GRA 741 10/23/2013
GRA 741 LECTURE 2
LEGAL FORMS OF BUSINES
Owner makes all decisions, personal and business assets are all in the same.
Owned and operated by one person.
If owner dies, business dissolves.
Income tax purposes, only one tax form is required.
All liability, unlimited liability.
More than one partner.
Two people share the risk, if one person fails, all responsibility will go to the other partner.
Separate entities from the owner.
Figurative third party who owns the business.
Limited Liability. Access to equity financing, ability to buys shares.
CON: taxed twice, very expensive to incorporate.
Expensive to set up
Comprised of more than one person who have limited liability, but they are only taxed once.
Limited Liability Partnership (LLP)
It allows firm to have limited liability. Committed to carrying insurance.
PROS: protection from wrongdoings of your partners.
CON: doesn’t protect you from wrongdoing of yourself.
Employees are all shareholders in that business, all have limited liabilities as shareholders.
Each member has one vote on decisions that are made even if they own more than one share.
PRO & CON: everyone only gets one vote
BUSINESS TYPES (p.144)
Manufacturing: Physically taking raw materials and manufacturing it to final product.
Wholesale: Communicating between retail and wholesale.
Retail: Sells to an end consumer. Service: Selling labor, expertise.
WHY do you need a business plan?
For investors, loans; have something formal down on paper.
Structure, understand realities of the cost ivolved.
For everyone involved in business
Improve chances of survival
BUSINESS PLANNING PROCESS
Not a final document, work in progress.
State of renewal: if market changes and you have to change directions. Ownership can change. Business
Be specific and keep it simple: keep it focused.
EX. Nike – authentic athletic performance.
Simplification is not a tag line.
Third person. Complete sentences.
FINDING COMPANY’S VISION Find something you really like to do, something you are interested in.
How to translate it into something that is not being done
When done properly, it becomes heart and soul of organization
All about what you can do for your customer, how do you address the core needs.
WHAT’S IN A NAME (PG.3536)
Choosing a first initial that’s early in the alphabet, even with numbers.
Picking a name with verb potential
Should sound different
Avoid the trendy
Weave a MAT (Milestones, Assumptions, Tasks)
•Prove your concept
•Complete design speciﬁcations •Finish a prototype
•Ship a testable version to customers
•Ship the ﬁnal version to customers