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CHAPTER

OBJECTIVESOBJECTIVES

PROPRIETORSHIPS AND PARTNERSHIPS

Describe characteristics of successful entrepreneurs. Outline responsibilities of owning your own business. List advantages and disadvantages of proprietorships. List advantages and disadvantages of partnerships. Describe legal points to consider when selecting a name for

a business.

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CHARACTERISTICS OF ENTREPRENEURS

Self-starters Energetic Independent Take charge people Creative thinkers Personable Experienced Well informed

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GETTING A BUSINESS STARTED

Prepare a business plan Assume the responsibilities of business

ownership

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Nature of the BusinessNature of the Business Detailed description of products and/or services Estimation of risk based on analysis of industry Size of business Location of business Background of entrepreneur(s)

Goals and ObjectivesGoals and Objectives Basic results expected in the short and long run Results expressed as sales volume or profitsMarketing PlanMarketing Plan Customers and demand for the product or service Prices for the product or service Comparison of product or service with competitors

Financial PlanFinancial Plan Investment needed to start and maintain business Projected income, expenses, and profit Cash start-up and cash flow needs

ELEMENTS OF A BUSINESS PLAN

Organizational PlanOrganizational Plan Legal form of ownership Legal factors: licenses, leases, contracts Organization chart Job descriptions and employee skills needed Physical facilities: building, equipment, tools

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PROPRIETORSHIP

Owner is boss Owner receives all profits Owner personally knows

employees and customers Owner can act quickly in

decision making Owner is free from red tape Owner usually pays less

income tax than a corporation

Owner may lack necessary skills and abilities

Owner may lack funds Owner bears all losses Illness or death may close

the business

Advantages Disadvantages

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PARTNERSHIP

Skills and abilities pooled Sources of capital increased Credit position improved Contribution of goodwill Increased concern in

business management Less tax burden that

corporations Reduction in competition Retirement from

management Operating economies

Unlimited financial liability Disagreement among

partners Each partner bound by

contracts of others Uncertain life Limited sources of capital Unsatisfactory division of

profits Difficulty in withdrawing from

partnership

Advantages Disadvantages