By the end of this lesson you should:1.Identify different types of businesses.2.Can differentiate aspects of corporations, partnerships, franchises, and sole proprietorships.3.Can assemble questions on these for review.

A Sole Proprietorship is the most common form of business.

It’s owned and controlled by ONE person. It makes up 40% of all businesses in the

U.S.

https://www.youtube.com/watch?v=KYneLGRTgy8

Mark Cuban on starting your own business:

Daymond John on starting your own business:

https://www.youtube.com/watch?v=usKz6WRvs3A

ADVANTAGES DISADVANTAGES

Easy to get started Few regulations Doesn’t have to share

any profits Doesn’t have to pay

business income tax

Unlimited Liability Difficulty to raise

money Limited life

Large Corporations offer FRINGE BENEFITS which makes it harder for small businesses to recruit and keep employees.

Total 2008 net income of the 22.5 million sole proprietorships

amounted to 265 billion dollars.

IRS statistics show that in 2008, the average annual net income of a sole proprietorship was only

$12,000.

A business jointly owned by two or more people.◦ HP

Zuckerberg, Parker, Saverin (Facebook)

Gates and Allen (Microsoft)

ADVANTAGES DISADVANTAGES

They bring in different ideas and different areas of expertise.

Access resources Few regulations Easy to open and

close

Each partner is responsible for each other and how well the company does.

Limited life Potential conflict

between partners

A Corporation is a business owned by stockholders and is recognized by laws as a separate entity.

You need a LICENSE to form a corporation. Stockholders are the owners of a

corporation.

Stockholders purchase STOCKS to own part of the company.

If the company does well, stockholders may receive a DIVIDEND, part of the profit gained.

Public Company – a corporation that issues stock to be publically traded.

Private Company – owners control who can buy or sell its stock.

Two duties of the board of directors1. Select a President2. Keep shareholders informed

ADVANTAGESCorporations have a lot of money.

◦ 18.2% of all corporations make more than $1 millionHas professional leadership.

◦ This allows for higher profits and greater growth.Two other advantages are stable ownership and very responsible.

http://thewaltdisneycompany.com/about-disney/leadership/board-of-directors

DISADVANTAGESCorporations charters are hard to obtain because of START UP COSTSOwners DO NOT have direct control over business decisions.Corporations are subject to DOUBLE TAXATION!Corporations are also subject to multiple REGULATIONS that smaller businesses are not.

http://www.polleverywhere.com/multiple_choice_polls/Jf5G8S28n1Od0L5

http://www.dos.ny.gov/corps/busguide.html

Businesses would merge for two reasons1.The desire for the business to become bigger.2.Efficiency - Economies of Scale: the cost of production falls as producer grows.

A Horizontal Merger is combining two or more firms that produce the same kind of product or service.

A Vertical Merger is combining firms involved in different steps of manufacturing a good.

Conglomerates – a firm that has at least four businesses, each making unrelated products.

GE

Multinational Corporations – a large corporation with branches in several countries.◦ Multinationals helped developing nations by… ◦ Multinationals hurt workers in the U.S.

A Franchise is a business that licenses the right to SELL ITS products in a given area.

A franchisee is when a person buys the rights to sell the parent company’s products.

Four types of food franchises:Fast Food – McDonalds, Burger King, Wendy’sPizzerias – Pizza Hut, Dominoes, Papa John’s Ice Cream – Dairy Queen, Cold Stone…Coffee – Tim Horton’s, Dunkin’s, Starbucks

A COOPERATIVE is a business operated for the shared benefit or the owners, who are also its customers. ◦ Associated Press (News Co-Op)◦ Sunkist Growers (Farmers Co-Op)◦ BJ’s (Consumer Co-Op)

Non-Profit Organizations acts like a business organization.

It’s purpose is usually to BENEFIT SOCIETY.◦ Amnesty International◦ Red Cross◦ UNESCO◦ Salvation Army