The Different Types of Business

Ownership
Sole Proprietor
A business owned and operated by one person.
The owner is responsible for all operations of the business
and assumes all the risk.

Advantages of a sole proprietorship

Owner makes all decisions
Owner is her or her own boss
Owner keeps all the profits
All financial informatio can be kept secret
This type of business is easy to start or close

Disadvantages of a sole proprietorship

Owner has responsibility for all debts
Costs and time commitment can be high
Funding can be difficult to obtain
Owner is responsible for all aspects of the business
Owner doesnt have fringe benefits

Partnership
A partnership has two or more owners or partners and
includes several forms: general, limited (LP), limited liability
(LLP), limited liability limited (LLLP), or professional.
Though a legal entity, a partnership is not a federal taxpaying entity, thus all income or loss must be reported on
the individual partners federal income tax return whether or
not distributed or allocated to partners.

Advantages of a partnership
Partners co-own the business.
They share responsibilities.
They may have greater financial resources than sole
proprietors.
They share business losses.
They share time commitment.
Disadvantages of a Partnership
Partners have unlimited personal liability for all the other
partners.
They may have conflicts.
Profits are shared.
Partnerships are more difficult to close down than sole
proprietorships.
Agents of the business dilemma.

Corporation
A corporation is owned by shareholders who elect a board of
directors to manage the business, thus ownership and
management of a corporation may be separate.
Shareholders have limited liability for the obligations of the
corporation.
The corporation is a legal and tax-paying entity for federal
income tax purposes.
It

has three types:

Private
Public
Crown

Advantages of a corporation
The owners are shareholders. They have limited liability for
the debts of the corporation and share the profits.
Usually shareholders do not operate the company they hire
employees to do so.
Corporations can usually raise funds more easily than sole
proprietors or partners.
Corporations usually have a lower tax rate than private
owners.
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 A corporation can continue to exist after the death of its

owners.

Disadvantages of a corporation
Corporations have more complicated structures than sole
proprietorships or partnerships.
Employees who are not owners may not be committed to the
business.
Corporations must publish annual reports, which could give
away important secrets to competitors
The value of company shares can change depending on
changes in the stock market

Co-operative
Businesses owned and operated by a group of people with a
strong common interest.
Start-up costs are shared among the members of the cooperative.
Members own and control the business and make all
business decisions.

Advantages of a co-operative
Members own and control the business.
Members share the start-up costs and the running of the
business.
They share the financial risk.
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 Members may pay less for goods and services and get more
for those they sell.

Disadvantages of a co-operative
Because each member only has one vote, members may not
want to invest money for expansion.
Because of the number of members, making decisions can
be difficult.
Members can have conflicts.

Franchise
A business in which a franchisor sells to another person, called
the franchisee, the rights to use the business name and to sell a
product or service in a given territory.

Advantages of a franchise
Franchisees buy a business with a good reputation.
Franchisors supply training and financial knowledge.
Franchisors usually provide packaging, advertising, and
equipment to the franchisee.

Disadvantages of a Franchise
Franchises can be expensive to buy.
Franchisees may have to follow a lot of rules laid down by
the franchisors.
If a franchisors business fails, so will the franchisees
business.
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Limited Liability Company

A limited liability company (LLC) combines the nontax
advantages of corporations with favorable tax treatment of
partnerships.
An LLC is owned by members, who may manage themselves
or retain a manager to run the business.
Members have limited liability for the obligations of the LLC.

Business Forms Worldwide

Many nations share similar forms of business, including
partnership and corporation, though details vary widely.

The General Partnership

Every state has enacted partnership laws.
The Revised Uniform Partnership Act (RUPA) of 1994, with
the 1997 amendments, is a model partnership statute.

Partnership Creation
RUPA defines partnership as an association of two or more
persons to carry on as co-owners a business for profit.
o Partners share profit and loss
A partnership is a voluntary and consensual relationship and
may exist by law even if the parties entered it inadvertently,
without considering whether they had created a partnership.
Partnership Creation Examples

Several musicians agree to form a band and share profits.

