Business Organization

Survey Monkey

https://www.surveymonkey.com/s/

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Have you ever thought about starting your own business? If you were your own boss, what type of business could you see

yourself running 5, 10 ,15 years from now?

Sole ProprietorshipA business owned and managed by a single individual.

• 75% of all businesses• 6% of sales.• (67% make less than

$25k).

• Examples- Bike shop, barber, gardener, bakery.

Sole ProprietorshipPositive•Full control.•Start-up costs low (business license).•Relatively few regulations.•Full receiver of profits.•Taxation.•Easy to discontinue.

Sole ProprietorshipNegative• Unlimited liability.• Limited capital ($) for expansion.• Lack of permanence.

Partnerships

A business organization owned by two or more persons.

• 7% of all businesses.• 5% of all sales. *General v. Limited Partnerships

or (LLP).

• Examples- Doctor, Lawyer, Accountant.

Partnerships

Positive• Low start-up costs• Shared decision making.• Specialization/complimentary qualities.• Larger pool of assets = expansion.• Taxation.

PartnershipsNegative• Unlimited liability.• Potential for conflict.

CorporationsA legal entity, or being, owned stockholders.

• 20% of all businesses.• 90% of all sales.• Examples: Wells Fargo, UPS, Disney, Wal-Mart.

Corporations

Positives• Limited liability.• Capital investment and

expansion easy w/stock offering.• Stockholders do not carry

responsibility for corporation’s actions.• Easy to raise money to purchase

capital.• Long life.

CorporationsNegative• Difficult and expense of start-

up.• Double taxation.

(Corporate and Individual)• Loss of Control = Stockholders.• More regulations.

Corporation Combinations1. Horizontal Merger – The joining of two or more

firms competing in the same market with the same good or service.

2. Vertical Merger – The joining of two or more firms involved in different stages of producing the good or service.

3. Conglomerate – The joining of companies that produce entirely different products. (Remember Sara Lee?)

FranchiseA semi-independent business that pays fees to a parent company. •The franchisee is granted the exclusive right to sell a certain product or service in a given area.•Franchisee must pay royalties to parent company.

FranchisePositives• Built-in reputation/brand recognition.• Management and training support.• Standardized quality.• National advertising.• Buying power.

FranchiseNegatives• High franchise/royalty fees• Strict operating standards.• Purchasing restrictions.• Limited product line.

Match the Characteristics• Unlimited Liability • Limited Liability for

Investors • Articles of Partnership • Few Government

Regulations • Must Issue Stock • Articles of

Incorporation • Recognizable Brand • Long Work Hours • Stricter Regulations • Needs Accurate Tax &

Employee Records

• Use of Personal Savings and Investments

• Board of Directors • Can Be a Hybrid • Lasts for a Fixed

Period of Time (5-30 years)

• Life of Partnership Limited

• Documents of Disclosure

• Secure Financing More Easily

• Quick Start Up • Complimentary Skills • Royalty Fees • Easy to Form

Becoming a Franchisee You are interested in owning a franchise, however you need to do your research before you invest. With a partner, you are going to find 2 franchises, compare and contrast the two different franchise opportunities, and decide which is best for you.

•With a partner, go to...http://www.entrepreneur.com/franchise500/index.html•Research 2 franchises.•Fill out the worksheet.•Decide which franchise is best for you.