Chapter 4 EntrepreneurshipSucceeding in the World of Work Ways of Becoming a Business Owner 4.2...

Chapter 4 • Entrepreneurship Succeeding in the World of Work

Ways of Becoming a Business OwnerWays of Becoming a Business Owner4.2

SECTION OPENER / CLOSERINSERT BOOK COVER ART

Section 4.2Section 4.2Ways of Becoming a Business OwnerWays of Becoming a Business Owner



WHAT YOU’LL LEARN

The four main ways of becoming The four main ways of becoming a business ownera business owner

The advantages and The advantages and disadvantages of each major disadvantages of each major route to business ownershiproute to business ownership



Awareness of the advantages Awareness of the advantages and disadvantages associated and disadvantages associated with launching a business will with launching a business will help you make informed choices, help you make informed choices, should you decide to become an should you decide to become an entrepreneur.entrepreneur.

WHY IT’S IMPORTANT



start-up costsstart-up costsleaseleasegoodwillgoodwillmarket outlookmarket outlookfranchise franchise

KEY TERMS



The four main ways to have your own The four main ways to have your own business are to:business are to:

Ways of Becoming a Ways of Becoming a Business OwnerBusiness Owner

Ways of Becoming a Ways of Becoming a Business OwnerBusiness Owner

start a new business,start a new business,buy an existing business,buy an existing business,buy a franchise, orbuy a franchise, ortake over the family business.take over the family business.



Starting a New BusinessStarting a New BusinessStarting a New BusinessStarting a New Business

If you start a new business, you will If you start a new business, you will have challenges as well as rewards.have challenges as well as rewards.



Some of the challenges of starting a new Some of the challenges of starting a new business are the time investment business are the time investment required and start-up costs.required and start-up costs.

Start-up costs Start-up costs are the expenses are the expenses involved in going into business.involved in going into business.

The ChallengesThe ChallengesThe ChallengesThe Challenges

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The RewardsThe RewardsThe RewardsThe Rewards

Some of the rewards of starting a new Some of the rewards of starting a new business are:business are:

You don’t inherit a previous owner’s You don’t inherit a previous owner’s mistakes.mistakes.You can try fresh ideas and build your You can try fresh ideas and build your business your way.business your way.

continued



The RewardsThe RewardsThe RewardsThe Rewards

You get personal satisfaction from You get personal satisfaction from knowing you built the business knowing you built the business yourself.yourself.



Buying an Existing BusinessBuying an Existing BusinessBuying an Existing BusinessBuying an Existing Business

The reasons a successful business The reasons a successful business might be for sale are:might be for sale are:

The owners are retiring.The owners are retiring.

The owners are starting a new The owners are starting a new business.business.

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Business is so good, the owners can’t Business is so good, the owners can’t handle it.handle it.

The owners want more free time.The owners want more free time.




There are many reasons why an There are many reasons why an unsuccessful business might be for sale.unsuccessful business might be for sale.

Take a good look at the reasons for a Take a good look at the reasons for a business’s failure.business’s failure.

continued




Determine whether the business’s Determine whether the business’s problems can be fixed, and at what cost.problems can be fixed, and at what cost.

You can often purchase a failing You can often purchase a failing business at a reduced rate.business at a reduced rate.



A Fast StartA Fast StartA Fast StartA Fast Start

You can save on start-up costs by taking You can save on start-up costs by taking advantage of the previous owner’s advantage of the previous owner’s business agreements.business agreements.

A A leaselease is a contract to use something is a contract to use something for a specified period of time.for a specified period of time.




You may not have to worry about buying You may not have to worry about buying or renting office furniture or equipment.or renting office furniture or equipment.

The person selling the business might The person selling the business might be a good source of advice.be a good source of advice.




The The goodwillgoodwill, or loyalty, of customers is , or loyalty, of customers is one of a business’s most valuable one of a business’s most valuable assets.assets.

When you buy an existing business, When you buy an existing business, you may benefit from its established you may benefit from its established reputation.reputation.



DrawbacksDrawbacksDrawbacksDrawbacks

Some of the problems that might come Some of the problems that might come with an existing business are:with an existing business are:

The location may be poor.The location may be poor.Competition may be stiff.Competition may be stiff.The The market outlookmarket outlook, or potential for , or potential for future sales, may have changed.future sales, may have changed.

