Business Organizations Business Organizations Management You need to
Business Organizations
Business Organizations Management You need to spend money to make money. What are some expenses your business might need to pay?
Business Organizations Expenses include money spent on: – – capital goods employee paychecks taxes rent and utilities
Business Organizations Management How does your business make money? Where will your receipts come from?
Business Organizations Receipts include money made from: – – – customer purchases royalties government subsidies
Business Organizations Management Are you actually making money? Subtract your expenses (what you've paid) from your receipts (what you've earned) to find your profit.
Business Organizations Example: Receipts for this month: $8, 000 dollars from customer purchases Expenses for this month: $3, 000 for employee paychecks, $500 utilities, $900 rent, $600 taxes. Total receipts: Total expenses:
Business Organizations Example: Receipts for this month: $8, 000 dollars from customer purchases Expenses for this month: $3, 000 for employee paychecks, $500 utilities, $900 rent, $600 taxes. Total receipts: $8000 Total expenses: ($3000 + $500 + $900 + $600) = $5000
Business Organizations Example: Receipts for this month: $8, 000 dollars from customer purchases Expenses for this month: $3, 000 for employee paychecks, $500 utilities, $900 rent, $600 taxes. Total receipts: $8000 Total expenses: ($3000 + $500 + $900 + $600) = $5000 Profit = ($8000 - $5000) = $3000
Business Organizations Management Record-keeping is an important habit for business owners. It enables one to keep track of one's receipts and expenses, as well as inventory.
Business Organizations Management It is possible that your expenses will exceed your receipts. It is also possible that you will make great profit. Yes, there is always risk involved.
Business Organization Types: Sole Proprietorship An entrepreneur decides to start a business. As the only owner of that business, he or she is the one proprietor (hence the term “sole proprietorship”). Fun fact: Sole proprietorships are the most numerous type of business organization in the U. S.
Business Organization Types: Sole Proprietorship So, why run a sole proprietorship? What are the advantages and disadvantages? Take about 2 minutes to write down some benefits and some drawbacks on your separate sheet of paper.
Business Organization Types: Sole Proprietorship Pros: + One's own boss + All of the profit + Relatively easy to start up Cons: - Unlimited liability - Low initial capital - Being good at a skill you can sell is not the same as being good at managing a business.
Business Organization Types: Partnerships In a partnership, two or more people own a business collectively. Partnerships often include law firms and doctors' offices.
Business Organization Types: Partnerships So, why run a partnership? What are the advantages and disadvantages? Take about 2 minutes to write down some benefits and some drawbacks on your separate sheet of paper.
Business Organization Types: Partnerships Pros: + More capital + Divided liability + Still some autonomy Cons: - Falling-outs between partners - Less autonomy -Liability is still unlimited
Business Organization Types: Partnerships There are several types of partnerships, including limited partnerships and joint ventures.
Business Organization Types: Corporations A corporation is owned by stockholders. Stockholders. . . well, they hold stock. (They are also sometimes called shareholders, as they own shares of stock. ) How much stock does a corporation issue? How much do they sell the stock for? This is outlined in the articles of incorporation.
Business Organization Types: Corporations When a company receives its corporate charter from the state, it has its license to run. The company then establishes its bylaws, which govern its proceedings, and select its board of directors, which make the decisions about how the company is run.
Business Organization Types: Corporations Where does a corporation's income go? Stockholders receive dividends from the company's profits The board of directors, elected by the stockholders, usually determine their own pay. The remaining money is reinvested into the corporation. Fun fact: Most profits in the U. S. are earned by corporations.
Business Organization Types: Corporations So, why run a corporation? What are the advantages and disadvantages? Take about 2 minutes to write down some benefits and some drawbacks on your separate sheet of paper.
Business Organization Types: Corporations Pros: Cons: + A lot of capital - Higher taxation + Limited liability - Limited control - Harder to start up
Business Organization Types: Franchises One person applies for the rights to use a company's name and products. This person is the franchisee. The company, the franchisor, in turn collects a fee from the franchisee.
Business Organization Types: Franchises So, why run a franchise? What are the advantages and disadvantages? Take about 2 minutes to write down some benefits and some drawbacks on your separate sheet of paper.
Business Organization Types: Franchises Pros: Cons: + Name recognition - Little autonomy + Tried and proven methods - Pay fee, and often a share of the revenue + Free advertising
Business Organizations So what kind of organization is best? That all depends on how much capital you need, how much liability you are okay with, how willing you are to take risks, and how much control you want.
Business Organizations: Follow-Up Choose one of the following people described and say what kind of organization would best suit them. Give at least two accurate reasons. I. Claire has a lot of money saved up from working for the past 11 years for a company, but is tired of taking orders. She believes she could run a business better than those she takes orders from. She also believes that her company does not pay her what she is worth, and she wants to earn more. II. Jorge wants to run a restaurant, but feels his ideas for a brand new restaurant are not practical and hesitates to take risks in a faltering economy. He also lacks the capital for advertising. III. The Broski Bros. ' tire manufacturing company has earned huge profits in the past 6 years. Its founders want to retire, but hesitate giving up ownership of the business to any one person. They want to stay involved in the business without having complete ownership. They also want to see the company expand, but they still need more capital before doing so.
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