1. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Managing the Form of Business Ownership 10.1 10.1 Entrepreneurs and Proprietorships 10.2 10.2 Partnerships 10.3 10.3 Corporate Forms of Business Ownership 10.4 10.4 Specialized Types of Organizations CHAPTER 10

2. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 10.1 10.1 Entrepreneurs and Proprietorships GOALS ● Describe the characteristics of successful entrepreneurs. ● Evaluate the role of planning in managing your own business. ● Explain the management issues of proprietorships. 2 CHAPTER 10

3. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Characteristics of Entrepreneurs ● Entrepreneurs ● A person who assumes risk of starting, owning, and operating a business for the purpose of making profit. ● Self starters who have plenty of energy and enjoy working on their own ● Intrapreneurs ● An employee who is given funds and freedom to create a special unit or department within a company to develop a new product, process, service. 3 CHAPTER 10

4. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● Explain why businesses start-ups often fail? CHAPTER 10 4

5. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● Explain why businesses start-ups often fail? ● Financial reasons ● Owners are not suited to entrepreneurship CHAPTER 10 5

6. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Planning a Business ● Business plan ● Describes nature of the business, goals and objectives, and how it will achieve them. ● Forms of ownership ● Proprietorships ● Partnerships ● Corporations 6 CHAPTER 10

7. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● Describe two advantages of developing a business plan? CHAPTER 10 7

8. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● Describe two advantages of developing a business plan? ● Identify the risks and responsibilities of owning a business ● Inspire confidence in potential investors ● Identify problems ● Help entrepreneurs become more realistic CHAPTER 10 8

9. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e The Nature of Proprietorships ● A Business owned and managed by one person ● Proprietor ● Creditor – person or business to which money is owed ● Management issues of proprietorships ● Self management ● Relationship management ● Speed of decision making ● Freedom from red tape ● Liability 9 CHAPTER 10

10. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e The Nature of Proprietorships ● Businesses suited to proprietorship ● Small enough to be managed by the proprietor or a few people hired by the proprietor ● Does not require a large amount of capital ● Part-time proprietorships ● 1/3 of proprietorships are part time 10 CHAPTER 10

11. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Balance Sheet for Proprietorship 11 CHAPTER 10 © Cengage Learning 2013.

12. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● List the management issues related to sole proprietorships? CHAPTER 10 12

13. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● List the management issues related to sole proprietorships? ● Self management ● Speed of decision making ● Relationship management ● Freedom from red tape ● Liability CHAPTER 10 13

14. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 10.2 10.2 Partnerships GOALS ● Discuss the impact of partnerships on managing a business. ● Explain the management issues of partnerships. 14 CHAPTER 10

15. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e The Nature of Partnerships ● Partnership—a business owned by two or more people. ● Partnership agreement—a written agreement between two or more people identifying how the partners will add capital, labor, or other assets and divide any profits 15 CHAPTER 10

16. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● What are some reasons for considering forming a partnership? CHAPTER 10 16

17. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● What are some reasons for considering forming a partnership? ● A partnership can allow for shared responsibility ● Additional capital ● More management expertise CHAPTER 10 17

18. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Management Issues of Partnerships ● Expanded management input ● Capital ● Efficiency ● Tax advantages ● Liability ● Agreement between partners ● Uncertain life ● Division of profits 18 CHAPTER 10

19. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Limited Partnerships ● Limited partnership—partnership with at least one general partner who has unlimited liability and at least one limited partner whose liability is limited to his or her investment. 19 CHAPTER 10

20. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Businesses Suited to Partnership ● More than one kind of product or service ● More than one location ● Extended operating hours ● Professional services 20 CHAPTER 10

21. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Balance Sheets for Proprietorships 21 CHAPTER 10 © Cengage Learning 2013.

22. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Balance Sheet for a Partnership 22 CHAPTER 10 © Cengage Learning 2013.

23. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● What are the disadvantages of a partnership? CHAPTER 10 23

24. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● What are the disadvantages of a partnership? ● Unlimited financial liability ● Partnership disagreement ● Partners bound by contracts ● Uncertain life of business ● Limited sources of capital ● Unsatisfactory divisions of profits ● Difficulty withdrawing from partnership CHAPTER 10 24

25. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 10.3 10.3Corporate Forms of Business Ownership GOALS ● Explain the basic structure of a corporation. ● Describe how a corporation is formed and organized. ● Explain the management issues of corporations. 25 CHAPTER 10

26. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e The Structure of Corporations ● Basic features ● Stockholders ● Directors ● Officers ● Charter (Certificate of incorporation) ● Close and open corporations ● Does not offer shares of stock to public ● Offers shares of stock to public 26 CHAPTER 10

27. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● List the three key groups of a corporation? CHAPTER 10 27

28. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● List the three key groups of a corporation? ● Stockholders ● Directors ● Officers CHAPTER 10 28

29. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Formation of Corporations ● Preparing the certificate of incorporation ● Stating the purpose of the business ● Investing in the business ● Paying incorporation costs ● Operating the new corporation ● Getting organized ● Handling voting rights 29 CHAPTER 10

30. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Organization Chart for a Corporation 30 CHAPTER 10

31. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Management Issues for Corporations ● Sources of capital ● Limited liability ● Permanency of existence ● Ease in transferring ownership ● Taxation ● Government regulations and reports ● Stockholders’ records ● Charter restrictions ● Agency dilemma 31 CHAPTER 10

32. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Balance Sheet for a Corporation 32 CHAPTER 10 © Cengage Learning 2013.

33. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● What are the disadvantages of the corporate form of ownership? CHAPTER 10 33

34. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● What are the disadvantages of the corporate form of ownership? ● Taxed twice ● Comply with strict government regulations ● Maintain records ● Charters restrict their activities CHAPTER 10 34

35. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 10.4 10.4 Specialized Types of Organizations GOALS ● Describe organizations that are specialized alliances between companies or individuals. ● Describe specialized forms of corporations formed for tax or nonprofit reasons. 35 CHAPTER 10

36. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Organizational Alliances ● Limited liability partnerships (LLP) ● Partners liability is limited to his or her investment in the partnership ● Accounting Firms, legal firms ● Joint ventures ● An agreement among two or more business to work together to provide a good or service ● Two contractors to connect two cities by building a tunnel ● Cooperative ● Popular in agriculture for buying and selling crops 36 CHAPTER 10

37. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● Describe the difference between the three types of organizational alliances? CHAPTER 10 37

38. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● Describe the difference between the three types of organizational alliances? ● LLPs has limited liabilities ● JVs are an agreement between two or more businesses to work together ● Cooperatives are businesses owned by user- members CHAPTER 10 38

39. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Specialized Forms of Corporations ● Limited liability company (LLC) ● Taxed as if it was a proprietorship or partnership ● Supchapter S ● Nonprofit corporations ● Does not pay taxes ● Does not make a profit ● Quasi-public corporations ● Important to society but lacks profit potential to attract private investors operated by government 39 CHAPTER 10

40. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● What is the main advantage of choosing an LLC or Supchapter S status? CHAPTER 10 40

41. ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Checkpoint ● What is the main advantage of choosing an LLC or Supchapter S status? ● These forms have limited liability and but are taxed like a partnership. CHAPTER 10 41