Sole Proprietorship

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Types of Business Organization

• Sole Proprietorship
• Partnerships (Limited/Gen)
• Corporations
• Non-profits

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Sole Proprietorship- 72 of businesses
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• Economic Weakness of sole proprietorship
• Unlimited Liability you have total
  responsibility for all debts and liabilities of
  the company
• Difficulty in raising financial capital
• Limited size and efficiency
• Limited managerial experience
• Limited Life

• Advantages of sole proprietorships
• Ease of start up
• Ease of Management
• You keep all profits
• You do not have to pay any business taxes
• Psychological advantages
• Ease of exit

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Stop and Think

• If you started your own business what would it
  be?
• What are some of the 4 Factors of production you
  would need.
• 2 examples for each

Land
Labor
Entrepreneur
Capital
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9 of businesses
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Partnerships

• Two major types of
  partnerships
• General Partnership (most common type) all
  partners are responsible for management and the
  financial responsibilities of the partnership.
• Limited Partnership at least one partner is not
  active in the day to day running of the business.
  They have limited liability.
• Articles of Partnership contract between
  partners spelling out the rules of partnership.
• Dividing profit
• Dividing responsibility
• Admitting new partners
• Buying out partners

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Partnerships

• Advantages of Partnerships
• Ease of establishment
• Ease of Management each partner has different
  things to offer
• No special business taxes
• Easier to raise financial capital
• Larger than sole proprietorship
• Easier to attract qualified workers

• Disadvantages of Partnerships
• Unlimited liability
• Limited partner is only responsible for his
  initial investment. He has limited liability.
• Limited Life
• Conflict between partners

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What fits best with each business??? Tell me
Why!!!
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Corporations- 20 of Business 74-profits
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Corporation- Set up

• Incorporate to form a corporation.
• Charter a document granted by the state giving a
  corporation the right to do business
• Stock shares of ownership in the corporation
• Stockholders (shareholders) owners of stock.
• Reasons to own stock
• Dividends share of corporate profits paid to
  stockholders
• Speculation buy in hope that price of stock will
  increase.

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Stock
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Corporation- Ownership

• Common Stock is a basic share of ownership in a
  corporation
• Have voting rights in the management of the
  company
• In reality they turn over voting rights to
  someone else with a proxy giving someone else
  the right to vote your share of stock.
• Preferred Stock
• Non voting shares of ownership
• Guaranteed dividend
• Liquidation benefit If corporation goes out
  of business they are ahead of common stockholders
  in getting back money.
• Board of Directors duty to direct the
  corporations business by setting board policies
  and goals
• Elected by common stockholders
• Hires a professional management team to run day
  to day activities. (CEO, CFO.)

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Corporations

• Advantages of a corporation
• Ease of raising financial capital (main
  advantage)
• Selling stock to investors
• Selling bonds a written promise to repay a loan
  on a specific date
• Principal the amount borrowed
• Interest the price paid for the use of anothers
  money
• Borrowing money from banks.
• Ability to hire
• Limited liability
• Unlimited life
• Ease of transferring ownership. Buying and
  selling stock is easy and is done millions of
  times a day

• Disadvantages of a corporation
• Start up expenses are high.
• Stockholders (owners) have a limited
• Profits are taxed
• Corporations are subject to more government
  regulations than sole proprietors or partners

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Dare to Compare

• Using the interwoven circles list the
  similarities and differences between Sole
  Proprietorships, Partnerships, and Corporations

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Non-Profits We dont like we just want to
make you
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Who is here to help???

• Community and Civic organizations
• Cooperatives- REI
• Consumer- Sams Club
• Labor, Professional and Business Organizations 
• Labor Unions- organization of workers formed to
  represent its members interests in varying
  employment matters. Collective bargaining
• Professional Associations- a group of people in a
  specialized field that work to improve their
  working conditions.
• Business associations
• Chamber of Commerce- promote economic growth of
  the community
• Better Business Bureau- cops for businesses

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Mergers and Acquisitions

• 5 Reasons to merge- Make money faster, Increase
  efficiency, Acquire new product lines, Catch up
  or eliminate rivals, Lose a company identity.
•  
• Horizontal Merger- when two or more companies
  that product the same kind of product join
  forces.
• Vertical merger- when two or more firms that are
  at different steps of manufacturing process join
  together.
• Conglomerates- is a firm that has at least four
  businesses, each making unrelated products.

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Be a thinker not a stinker

• With a neighbor develop 2 examples of each type
  of merger
• Vertical
• Horizontal
• Conglomerate
• Why would companies ever want to merge????

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Summary

• With a partner
• Use two real organizations and design the
  following
• A vertical merger
• A horizontal merger
• Conglomerate