 Two students stand in line for hours to buy 10 concert

tickets. They sell 8 tickets for a $5 fee per ticket and
splitting the profits.

Partnership Creation The LLP

Unlike an ordinary partnership, creating a limited liability
partnership (LLP) must comply with a states limited liability
partnership statute
Formation of an LLP requires filing a form with the secretary
of state, paying an annual fee, and using proper terminology
o Registered Limited Liability Partnership, RLLP, Limited
Liability Partnership, LLP

Leadership
Leadership is the ability to inspire or influence others towards the
leader's goal. If someone has followers, he or she is a leader.
Management literature mostly focuses on the characteristics of
the leader - it asks "what make this person a leader", rather than
"why do these people choose to follow".

The Pyramid of Leadership

"The very essence of leadership is that you have
to have a
vision. It's got to be a vision you articulate
clearly and
forcefully on every occasion." - Theodore
Hesburgh,
President of the University of Notre Dame
Leadership translates vision into reality by inspiring followers to
want to experience the change process. And to influence their
followers to willingly jump into that experience, leaders need a
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specific set of competencies1 to guide their actions. Although

competencies will always differ from one leader to the next,
having a core set to draw from increases the chance for success.
These competencies can be thought of as the inner tools for
motivating employees, directing systems and processes, and
guiding the business towards common goals that allow the
organization to increase its value.
Core Competencies form the foundation of leadership. Without
a solid base, the sides of the pyramid will soon crumble away.
Leadership Competencies form the basic structure (walls) that
separates leaders from bosses by building the knowledge and
skills required for driving the organization towards the cutting
edge of its business. Without these competencies, a leader has a
shallow base from which to work, or as Scott Adams, the creator
of Dilbert best characterizes it, "a pointy-head boss."
Professional Competencies add depth to the pyramid. The
main driver of these competencies arrives from experiences and
LEARNING from these experiences. While a person might have a
firm grasp on the core and leadership competencies, it is only
through trial and error, and later through reflection to increase the
depth of those experiences, that an average leader grows into a
good leader. Each organization requires a different set of
professional competencies for each leadership position.

Leadership Competencies
Managers are people who do things right, while
leaders are
people who do the right thing. - Warren Bennis,
Ph.D. "On
Becoming a Leader"

Leadership abilities - Displays attributes that make people glad

to follow. Provides a feeling of trust. Rallies the troops and builds
morale when the going gets tough.
Visioning - Applies effort to increase productiveness in areas
needing the most improvement. Creates and set goals (visions).
Senses the environment by using personal sway to influence
subordinates and peers. Gain commitment by influencing team to
set objectives and buy in on the process. Reinforces change by
embracing it (prevents relapse into prior state).
Create and Lead Teams - Develops high-performance teams by
establishing a spirit of cooperation and cohesion for achieving
goals.
Foster Conflict Resolutions (win-win) - Effectively handles
disagreements and conflicts. Settles disputes by focusing on
solving the problems, without offending egos. Provides support
and expertise to other leaders with respect to managing people.
Evaluates the feasibility of alternative dispute resolution
mechanisms.
Assess Situations Quickly and Accurately - Takes charge
when the situation demands it. Make the right things happen on
time.
Coach and Train Peers and Subordinates - Recognizes that
learning happens at every opportunity (treats mistakes as a
learning event). Provides performance feedback, coaching, and
career development to teams and individuals to maximize their
probability of success.
Implement Employee Involvement Strategies - Develops
ownership by bringing employees in on the decision making and
planning process. Provides the means to enable employee
success, while maintaining the well being of the organization.
Develops processes to engage employees in achieving the
objectives of the organization. Empower employees by giving
them the authority to get things accomplished in the most
efficient and timely manner.
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Leadership Abilities
One can never consent to creep when one feels
an impulse to
soar. - Helen Keller
Good leaders are made not born. To inspire your team into higher
levels of teamwork, there are certain things you must be, know,
and, do. These do not come naturally, but are acquired through
continual work and study. The best leaders are continually
working and studying to improve their leadership skills.

