The Different Types of Business Ownership0

7/24/2019 The Different Types of Business Ownership0

1/18

The Diferent Types o Business

Ownership

Sole Proprietor

A business owned and operated by one person.

The owner is responsible for all operations of the business

and assumes all the risk.

Advantages o a sole proprietorship

Owner makes all decisions

Owner is her or her own boss

Owner keeps all the prots

All nancial informatio can be kept secret

This type of business is easy to start or close

Disadvantages o a sole proprietorship

Owner has responsibility for all debts

Costs and time commitment can be high

Funding can be dicult to obtain

Owner is responsible for all aspects of the business

Owner doesnt hae fringe benets

!


2/18

Partnership

A partnership has two or more owners or partners and

includes seeral forms" general# limited $%&'# limited liability$%%&'# limited liability limited $%%%&'# or professional.

Though a legal entity# a partnership is not a federal ta()

paying entity# thus all income or loss must be reported on

the indiidual partners federal income ta( return whether or

not distributed or allocated to partners.

Advantages o a partnership

&artners co)own the business.

They share responsibilities.

They may hae greater nancial resources than sole

proprietors.

They share business losses.

They share time commitment.

Disadvantages o a Partnership

&artners hae unlimited personal liability for all the other

partners.

They may hae con*icts.

&rots are shared.

&artnerships are more dicult to close down than sole

proprietorships.

Agents of the business dilemma.

+


3/18

Corporation

A corporation is owned by shareholders who elect a board of

directors to manage the business# thus ownership and

management of a corporation may be separate.

,hareholders hae limited liability for the obligations of the

corporation.

The corporation is a legal and ta()paying entity for federal

income ta( purposes.

-t has three types"

&riate

&ublic

Crown

Advantages o a corporation

The owners are shareholders. They hae limited liability for

the debts of the corporation and share the prots.

sually shareholders do not operate the company / they hire

employees to do so.

Corporations can usually raise funds more easily than sole

proprietors or partners.

Corporations usually hae a lower ta( rate than priate

owners.

0


4/18

A corporation can continue to e(ist after the death of its

owners.

Disadvantages o a corporation

Corporations hae more complicated structures than sole

proprietorships or partnerships.

1mployees who are not owners may not be committed to the

business.

Corporations must publish annual reports# which could gie

away important secrets to competitors

The alue of company shares can change depending on

changes in the stock market

Co-operative

2usinesses owned and operated by a group of people with astrong common interest.

,tart)up costs are shared among the members of the co)

operatie.

3embers own and control the business and make all

business decisions.

Advantages o a co-operative 3embers own and control the business.

3embers share the start)up costs and the running of the

business.

They share the nancial risk.

4


5/18

3embers may pay less for goods and serices and get more

for those they sell.

Disadvantages o a co-operative 2ecause each member only has one ote# members may not

want to inest money for e(pansion.

2ecause of the number of members# making decisions can

be dicult.

3embers can hae con*icts.

Franchise

A business in which a franchisorsells to another person# called

the franchisee# the rights to use the business name and to sell a

product or serice in a gien territory.

Advantages o a ranchise

Franchisees buy a business with a good reputation. Franchisors supply training and nancial knowledge.

Franchisors usually proide packaging# adertising# and

e5uipment to the franchisee.

Disadvantages o a Franchise

Franchises can be e(pensie to buy.

Franchisees may hae to follow a lot of rules laid down by

the franchisors.

-f a franchisors business fails# so will the franchisees

business.

6


6/18

i!ited ia"ility Co!pany

A limited liability company $%%C' combines the nonta(

adantages of corporations with faorable ta( treatment ofpartnerships.

An %%C is owned by members# who may manage themseles

or retain a manager to run the business.

3embers hae limited liability for the obligations of the %%C.

Business For!s #orldwide

3any nations share similar forms of business# including

partnership and corporation# though details ary widely.

The $eneral Partnership

1ery state has enacted partnership laws.

The 7eised niform &artnership Act $7&A' of !884# with

the !889 amendments# is a model partnership statute.

Partnership Creation

7&A denes partnership as an :association of two or more

persons to carry on as co)owners a business for prot.;

o &artners share prot and loss

A partnership is a oluntary and consensual relationship and

may e(ist by law een if the parties entered it inadertently#

without considering whether they had created a partnership.

Partnership Creation % &'a!ples

,eeral musicians agree to form a band and share prots.


7/18

Two students stand in line for hours to buy != concert

tickets. They sell > tickets for a ?6 fee per ticket and

splitting the prots.

Partnership Creation % The P

nlike an ordinary partnership# creating a limited liability

partnership $%%&' must comply with a states limited liability

partnership statute

Formation of an %%& re5uires ling a form with the secretary

of state# paying an annual fee# and using proper terminology

o 7egistered %imited %iability &artnership# 7%% %imited

%iability &artnership# %%&

eadership

%eadership

is the ability to inspire or in*uence others towards the

leader@s

goal. -f someone has followers# he or she is a

leader.

3anagement literature mostly focuses on the characteristics of

the leader

) it asks what make this person a

leader# rather than

why do these people choose to follow.

