© SOUTH-WESTERN EDUCATIONAL PUBLISHING
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.
5555
© SOUTH-WESTERN EDUCATIONAL PUBLISHING
CHARACTERISTICS OF ENTREPRENEURS
Self-starters Energetic Independent Take charge people Creative thinkers Personable Experienced Well informed
© SOUTH-WESTERN EDUCATIONAL PUBLISHING
GETTING A BUSINESS STARTED
Prepare a business plan Assume the responsibilities of business
ownership
© SOUTH-WESTERN EDUCATIONAL PUBLISHING
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
© SOUTH-WESTERN EDUCATIONAL PUBLISHING
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
© SOUTH-WESTERN EDUCATIONAL PUBLISHING
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