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BUSINESS STRUCTURES. Types of Business Structures Sole Proprietor Partnership  General Partnership  Limited Partnership  Limited Liability Partnership.

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Presentation on theme: "BUSINESS STRUCTURES. Types of Business Structures Sole Proprietor Partnership  General Partnership  Limited Partnership  Limited Liability Partnership."— Presentation transcript:

1 BUSINESS STRUCTURES

2 Types of Business Structures Sole Proprietor Partnership  General Partnership  Limited Partnership  Limited Liability Partnership Corporations Others (Franchises, Co-ops, Nonprofits)

3 ADVANTAGES OF BEING A SOLE PROPRIETOR

4 EASY START UP  FEW GOV’T. REGULATIONS AND BARRIERS TO ENTRY

5 GETS ALL THE PROFIT It is by FAR the most popular type of firm.

6 FULL CONTROL AND DECISION MAKING

7 EASY TO DISCONTINUE

8 DISADVATAGES OF BEING A SOLE PROPRIETOR

9 UNLIMITED PERSONAL LIABILITY (business and personal assets can be taken to pay debt)

10 LACK OF PERMANENCE  IF THE OWNER DIES, THE BUSINESS COULD DIE TOO.

11 LIMITED RESOURCES  ONE PERSON, ONE SOURCE OF CAPITAL (money)

12 RESPONSIBILITY AND TIME COMMITMENT RESTS ON ONE PERSON

13 THREE TYPES OF PARTNERSHIPS

14 General Partnership:  All partners are financially responsible for debt and liability.  All may be sued professionally and personally

15 Limited Partnership:  One partner has unlimited liability and can be sued professionally and personally  Other partners have limited liability and can only lose professional assets  Partners, however, are not equal in sharing profits

16 Limited Liability Partnership:  All partners have limited liability and none can be sued for personal assets…only professional  These forms of partnerships need government approval  Ex: Medical offices and law firms

17 ADVANTAGES OF PARTNERSHIPS

18 EASY START UP  FEW GOV’T. REGULATIONS AND BARRIERS TO ENTRY

19 SHARED DECISION MAKING AND SPECIALIZATION

20 LARGER POOL FOR FUNDING

21 NO SPECIAL TAXES

22 DISADVANTAGES OF PARTNERSHIPS

23 UNLIMITED LIABILITY

24 Limited Liability Partnership:  All partners have limited liability and none can be sued for personal assets…only professional  These forms of partnerships need government approval  Ex: Medical offices and law firms

25 PERSONAL CONFLICT

26 ADVANTAGES OF CORPORATIONS http://www.nyse.com/about/listed/lcddata.html?ticker=YUM

27 LIMITED PERSONAL LIABILITY FOR STOCKHOLDERS (personal assets cannot be taken away)

28 OWNERSHIP IS TRANSFERABLE (you may sell it when you want)

29 THE COMPANY CAN ATTRACT CAPITAL QUICKLY BY SELLING STOCK

30 LONG LIFE (Corporations can live forever, beyond life of founder)

31 DISADVANTAGES OF CORPORATIONS

32 DIFFICULT AND EXPENSIVE TO START-UP

33 DOUBLE TAXATION (corporate and dividend)

34 LOSS OF CONTROL FOR FOUNDER

35 A LOT OF GOV’T. REGULATIONS

36 CORPORATE COMBINATIONS

37 HORIZONTAL MERGER  COMPANIES FROM SAME INDUSTRY JOIN TOGETHER MERGERS

38 VERTICAL MERGER  Combination of two or more firms involved in different stages of producing the same good or service

39 CONGLOMERATE Business combination of more than 3 businesses that make unrelated products

40

41 MULTINATIONAL CORPORATION THAT OPERATES IN MORE THAN ONE COUNTRY _________________________

42 Other Types of Organizations Cooperative (Co-op): Business organization owned and operated by a group for their benefit. Non-profit: Usually in the business of benefiting society.

43 FRANCHISE CORPORATION THAT SELLS ITS NAME FOR A FEE TO INDEPENDENT OWNERS What do you normally think of?

44 PROS OF FRANCHISE CORP. BUILT IN REPUTATION MANAGMENT AND TRAINING SUPPORT

45 …MORE PROS STANDARDIZED QUALITY THAT PEOPLE TRUST NATIONAL ADVERTISING

46 …EVEN MORE PROS FINANCIAL ASSISTANCE FROM MOTHER CORP. CORP. BUYS IN BULK SAVING MONEY FOR FRANCHISE OWNER

47 CONS OF FRANCHISES HIGH FEE AND ROYALTY PAYMENTS STRICT STANDARDS OF OPERATION

48 …MORE CONS PURCHASING RESTRICTIONS (you must buy from mother corp.) LIMITED PRODUCT LINE (can’t develop own goods)

49 Dunkin' Donuts Cost of Franchise: $40,000 to $80,000 Average total start up costs vary depending on location. KFC Cost of Franchise: $45,000 Average total start up costs: From 1 to 3 million US$. Further details on KFC Franchise Opportunity USA McDonald's Franchise USA Cost of Franchise $45,000 Average running costs $950,000 to $1,800,000 Massage Envy Cost of Franchise $39,000 Average Start up costs $290,000 to $470,000 Pizza Hut Cost of Franchise: $25,000 Average total start up costs: From 210 thousand to 3 million US$, depending on location and size of store. Snap-On Tools Cost of Franchise: From $5,000 to $15,000 Average total start up costs: From $17,000 to $280,000 Subway Cost of Franchise: $15,000 Average total start up costs: From 80 to 240 thousand US$, depending on location. Supercuts Cost of Franchise: $22,500 Average total start up costs: From 110 to 240 thousand us$


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