Select a Type of Business Ownership Section 2. An Existing Business Advantages of an Existing...
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Transcript of Select a Type of Business Ownership Section 2. An Existing Business Advantages of an Existing...
An E
xistin
g B
usin
ess
• Advantages of an Existing Business– _________ has customer
base, suppliers, and producers
– Seller of a business may ______ the new owner
– Prior ________ of revenues, expenses, and profits
– Financial Arrangement can be ______
• May give better terms than a bank
An E
xistin
g B
usin
ess
• Disadvantages of an Existing Business– Not making a
_______– Inherited
_________• Bad reputation• Poor location
– ________ is required
• Many entrepreneurs may not have the money
Fam
ily B
usin
ess
• Approx. 90% of businesses are owned by _________– Even Ford is still
held largely by family members
• Advantages of family businesses– Efforts are
___________ by those they care about
– _______ working with relatives/keep memories alive
Fam
ily B
usin
ess
• Disadvantages of Family Businesses– ___________-
hiring because of family status regardless of ability
• Can mean _______ business decisions are made
– Family ___________
Franch
ise
• Franchise- ________ agreement that gives an individual the ______ to market a company’s products or services in a particular area– ___________- the person
who purchases a franchise
– ___________- person or company who offers a franchise for purchase
– More than ___________ people own franchises
Franch
ise
• _____________ Costs of a Franchise– Initial ______________
Fee• Fee the franchise
owner pays in return for the right to run the franchise
– ____________________• Costs associated
with beginning a business
– ____________ Fees• Weekly or monthly
payments made by the owner to the seller
– Usually a % of your franchise income
– Advertising Fees• Fees paid to support
television, magazine and other __________
Franch
ise
• Advantages of a Franchise– Entrepreneur is provided with an _____________
product or service– Franchisors offer management, technical, and
other ____________– Equipment and supplies can be ____ _________– Guarantee of ______________ attracts customers
• Franchises mandates a certain level of quality
Franch
ise
• Disadvantages of a Franchise– Can cost a lot of ______ and cut down on
profits– Owners have _____ ___________ to make
decisions than other entrepreneurs– Franchisees are ___________ on the
performance of other franchises in the chain– The franchisor can ___________ the franchise
agreement
Franch
ise
• Evaluate a Franchise– What is the ___________
• Will I get _________ territory
– What are the ______ and royalty fees associated with the franchise
– How __________ have other franchises in the area been? What do other franchisees think of the franchisor?
– What ________ are provided by the franchisor
– ___________the franchise relationship
Non- ProfIt
• Focus on _________Rather than __________
• All revenue is __________ in the company
Advantages• Special _____ Exemptions•Qualify for certain _______•________ Liability
Disadvantages•______ – the time, effort, and cost to set up is lengthy•___________– for tax exemptions/grants•_________ Control
• Board of Directors
•Finances are public
Legal Fo
rm o
f Your B
usin
ess
• Sole ______________– _____ person is in
control of all business aspects
– Advantages• Gov’t exercises
_____ ________ over your actions
• Not as many _____ to fill out
– Disadvantages• Can be difficult to
raise _________• Private assets
may be _______ to pay what is owed.
Legal Fo
rm o
f Your B
usin
ess
• ________________– Go into business
with more than one person. ________ decision-making and management responsibilities
– Advantages • ____ coming up
with ________• Shared ________• Face ________ gov’t
regulations– Disadvantages
• Don’t want to share _________
• Legally _____ for errors of partners
• ________ decision making
Legal Fo
rm o
f Your B
usin
ess
• ______________- treated _____________ of its owners. The corporation, not the owners pays taxes, enters into contracts, and held liable for negligence
• Share of ______- ownership in a corporation. Owners are called shareholders. – Private vs. public
• Board of Directors- group of people who meet several times a year to make important _________ affecting the company. Electing company officers, salaries, corporate rules– Day to day operations are left up to the
_________ ___________
• Dividends- ________ distributed to shareholders by corporations.
Legal Fo
rms o
f You
r B
usin
ess
• Advantages of a Corporation
– The corporation is _____ not the individual people
– Can raise more money through ______ more stock
• Lenders may be more willing to lend
– Main shareholders can __________ without disrupting day to day operations
• Disadvantages of a Corporation
– ____________ to set up• Need a ______ and file
_______ of ____________• Must disclose all
activities of a business and will be limited to those activities alone
– Income is taxed _______• Corporation pays tax on
_________• Shareholders pay taxes
on __________