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Basics of Business

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by

Patti Griffin

on 1 September 2016

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Transcript of Basics of Business

Basics of Business
Management
Works with the employees
to make sure they are
meeting their goals
and have all the tools, equipment needed to do the job.
Accounting
Records and reports financial activity
(
money & numbers
)
Examples:
Pay bills
Collect money from customers
Pay taxes
Prepare employee payroll checks
Work with bank statements
Purchase supplies & inventory
Functions of a Business

A business
cannot function without the following departments:
Sole Proprietorship
Owned by
one
person

Advantages - Easy to start, owner is his/her own boss, owner keeps all the profits

Disadvantages - owner has to pay all the bills, difficult to obtain capital (money) to start, owner may lack skills, owner has full responsibility of debts.

*Of all the different types of businesses, the Sole-Proprietorship has the most RISK & REWARDS!
5 Types of Businesses
(Classification)
Sole-Proprietorship
Partnership
Corporation
Franchise
Non-Profit
Purposes of Business

1~ Profit - make money

2~ Meet needs & wants of customers by providing products & services

3~ Increase competition & provide choices

4~Investment opportunity - future income
Partnership
Owned by
two or more people
Ex: Law Firms, Medical practices
Advantages: Easy to start, easier to obtain capital, partners share skills & talents, partners share risks.

Disadvantages: Partners must agree and get along, must share profits, partner may quit.
Corporation
A large business or organization (public or private)
Examples: Google, Nike, IBM

Advantages: Raise money by selling stock, can only lose what they have invested, stockholders can sell stock

Disadvantages: Taxed on profits, government regulated, difficult to start
Franchise
A
contract
agreement to sell a company's products or services at a specific location
Advantages: Easy to start, the name and reputation is already established, marketing material and supplies are supplied, owner gets guidance from the franchise.

Disadvantage: Some are strict, limited to what can be sold or provided, must operate like all other franchises. Parent Company provides training & support to owner (franchisee).

Examples:
Taco Bell
Sonic
TCBY
Goods
: Examples include food, clothing,vehicle, material items

Services
: Examples include medical services, law services, transportation, etc.

Operations
The "back office" people who work behind the scenes and
make the important decisions
. Ex: Owner, President, CEO, etc.
Information Technology (IT)
Works with
computers
to maintain e-mail, software programs, processing systems, etc.
for individuals AND the company.

Marketing
Create ways to
advertise
the business (products/services) through social media, commercials, web site, etc.
Manufacturing:
The production of goods using raw materials

Other Departments (in manufacturing):

Production Dept.
- produces a product using raw materials.

Quality Assurance
- inspects for best quality


Human Resources
Meets the needs of employees
regarding hiring, firing, pay, and benefits (insurance). Helps with educational opportunities & advancement.
Other Vocabulary
Inventory
- the product that is in stock and ready to be sold.

Competition
- a contest between similar businesses to win customers' loyalty & business.

Franchisee
- a person who buys a contract to operate a franchise.

Franchisor
- (same as a Parent Company) the franchise company that offers products, supplies, and training to the franchisee.

Parent Company
- the franchise company that offers products, supplies, and training to the franchisee.

Unlimited Liability
- if the owner of a business goes bankrupt, they could lose all of their assets (house, car, etc.)
Limited Liability
- if the owner of a business goes bankrupt, they could only lose a certain amount of their assets.

Profit
- Income is greater than expenses
Loss
- Expenses is greater than income


Recall
- When a product is to be returned to the manufacturer due to quality and/or safety.

The End
Non-Profit
Important because they help others
Any money earned is used for expenses only, so no profit is earned.
Contributions are tax-deductible
Purposes of Business

1~Profit - make money

2~Meet needs & wants of customers by providing products & services

3~Increase competition & provide choices

4~Investment opportunity (future income)
How Businesses are Classified
Sole-Proprietorship
Partnership
Corporation
Franchise
Non-Profit
Multi-National
Functions of a Business

1~Operations
2~Management
3~Accounting
4~Human Resources
5~Information Tech
6~Marketing
7~Production
8~Quality Control
Examples: Goodwill
Red Cross
Salvation Army
Needs & Wants
~Examples of
Needs
are food, water, shelter in which you need for survival.
~Examples of
Wants
are cell phone, tv, etc. that are nice to have.

Private
The owners of the corporation are in full control and DO NOT SELL STOCK to raise money
Public
The owners want to raise extra money so they sell stock.
A business that does not make a profit and customers can use as a tax deduction.
Full transcript