The Pyra!id o eadership

"The very essence of leadership is that you have

to have a

vision. It's got to be a vision you articulate

clearly and

forcefully on every occasion." - TheodoreHesburgh,

President of the University of Notre a!e

%eadership translates ision into reality by inspiring followers to

want to e(perience the change process. And to in*uence their

followers to willingly Bump into that e(perience# leaders need a

9


8/18

specic set of competencies! to guide their actions. Although

competencies will always dier from one leader to the ne(t#

haing a core set to draw from increases the chance for success.

These competencies can be thought of as the inner tools for

motiating employees# directing systems and processes# andguiding the business towards common goals that allow the

organiDation to increase its alue.

Core Co!petencies form the foundation of leadership. Eithout

a solid base# the sides of the pyramid will soon crumble away.

eadership Co!petencies form the basic structure $walls' that

separates leaders from bosses by building the knowledge and

skills re5uired for driing the organiDation towards the cutting

edge of its business. Eithout these competencies# a leader has ashallow base from which to work# or as ,cott Adams# the creator

of Dilbert best characteriDes it# a pointy)head boss.

Proessional Co!petencies add depth to the pyramid. The

main drier of these competencies arries from e(periences and

%1A7-G from these e(periences. Ehile a person might hae a

rm grasp on the core and leadership competencies# it is only

through trial and error# and later through re*ection to increase the

depth of those e(periences# that an aerage leader grows into agood leader. 1ach organiDation re5uires a dierent set of

professional competencies for each leadership position.

>


9/18

eadership Co!petencies

anagers are people #ho do things right, #hileleaders are

people #ho do the right thing. - $arren %ennis,

Ph.. "&n

%eco!ing a eader"

8


10/18

eadership a"ilities ) Hisplays attributes that make people glad

to follow. &roides a feeling of trust. 7allies the troops and builds

morale when the going gets tough.

(isioning ) Applies eort to increase productieness in areas

needing the most improement. Creates and set goals $isions'.,enses the enironment by using personal sway to in*uence

subordinates and peers. Gain commitment by in*uencing team to

set obBecties and buy in on the process. 7einforces change by

embracing it $preents relapse into prior state'.

Create and ead Tea!s ) Heelops high)performance teams by

establishing a spirit of cooperation and cohesion for achieing

goals.

Foster Con)ict *esolutions +win-win, ) 1ectiely handles

disagreements and con*icts. ,ettles disputes by focusing on

soling the problems# without oending egos. &roides support

and e(pertise to other leaders with respect to managing people.

1aluates the feasibility of alternatie dispute resolution

mechanisms.

Assess Situations uic.ly and Accurately ) Takes charge

when the situation demands it. 3ake the right things happen on

time.

Coach and Train Peers and Su"ordinates ) 7ecogniDes that

learning happens at eery opportunity $treats mistakes as a

learning eent'. &roides performance feedback# coaching# and

career deelopment to teams and indiiduals to ma(imiDe their

probability of success.

/!ple!ent &!ployee /nvolve!ent Strategies ) Heelops

ownership by bringing employees in on the decision making and

planning process. &roides the means to enable employeesuccess# while maintaining the well being of the organiDation.

Heelops processes to engage employees in achieing the

obBecties of the organiDation. 1mpower employees by giing

them the authority to get things accomplished in the most

ecient and timely manner.

!=


11/18

eadership A"ilities

&ne can never consent to creep #hen one feels

an i!pulse tosoar. - Helen (eller

Good leaders are made not born. To inspire your team into higher

leels of teamwork# there are certain things you must be# know#

and# do. These do not come naturally# but are ac5uired through

continual work and study. The best leaders are continually

working and studying to improe their leadership skills.

2ass@ $!8>8 I !88=' theory of leadership states that there are

three e(planations on how people become leaders"

Trait Theory ) ,ome personality traits may lead people naturally

into leadership roles. Ee hae all met a few people like this# such

as a Jigh ,chool coach# scout leader# teacher# or a good boss.

There are a ery few people who hae a natural talent for leading

others.

$reat &vents Theory ) A crisis or important eent may cause a

person to rise to the occasion# which brings out e(traordinary

leadership 5ualities in an ordinary person.

!!


12/18

Transor!ational eadership Theory ) &eople can choose to

become leaders. &eople can learn leadership skills. This is the

most widely accepted theory today and the premise on which this

guide is based.

eadership Fra!ewor. % Be0 1now0 2Do

-f you are a leader that can be trusted# then the people around

you will learn to respect you. To be a good leader# there are things

that you must be# know# and do.

B&3

A proessional. ,eek responsibility and take responsibility for

your actions. ,earch for ways to guide your organiDation to new

heights. And when things go wrong# they will eentually# do not

blame others. AnalyDe the situation# take correctie action# and

moe on to the ne(t challenge.

A proessional who possesses good character traits.

Heelop good traits within yourself# such as honesty#

competence# candor# commitment# integrity# courage#

straightforward# imagination. Heelop good character traits within

your team that will help them carry out their professionalresponsibilities.

14O#3

The our actors o leadership ) follower# leader#

communication# situation.