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DrawbacksDrawbacksDrawbacksDrawbacks

The building or equipment may need The building or equipment may need expensive repairs or replacement.expensive repairs or replacement.The business may have a poor The business may have a poor reputation.reputation.



Buying a FranchiseBuying a FranchiseBuying a FranchiseBuying a Franchise

A A franchisefranchise is the legal right to sell a is the legal right to sell a company’s goods and services.company’s goods and services.

When you buy a franchise, you are When you buy a franchise, you are actually buying the right to sell another actually buying the right to sell another company’s products.company’s products.




In addition to paying for the franchise, In addition to paying for the franchise, you will continue to pay a percentage of you will continue to pay a percentage of your profits to the parent company.your profits to the parent company.




You must follow the parent company’s You must follow the parent company’s guidelines.guidelines.

Guidelines often dictate how to make or Guidelines often dictate how to make or distribute the goods or services.distribute the goods or services.



Less RiskLess RiskLess RiskLess Risk

Some of the benefits of a franchise are:Some of the benefits of a franchise are:

recognized product name,recognized product name,established management systems,established management systems,business reputation and customer business reputation and customer goodwill,goodwill,

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Less RiskLess RiskLess RiskLess Risk

training and support services,training and support services,advertising, andadvertising, andfinancing.financing.



Less GainLess GainLess GainLess Gain

A franchise may be less profitable, A franchise may be less profitable, because you pay a portion of your profits because you pay a portion of your profits to the parent company.to the parent company.

Since you didn’t build the company, Since you didn’t build the company, there may also be less satisfaction.there may also be less satisfaction.



Taking Over the Family BusinessTaking Over the Family BusinessTaking Over the Family BusinessTaking Over the Family Business

Taking over the family business can be Taking over the family business can be a shortcut to entrepreneurship.a shortcut to entrepreneurship.



Smoothing the WaySmoothing the WaySmoothing the WaySmoothing the Way

Taking over the family business can Taking over the family business can have the advantages of a franchise, have the advantages of a franchise, without the fees.without the fees.




The advantages of taking over the family The advantages of taking over the family business are:business are:

Your relatives might help you finance Your relatives might help you finance the business.the business.Family members tend to be more loyal Family members tend to be more loyal and trust each other.and trust each other.

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Family members working as a team Family members working as a team can achieve more than individuals.can achieve more than individuals.Relatives can teach you the business.Relatives can teach you the business.Customers are likely to give trust and Customers are likely to give trust and goodwill to an owner who is part of the goodwill to an owner who is part of the family they are accustomed to doing family they are accustomed to doing business with. business with.



Bumps in the RoadBumps in the RoadBumps in the RoadBumps in the Road

Sometimes, it’s hard to have normal Sometimes, it’s hard to have normal business relationships with relatives.business relationships with relatives.

When the family is part of the business, When the family is part of the business, you can’t always go home and leave the you can’t always go home and leave the business behind.business behind.


Ways of Becoming a Business OwnerWays of Becoming a Business Owner4.2 Graphic OrganizerGraphic Organizer4.2


Paths to EntrepreneurshipPaths to EntrepreneurshipPaths to EntrepreneurshipPaths to Entrepreneurship

ENTREPRENEURSHIP

Buy Franchise

Take Over Family Business

Buy ExistingBusiness

Start NewBusiness



Key Concept CheckpointKey Concept CheckpointComprehensionComprehension

1.1. Describe four ways to enter the fast-Describe four ways to enter the fast-food business. Which one do you food business. Which one do you think would offer you the best chance think would offer you the best chance for success? Why?for success? Why?

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SECTION 4.2 REVIEWSECTION 4.2 REVIEW



Key Concept CheckpointKey Concept CheckpointComprehensionComprehension

2.2. State the advantages and State the advantages and disadvantages of buying an existing disadvantages of buying an existing business rather than starting a new business rather than starting a new business.business.

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Key Concept CheckpointKey Concept CheckpointCritical ThinkingCritical Thinking

3.3. Why should you think twice about Why should you think twice about buying a business that has a bad buying a business that has a bad reputation?reputation?




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Chapter 4 EntrepreneurshipSucceeding in the World of Work Ways of Becoming a Business Owner 4.2...

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