Unit 3

Business Ownership Opportunities

If you were to start your own business what would it be? Subscription business
How would you enter a business? Start a new business
What organizational form will it take?
*Forms of Business Organization
Sole Proprietorship: A business owned by one person who receives all the
profits and is responsible for all the debts incurred by the business.
Partnership: A business with two or more owners who share the firms profits
and losses.
Ex: Law offices, Doctors Offices, Real Estate Offices
Corporation: A legal entity owned by shareholders whose liability for the firms
losses is limited to the value of the stock they own.
-Charter: A government document that gives permission to create a corporation
-Stockholders: Purchases share or shares of ownership in a corporation
-Public vs. Private
Public: Is a company who offers its securities for sale to the general public
Private: Are owned by a relatively small number of shareholders who owns
stocks that are not traded publicly, many family-owned
Franchise: A legal agreement to sell a parent companys product or service in a
geographic area.
Advantage

Disadvantage

Sole

All business
decisions are the
owners
Low start-up
costs
All profits go to
the owner
Greater
freedom
Very little
government control

Unlimited
liability personally
responsible for any
losses
Long working
hours
Difficult to
obtain financial capital
All business
decisions and risks
are the owners
Limited life
span

Partnership

East to form
Low start-up
costs
Divided liability
Easier to
obtain financial capital
Opportunity to
gain complementary
skills

Unlimited
liability
Divided
authority
Divided profits
Can be difficult
to find the right
partner
Potential

disagreements
Limited life
span
Corporation

Limited liability
Specialized
managerial functions
Easier to raise
financial capital
Perpetual
existence
freely
transferable shares of
stock

Greater
government
regulations
Expensive to
organize
Double
taxation
Not easily
dissolved
A lot of
paperwork
Extra costs for
lawyers, fees, etc.

Franchise

Proven idea
Brand name
Support from
franchiser
Established
relationships with
suppliers
Financing may
be easier than starting
from starch

Restrictions
from franchisor
Royalty fees- a
percent of the gross
profits
May be
expensive to own and
operate
Stiff penalties
from franchisor if
business is sold or
closed
Added costs
for legal and
accounting services