Presentation on theme: "SELECT A TYPE OF OWNERSHIP"— Presentation transcript:
1 SELECT A TYPE OF OWNERSHIP Entrepreneurship4/20/2017Chapter 4SELECT A TYPE OF OWNERSHIP4.1 Run an Existing Business4.2 Own a Franchise or Start a Business4.3 Choose the Legal Form of Your BusinessChapter 4
2 Lesson 4.1 RUN AN EXISTING BUSINESS Chapter 4Lesson 4.1 RUN AN EXISTING BUSINESSGOALSIdentify the advantages and disadvantages of purchasing an existing business.Explain the steps involved in buying a business.Recognize the advantages and disadvantages of joining a family business.
3 ADVANTAGES OF BUYING AN EXISTING BUSINESS Chapter 4ADVANTAGES OF BUYING AN EXISTING BUSINESSThe existing business already has customers, suppliers, and procedures.The seller of a business may train a new owner.There are prior records of revenues, expenses, and profits.Financial arrangements can be easier.
4 DISADVANTAGES OF BUYING AN EXISTING BUSINESS Chapter 4DISADVANTAGES OF BUYING AN EXISTING BUSINESSMany businesses are for sale because they are not making a profit.Serious problems may be inherited.Capital is required.
5 STEPS TO PURCHASE A BUSINESS Chapter 4STEPS TO PURCHASE A BUSINESSWrite specific objectives about the kind of business you want to buy, and identify businesses for sale that meet your objectives.Meet with business sellers or brokers to investigate specific opportunities.Visit during business hours to observe the company in action.Ask the owner to provide you with a complete financial accounting of operations for at least the past three years.Ask for important information in written form.Determine how you would finance the business.Get expert help to determine a price to offer for the business
6 ENTER A FAMILY BUSINESS Chapter 4ENTER A FAMILY BUSINESSAdvantages of a family businessDisadvantages of a family business
7 Lesson 4.2 OWN A FRANCHISE OR START A BUSINESS Chapter 4Lesson 4.2 OWN A FRANCHISE OR START A BUSINESSGOALSEvaluate franchise ownership.Recognize the advantages and disadvantages of starting a new business.
8 Chapter 4FRANCHISE OWNERSHIPA franchise is a legal agreement that gives an individual the right to market a company’s products or services in a particular area.A franchisee is the person who purchases a franchise agreement.A franchisor is the person or company that offers a franchise for purchase.
9 OPERATING COSTS OF A FRANCHISE Chapter 4OPERATING COSTS OF A FRANCHISEInitial franchise feeStart-up costsRoyalty feesAdvertising fees
10 ADVANTAGES OF OWNING A FRANCHISE Chapter 4ADVANTAGES OF OWNING A FRANCHISEAn entrepreneur is provided with an established product or service.Franchisors offer management, technical, and other assistance.Equipment and supplies can be less expensive.A guarantee of consistency attracts customers.
11 DISADVANTAGES OF OWNING A FRANCHISE Chapter 4DISADVANTAGES OF OWNING A FRANCHISEFranchises can cost a lot of money and cut down on profits.Owners of franchises have less freedom to make decisions than other entrepreneurs.Franchisees are dependent on the performance of other franchisees in the chain.The franchisor can terminate the franchise agreement.
12 EVALUATING A FRANCHISE Chapter 4EVALUATING A FRANCHISEDemand for product or serviceExclusive territoryCostsProfitabilityLongevityServices provided by franchisorLoss of independenceCancellation
13 STARTING YOUR OWN BUSINESS Chapter 4STARTING YOUR OWN BUSINESSAdvantages of starting your own businessDisadvantages of starting your own business
14 Lesson 4.3 CHOOSE THE LEGAL FORM OF YOUR BUSINESS Chapter 4Lesson 4.3 CHOOSE THE LEGAL FORM OF YOUR BUSINESSGOALSEvaluate the different legal forms for a business.
15 TYPES OF BUSINESS ARRANGEMENTS Chapter 4TYPES OF BUSINESS ARRANGEMENTSSole proprietorshipPartnershipCorporationS corporation
16 Chapter 4SOLE PROPRIETORSHIPA business that is owned exclusively by one person is a sole proprietorship.Sole proprietorship is the most common form of ownership in the United States.DisadvantagesInvestmentRisk
18 CORPORATION Share of stock Board of directors Dividends Disadvantages Chapter 4CORPORATIONShare of stockBoard of directorsDividendsDisadvantagesWhy incorporate?
19 Chapter 4S CORPORATIONAn S corporation is a corporation organized under subchapter S of the Internal Revenue Code whose income is taxed as a partnership.
20 CHARACTERISTICS OF THE LEGAL FORMS OF BUSINESS Chapter 4CHARACTERISTICS OF THE LEGAL FORMS OF BUSINESSSole ProprietorshipPartnershipCorporationS CorporationFEATURESimple to startDecisions made by one personLow initial costLimited liabilityLimited government regulationAbility to raise capitalDouble taxation of profits