Proprietorships and Partnerships
BellWork
List some advantages and disadvantages of starting a partnership.
Chapter 5 Proprietorships and Partnerships

27. Chapter 5 Proprietorships and Partnerships
Lesson 5.3 Partnership
Objectives
Explain advantages and disadvantages of partnerships.
Describe the types of businesses suited to the partnership form of business.
Chapter 5 Proprietorships and Partnerships

28. Nature of Partnership
Partnership — business owned by two or more people
A key factor in partnership is that the partners must clearly agree upon each person’s responsibilities
General partnership — each partner is personally liable for all debts incurred by partnership

29. Advantages of Partnerships
Skills and abilities pooled
Sources of capital increased
Credit position improved
Contribution of goodwill
Increased concern in business management
Lower tax burden than corporations
Reduction in competition
Retirement from management
Operating economies
Chapter 5 Proprietorships and Partnerships

30. Disadvantages of Partnerships
Unlimited financial liability
For all the debts of the business
Disagreement among partners
Each partner bound by contracts of others
Uncertain life
Limited sources of capital
Unsatisfactory division of profits
Difficulty in withdrawing from partnership
Chapter 5 Proprietorships and Partnerships

31. Limited Liability
Limited partnership — liability of each partner is restricted to amount of partner’s investment
Not all partners have unlimited financial liability for the partnership debts.
At least one partner must be a general partner who has unlimited liability
Is a useful for of business organization in situations where one person wishes to invest in a business but does not have the time or interest to participate actively in its management.

32. Businesses suited to being Partnerships and Business Name
Is common among businesses that furnish more than one kind of product
Ex: car dealers often have sales and service department.
May be conducted under the name or names of the owner or owners
In many states, the law prohibits the use of and company or & Co., because that name indicates at least three partners.

33. Question Advantages of partnership include all of the following except
Partners can pool skills and abilities
Partners provide greater amounts of capital
Partners have limited liability
The business’s credit is improved
Answer: Partners have limited liability

34. Question Disadvantages of partnership include all the following except
Partnerships may reduce competition
Partners may disagree
Partners are bound by contracts of others
Partnerships have an uncertain life

35. Assignment
Break up into each pair of business partners. Complete “My Business, Inc.” project on page 135. Make sure fully research the “Data Collection” section. Write the questions out for the “Analysis” section and answer the questions appropriately.
If you finish early, please complete the “Case in Point” on page

36. Chapter 5 Proprietorships and Partnerships
Lesson 5.3 Partnership
Objectives / Exit Ticket
Explain advantages and disadvantages of partnerships.
Describe the types of businesses suited to the partnership form of business.
Chapter 5 Proprietorships and Partnerships