5oursel. Know yourself and seek self)improement. -n order to

know yourself# you hae to understand your be# know# and do#

attributes. ,eeking self)improement means continuallystrengthening your attributes. This can be accomplished through

reading# self)study# classes# etc.

6u!an nature7Know human nature and the importance of

sincerely caring for your workers.

!+


13/18

5our 8o"72e technically procient. As a leader# you must know

your Bob and hae a solid familiarity with your employees@ Bobs.

Train your people as a team. Although many superisors call their

organiDation# department# section# etc.# a teamL they are not

really teams...they are Bust groups of people doing their Bobs.5our organi9ation. se the full capabilities of your organiDation.

2y deeloping a team spirit# you will be able to employ your

organiDation# department# section# etc. to its fullest capabilities.

DO3

Provide direction. 3ake sound and timely decisions. se good

problem soling# decision)making# and planning tools. Keep yourteam informed. Know how to communicate with your team#

seniors# and other essential people within the organiDation.

/!ple!ent. Heelop a sense of responsibility in your team.

1nsure that tasks are understood# superised# and accomplished.

Communication is the key to this responsibility.

:otivate. ,et the e(ample. 2e a good role model for you

employees. They must not only hear what they are e(pected to

do# but also see. Know your team and look out for their well)being.

6u!an *elations

;.The si( most important words" - admit - made a mistake.

.The three most important words" -f you please.?.The two most important words" Thank you#

@.The one most important word" Ee

.The least most important word" -

!0


14/18

/nterpersonal S.ills

If we cannot end now our dierences, at least we can

help

make the world safe for diversity.

-nterpersonal skills come from recogniDing the diersity in others.

And diersity is about empowering people. -t makes an

organiDation eectie by capitaliDing on all the strengths of each

employee. -t is not 11O or Armatie Action# which are laws and

policies. Hiersity is understanding# aluing# and using the

dierences in eery person. To obtain that competitie edge you

need to create great work teams by using the full potential of

eery indiidual.

-nterpersonal skills are those necessary for relating and working

with others / such as erbal and non)erbal communication#

listening# giing and receiing feedback.

!4


15/18

Joward Gardner described it as one of the multiple intelligences"

interpersonal intelligenceor the ability to be able to understand

and work eectiely with others.

2eing able to understand and work with others in teams or groups

is another important aspect of interpersonal skills. The focus is

on facilitating teamwork# ensuring group eectieness# decision

making# running meetings and presenting work.

Benets

On a personal basis ) we all interact with other people# it is worth

reiewing and improing our interpersonal eectieness.

-n the helping professions good communication and interpersonal

skills are crucial.

Furthermore# many sureys of employers and graduates indicate

that employers want their employees to hae good social skills.

The ability to communicate well with others and the ability to

work well in a team are aluable skills.

These skills are also important in business and managementwhere modern organiDations increasingly use teamwork which

re5uires being able to communicate and collaborate with others.

They are also useful to deelop in college where more cooperatie

learning is taking place# re5uiring interpersonal and small group

skills.

These are skills that can be learnt thereby improing an

indiiduals performance# resilience and oerall emotional literacy

$Goleman# !886'.

Eorking in groups proides the opportunity to share ideas# hear

other perspecties# to benet from the e(perience and e(pertise

of others and to receie help and support.

Aspects o Co!!unication

!6


16/18

The cornerstone of eectie communication is the ability to listen

and to accomplish this in an actie manner. Often communication

fails because people hae not actually heard to the message or

hae only listened to part of it. As a result# they may hae

assumed or misinterpreted what was actually said. -n theprofessional arena# good listening skills are necessary in order to

communicate that you want to help.

1(pressing refers to the ability to eectiely say what we want to

say.

(er"al reersto what we say with words. 4on-ver"al reersto

all the other ways we communicate# ia body language# tone etc.

Eell come back to this as its ery important part of the

communication process.

earn to isten

%istening is not the same as hearing.Take time to listen carefullyto what others are saying through both their erbal and non)

erbal communication.

Choose 5our #ords

2e aware of the words you are using when talking to others.

Couldyou be misunderstood or confuse the issueN &ractice clarity and

learn to seek feedback to ensure your message has been

understood.

*ela'

Ehen we are nerous we tend to talk more 5uickly and therefore

less clearly. 2eing tense is also eident in our body language and

other non)erbal communication. -nstead# try to stay calm# make

eye contact and smile. %et your condence shine.

Clariy

,how an interest in the people you talk to. Ask 5uestions and seek

clarication on any points that could be easily misunderstood.

nderstand Stress

!


17/18

%earn to recogniDe# manage and reduce stress in yourself and

others. Although stress is not always bad# it can hae a

detrimental eect on your interpersonal communication. %earning

how to recogniDe and manage stress# in yourself and others# is an

important personal skill.

4egotiate

%earn how to eectiely negotiate with others paing the way to

mutual respect# trust and lasting interpersonal relations.

#or.ing in $roups

We often find ourselves in group situations, professionally and socially. Learn all about the different

types of groups and teams.

!9


18/18

!>

Documents

The Different Types of Business Ownership0