Selecting a Form of Business Ownership
Selecting A Form of Business Ownership Outline
Introduction
A. The Learning Goals of this chapter are to:
1. Describe the advantages and disadvantages of a sole proprietorship.
2. Describe the advantages and disadvantages of a partnership.
3. Desribe the advantages and disadvantages of a corporation.
4. Explain how the potential return and risk of a business are affected by its form of ownership.
5. Describe methods of owning existing businesses.
B. One of the most important decisions an entrepreneur must make when establishing a new business is the form of ownership. This chapter examines the major forms of business ownership and identifies ways investors can become owners of existing businesses.
I. Sole Proprietorship
A sole proprietorship is a business owned by a single owner. The owner is called the sole proprietor. About 70 percent of all firms in the United States are organized as sole proprietorships. However, since most sole proprietorships are small, they generate less than 10 percent of all business revenue.
A. Characteristics of Successful Sole Proprietors
1. They are willing to accept sole responsibility for the firm's performance. The success or failure of the firm rests squarely on the shoulders of the sole proprietor.
2. They are willing to work long hours. The owner must often work more than the typical work day put in by employees. They are on call at all times, and may have to fill in for a sick worker.
3. Most successful sole proprietors also have strong organizational skills, leadership skills, and communication skills
4. Many successful sole proprietors have had previous experience working in the industry in which they are competing. This experience gives them an edge in understanding the competition and the wants and needs of their customers.
B. Advantages of a Sole Proprietorship
1. Since there is only one owner, all earnings go to the sole proprietor.
2. Although the owner must register the name of the
Introduction
A. The Learning Goals of this chapter are to:
1. Describe the advantages and disadvantages of a sole proprietorship.
2. Describe the advantages and disadvantages of a partnership.
3. Desribe the advantages and disadvantages of a corporation.
4. Explain how the potential return and risk of a business are affected by its form of ownership.
5. Describe methods of owning existing businesses.
B. One of the most important decisions an entrepreneur must make when establishing a new business is the form of ownership. This chapter examines the major forms of business ownership and identifies ways investors can become owners of existing businesses.
I. Sole Proprietorship
A sole proprietorship is a business owned by a single owner. The owner is called the sole proprietor. About 70 percent of all firms in the United States are organized as sole proprietorships. However, since most sole proprietorships are small, they generate less than 10 percent of all business revenue.
A. Characteristics of Successful Sole Proprietors
1. They are willing to accept sole responsibility for the firm's performance. The success or failure of the firm rests squarely on the shoulders of the sole proprietor.
2. They are willing to work long hours. The owner must often work more than the typical work day put in by employees. They are on call at all times, and may have to fill in for a sick worker.
3. Most successful sole proprietors also have strong organizational skills, leadership skills, and communication skills
4. Many successful sole proprietors have had previous experience working in the industry in which they are competing. This experience gives them an edge in understanding the competition and the wants and needs of their customers.
B. Advantages of a Sole Proprietorship
1. Since there is only one owner, all earnings go to the sole proprietor.
2. Although the owner must register the name of the