Types of Businesses

Individuals or companies come together for a definite period to form a new company. The skills and expertise of the individuals are combined in the process to generate profits for the parties

Going into Business

Why Start your Own Business?

• Once your business begins to generate a profit you are the primary beneficiary
• You will likely earn more money than you would working for someone else company
• Gives you an opportunity to use your skills and knowledge in a creative manner.

Co-operatives

Co-operative - a business owned by the workers or by members who buy the products or use the services that the business offers

Corporations

A business that has been granted legal status with rights, privileges, and liabilities that are distinct from those of the people who work for the business

Characteristics of Co-operatives

• Members are like board of directors
• Members own shares and run the co-operative
• Each member has only one vote, regardless of the number of shares owned.
• Profits are distributed according to how much each member spends a the co-operative

What Different types of Businesses Are There?

Retail Business

Once you decide to go into business, you have to decide what type of business you want to own...

• Generates a profit by selling things
• Usually buys items from a producer and sells them to the consumer
• Walmart, Sobey's, Payless Shoes etc.,

Characteristics of Corporation Con't

Characteristics of a Corporation

• Private Corporation - owned by a few people - not on TSE
• Crown Corporation - operated by the provincial or federal government
• E.g. VIA rail, Business Development Bank of Canada (BDC)

Partnerships

Manufacturing Business

Non-for profit Organization

• Can be as small as a one person or as large as a multinational
• Ownership are in shares if a public corporation (Traded on Toronto Stock Exchange)
• Legal Entity
• Limited Liability for a shareholder
• Pays dividend to shareholders

Service Business

Generates a profit by producing products from raw material or component parts and selling them to consumers or distributors

• Does not generate a profit
• Purpose is to meet specific needs of the community
• E.G. Heart and Stroke Foundation, Arthritis Society, church organizations, Goodwill, Charities and co-operatives

Generates a profit by doing something for other businesses or consumer - no products are involved.

E.G. Dentist, Doctor, Lawyer, Accountant etc.

Should your Business Be Web-based?

• Most businesses are open 12 hours a day, six days a week. With E-businesses you can be open 24/7

• Information about your business can be accessed by everyone in the world - not limited to your physical location

• Reduces the work load and number of employees to do administrative work

A business that's usually operated by two or more individuals who share the costs and responsibilities of running a business

Where Can you Find Information About a Business?

Industry Canada, a department of the federal government, provides an internet site called Strategis

• Strategis gives Canadians direct access to new markets, business partners, technologies or to learn about risk factors that may apply to the business. visit www.strategis.gc.ca

• Another source - Statistics Canada - collects statistical information and provides business people with data (i.e) income of people living in a certain area where the business is planning to locate.

What Are the Start-up Costs

Franchises

Equity Financing - using your savings or investor savings to run your business.

You risk your own savings and the funds of others

Means giving up part ownership of your business

What Are the Start-up Costs?

Debt Financing - borrowing money to run the business.

You can borrow from banks, trust companies, credit unions - but only once they have assessed your credit History

Should Your Business Be Home-based?

• Sometimes called SOHO (Small Office, Home Office)
• Fewer meetings to attend, no office politics, less time going to meetings
• You can wear casual clothes
• some people need personal contact or the discipline of a traditional work environment

Franchiser licenses the rights to its name, operating procedure, designs, and business expertise to another business - Franchisee

Sole Proprietorship

Characteristics of a Franchise

Sole Proprietorships - A business that is owned by one person

Characteristics of Partnerships

• Hugh amount of capital to start
• Franchisee pays royalty fees to the franchisor
• Already made customer base
• Income is guaranteed
• E.G. Tim Hortins, McDonalds, Wendys

Terms of a partnership is written in a partnership agreement

There different kinds of partnerships ( general partnership, limited partnership and limited liability partnership)

Complementary talents

More access to capital

Characteristics Of Sole Proprietorships

• A business owned by one person

• The proprietor has many different responsibilities.

• Money usually comes from the owners savings, friends, family and from a bank.

• If the business does poorly the owner is responsible for all the losses (Unlimited Liability)

International Business Structures

Joint Ventures

Types of Businesses

Offshoring

Relocation of some of a company's operations to another country. Typically, the new location takes advantage of much lower labour costs. E.g. Canadian manufacturing companies have moved to China and Mexico

I

International Franchises

Having a franchise in different countries e. McDonalds. Boston Pizza, Wendy's etc.,

Multinational Corporations

A business enterprise that conducts business in several different countries.

They operate as if they have no borders. Headquarters in Canada, Raw Material in England.

Why? to take advantage of what each country has to offer.

Strategic Alliances

Mergers

An agreement between businesses in which each business commits resources to achieve a common set of objectives.

Helps business improve competitive positioning, gain entry to new markets, supplement critical skills

Partners remain seperate and independent of each other

A merger occurs when tow or more companies join together either because one has purchased a controlling interest in the other or the companies have combined interests

Eg. CBC radio and Toronto Star