Objective 3.01:Factors Influencing Entrepreneurship

EntrepreneurA person who

assumes risk of starting and

operating a business for the purpose of

making a profit.

Acquiring a Business…

1. Take over a family business

oDo you have the ability to work for a member of your family?

oDo you get along with members of your family who will be involved with the business?

oDo you share the same goals for the business?

oCan you leave the business problems at work when you go home?

2. Buy an existing business

oGood alternative if you do not have a great deal of business experience.

oMay be less risky as already established.

oWill you keep the current name and location of business or change?

3. Start your own business

oDo I have the motivation and persistence to start from “ground up”?

oDo I have sufficient knowledge of basic operations to undertake the business in which I am interested?

oDo I have enough financial resources to start from “ground up?”

Types of Businesses

1. Sole Proprietorship

Sole ProprietorAdvantages Disadvantages

• Easy start up• All profits to owner• Little government

regulation• Direct control

• Held personally liable for debts and obligations of the business

• Responsible for liabilities committed by employees

• Difficulty in financing• Limited life (death of

owner usually equals death of business)

• All losses responsibility of owner

2. PartnershipTwo or more owners

PartnershipAdvantages Disadvantages

• Easy start-up• Limited

government regulations

• Shared financing and losses

• Unlimited liability• Shared profits• Limited life (death

of partner may mean end of partnership)

• Shared control

3. Corporation• Owned by stockholders

CorporationsAdvantages Disadvantages

• Limited liability• Ease in raising capital

$$$$• Continuity of business• Ownership is easily

transferred

• Expensive to form• Profits depend on

investment• Lack of control by

owners• High government

regulation

4. Franchise• A business system in which private

entrepreneurs purchase the rights to open and run a location of a larger company.

FranchiseAdvantages Disadvantages

• Established national name

• Reduced risk of failure

• Training provided

• Cost to purchase is high

• Additional fees for local advertising

• Percentage of sales goes to Franchiser

• Lack of freedom in running business