Discussion Topic 3
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Chapter5.pptxSmall Business and Forms of Business Ownership http://www.wileybusinessupdates.com
Chapter
5
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Discuss why most businesses are small businesses.
Determine the contributions of small businesses to the economy.
Discuss why small businesses fail.
Identify the available assistance for small businesses.
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Learning Objectives
Outline the forms of private business ownership.
Describe the public and collective ownership of business.
Discuss organizing a corporation.
Explain what happens when businesses join forces.
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99.7% of all U.S. companies are considered small businesses.
These firms have generated 65% of new jobs in the past two decades
They employ half of all private sector workers
Most Businesses are Small Businesses
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The Small Business Administration defines a small business to be a firm that is independently owned and operated and is not dominant in the field.
Manufacturing business: fewer than 500 workers
Wholesalers: fewer than 100 workers
Retailers: less than $7 million in annual sales
Agricultural business: less than $750,000
What is Small Business?
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Typical Small-Business Ventures
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Major Industries Dominated by Small Businesses
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Creating New Jobs
Creating New Industries
Innovation
Contributions of Small Business
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3 in 10 businesses close permanently within two years.
50% of businesses fail within five years.
By the 10-year mark, 66% of all small businesses have closed permanently.
Small Business Failure
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Management Shortcomings
Inadequate Financing
Government Regulation
Reasons Why Small Business Fail
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Government agency concerned with helping small business firms
Financial Assistance
Loan Guarantees
Microloans
Small Business Investment Companies (SBICs)
Small Business Administration
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More than 40% of U.S. businesses are owned by women (10 million businesses)
The number of businesses owned by minorities outpaced the growth in the number of U.S. businesses overall.
Women and minorities still face challenges:
Opportunities for Women & Minorities
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Minority-Owned Businesses
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Forms of Private Business Ownership
Figure 5.4 Forms of Business Ownership
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Domestic, foreign, alien
S Corporation
Limited Liability Companies
Employee-Owned Corporations
Not-for-Profit Corporations
Types of Corporations
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Public ownership – a unit or agency of government owns and operates an organization. Parking structures, water systems, turnpike authority.
Collective Ownership– collective ownership of a production, storage, transportation or marketing organization is a cooperative.
Public and Collective Ownership of Business
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Stockholders – acquire stocks in exchange for ownership
Preferred Stock
Common Stock
Board of Directors – elected by stockholders to oversee corporation
Corporate Officers & Management – make major corporate decisions and handle ongoing operations
Organizing a Corporation
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Mergers and Acquisitions (M&A)
Merger – combination of two or more firms to form one company
Vertical
Horizontal
Conglomerate
Acquisition – procedure in which one firm purchases the property and assumes the obligations of another
Joint Venture – partnership between companies for a specific purpose
When Businesses Join Forces
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