Types and Forms of Business Ownership

What is it?
A Service Business provides
personal labor over product
for a fee.

Advantages?
- Low cost to start
-Adaptable to needs and trends
-Personal connection with customer
-Flexible with working hours and location

Disadvantages?
-Takes time to perform and sell
-Relies on human expertise
-No control over customer wants

Examples?
Hair, Nails, Childcare,
Dentist, Vet, Doctor

What is it?
A Merchandising Business
purchases a finished product
and resells them, to customers.

Advantages?
-Increased Sales
-Customers loyalty
-Higher item sales, more profit
-Attractive Spaces

Disadvantages?
-High expense
-Demands on staff
(longer hours)

Examples?
Clothing Stores, Grocery Stores,
Gas Station, Department Stores

What is it?
A Manufacturing Business
uses raw materials and
components to assemble
goods for customers.

Advantages?
-Creates jobs
-Makes safer products
-Helps with skill development
-High quality products

Disadvantages?
-High Risk
-Competition between producers
-High cost of equipment
-Can run out of materials

Examples?
Agriculture, Car Industry, Construction,
Chemical and Pharmacy, Foods/Beverages

What is it?
An E-Commerce Business
sells products and services
through digital websites

Advantages?
-Faster buying process
-Cost reduction
-More demands
-You can shop from anywhere
-Increased sales

Disadvantages?
-Communication difficulties
-Tech difficulties
-Security issues

Examples?
Amazon, Spotify, Ebay
Craigslist, Alibaba

What is it?
A Non-Profit Business are
organizations that provide
products or services to improve
or benefit a community

Advantages?
-Limited liability protection
-Credibility
-Helps people in the community

Disadvantages?
-No political campaigning
-No lobbying

Examples?
Food Banks, Red Cross, UNICEF
Salvation Army, Sick Kids

Definition!
Sole proprietorship is when someone starts there business alone and pays income taxes from business profits.

Advantage!
-Easier processes and fewer requirements for business taxes
-Less paperwork to get started
-Fewer registration fees

Disadvantage!
-No liability protection
-It's harder to get financing and business credit
-It's harder to sell your business

Examples!
Kate's Real Food, a company that creates and sells energy bars.

Other!
Sole proprietorships are easy to establish and dismantle due to a lack of government involvement, making them popular with small business owners and contractors.

Definition!
A partnership is an arrangement between 2 or more people to oversee business operations and share its profits and liabilities.

Advantages!
-Shared burden
-Access to different skills and specialization
-Fewer legal obligations
-Additional business opportunities

Disadvantages!
-Profit sharing
-Potential for conflict
-Disagreements
-Exit strategy complication
-Lack of stability

Examples!
-William Procter and James Gamble: Procter & Gamble
-Henry Wells and William G. Fargo: Wells Fargo
-John D. Rockefeller and Henry Flagler: Standard Oil

Other!
-The average salary for partnership professionals in the US is $178,621
-The most common partnership program is called Channel

Definition!
A corporation is a legal entity that is separate and destined from its owners. Under the law, corporations possess many of the same rights and responsibilities as individuals.

Advantages!
-Access the funding
-Limited liability protections
-Unlimited lifespan

Disadvantages!
-Observe strict formalities
-Expensive double taxation

Examples!
-General Motors Corporations
-Amazon Corporation
-Apple Corporation

Other!
A corporation is owned by its shareholders who each own a piece of the corporate pie.

Definition!
A franchise is a join venture between a franchisor and a franchisee. The franchisor is the original business. It sells the right to use its name and idea.

Advantage!
-Access to free training and marketing
-Being part of an established business
-Easier to make money
-Lower risk for a new entrepreneur than setting up a business.

Disadvantage!
-A franchisee has to pay a percentage of its profits to the franchisor as royalties
-The initial investment and start up costs can be expensive
-The franchisee has limited creativity and control over the business decisions

Examples!
-McDonalds
-Century 21
-Subway
-Hertz
-Carrefour
-Circle C
-Kumon
-The UPS store
-Dunkin donuts

Other!
-There are more then 750,000 franchises in the US alone
-Franchises in the US provide employment to more then 8 million people

Definition!
A co-operative is a business organization that is owned and controlled by the people who use its products, supplies or services.

Advantage!
-They are easy to form with a minimum of 10 adults and have limited liability
-They give equal status and democratic control to each member, who can also access various resources and services

Disadvantage!
-Limited profits, as profits are distributed equally among all members
-Incompetent management
-Difficulty to rake funds

Examples!
-Do It Best
-Dairy Farmers of America
-Ocean Spray

Other!
-The co-op business model is at least 519 years old
-The world's biggest co-operative is Credit Agricole Group