1. Chapters 5 & 6

2. Describe the characteristics of successful
entrepreneurs
Discuss responsibilities of owning your
own business
Explain advantages/disadvantages of
partnerships
Describe the types of businesses suited to
the partnership form of business

3. Recall: A person who assumes the risk of
starting, owning, and operating a business
for PROFIT
Often invest months/years before earning
profit
½ of all new business end within the first
five to six years
How many people own businesses?

4. Qualities:
Self-starters
Take charge
Creative thinking
Community leaders
Obtain work experience in the industry
Well-informed about financial, marketing,
and legal matters

5. To start your own business you need:
• Adequate funds
• General knowledge about business
• Some work experience
• A business opportunity
• A BUSINESS PLAN - written document that
describes the nature of the business, its goals and
objectives and how they will be achieved
• **most important step in starting a business

6. Page 114 in textbook

7. Sole Proprietorship:
 Most common form of business organization
 Owned and managed by 1 person – the “Proprietor”
• Performs day-to-day tasks with help of hired
employees
• Furnishes expertise, $, and management
• Is entitled to ALL PROFIT
• Creditors have full claim to the assets/property if
business is in debt

8. Business owned by 2 or more people
Once partnership is formed (p122-123)
1. Partnership Agreement should be drafted
2. Balance Sheet – combined assets/liabilities
Determine responsibilities
• Silent partner- no active part
• Secret partner- not known to public
Around 1.6 Million
Partnerships in U.S.

9. Sole Proprietorship vs.
Partnership

10. Owner is Boss
Owner receives all PROFITS
Owner personally knows employees and
customers – develops close relationships
Owner can make quick decisions
Owner is free from ‘red tape’ – lots of legal
documents or gov’t restrictions
Pay LESS income tax than Corporation

11. Owner may lack necessary skills/abilities
Owner may lack funds
Owner bears all LOSSES
Illness or death may close the business

12.  Personal services
• Dentists
• Barbers
• Landscapers
• Carpenters
 Those which sell merchandise/services on a
small scale
• Family restaurants
• Newspaper stands
• Small grocery stores
 Do not require a large amount of CAPITAL

13. Business owned by 2 or more people
Once partnership is formed (p122-123)
1. Partnership Agreement should be drafted
2. Balance Sheet – combined assets/liabilities
Determine responsibilities
• Silent partner- no active part
• Secret partner- not known to public
Around 1.6 Million
Partnerships in U.S.

14. Skills & abilities are pooled together
More Capital
Credit position improved
Contribution of Goodwill improved
↑ed concern in business management
Lower tax burden than corporations
Reduced competition
Operating more efficiently by
combining 2 or more businesses

15. Unlimited financial liability
Disagreement among partners
Each partner bound by contract of others
Uncertain life
Limited sources of capital
Unsatisfactory division of profits
Difficulty withdrawing from partnership

16. More than one kind of product or service
• Car dealership- sales / service depts
Operates in more than 1 location
Operates more than 8 hours/day
Popular with professional services
• Lawyers (Schwebel, Goetz & Seiben)
• Doctors
• Accountants
• Financial consultants