Bass' (1989 & 1990) theory of leadership states that there are
three explanations on how people become leaders:
Trait Theory - Some personality traits may lead people naturally
into leadership roles. We have all met a few people like this, such
as a High School coach, scout leader, teacher, or a good boss.
There are a very few people who have a natural talent for leading
others.
Great Events Theory - A crisis or important event may cause a
person to rise to the occasion, which brings out extraordinary
leadership qualities in an ordinary person.

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Transformational Leadership Theory - People can choose to

become leaders. People can learn leadership skills. This is the
most widely accepted theory today and the premise on which this
guide is based.

Leadership Framework Be, Know, &

Do
If you are a leader that can be trusted, then the people around
you will learn to respect you. To be a good leader, there are things
that you must be, know, and do.

BE:
A professional. Seek responsibility and take responsibility for
your actions. Search for ways to guide your organization to new
heights. And when things go wrong, they will eventually, do not
blame others. Analyze the situation, take corrective action, and
move on to the next challenge.
A professional who possesses good character traits.
Develop good traits within yourself, such as honesty,
competence, candor, commitment, integrity, courage,
straightforward, imagination. Develop good character traits within
your team that will help them carry out their professional
responsibilities.

KNOW:
The four factors of leadership - follower, leader,
communication, situation.
Yourself. Know yourself and seek self-improvement. In order to
know yourself, you have to understand your be, know, and do,
attributes. Seeking self-improvement means continually
strengthening your attributes. This can be accomplished through
reading, self-study, classes, etc.
Human nature. Know human nature and the importance of
sincerely caring for your workers.

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Your job. Be technically proficient. As a leader, you must know

your job and have a solid familiarity with your employees' jobs.
Train your people as a team. Although many supervisors call their
organization, department, section, etc., a team; they are not
really teams...they are just groups of people doing their jobs.
Your organization. Use the full capabilities of your organization.
By developing a team spirit, you will be able to employ your
organization, department, section, etc. to its fullest capabilities.

DO:
Provide direction. Make sound and timely decisions. Use good
problem solving, decision-making, and planning tools. Keep your
team informed. Know how to communicate with your team,
seniors, and other essential people within the organization.
Implement. Develop a sense of responsibility in your team.
Ensure that tasks are understood, supervised, and accomplished.
Communication is the key to this responsibility.
Motivate. Set the example. Be a good role model for you
employees. They must not only hear what they are expected to
do, but also see. Know your team and look out for their wellbeing.

Human Relations
1.The
2.The
3.The
4.The
5.The
6.The
7.The

six most important words: "I admit I made a mistake."

five most important words: "You did a good job."
four most important words: "What is your opinion."
three most important words: "If you please."
two most important words: "Thank you,"
one most important word: "We"
least most important word: "I"

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Interpersonal Skills
If we cannot end now our differences, at least we can
help
make the world safe for diversity.
Interpersonal skills come from recognizing the diversity in others.
And diversity is about empowering people. It makes an
organization effective by capitalizing on all the strengths of each
employee. It is not EEO or Affirmative Action, which are laws and
policies. Diversity is understanding, valuing, and using the
differences in every person. To obtain that competitive edge you
need to create great work teams by using the full potential of
every individual.

Interpersonal skills are those necessary for relating and working

with others such as verbal and non-verbal communication,
listening, giving and receiving feedback.

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Howard Gardner described it as one of the multiple intelligences:

interpersonal intelligence or the ability to be able to understand
and work effectively with others.
Being able to understand and work with others in teams or groups
is another important aspect of interpersonal skills. The focus is
on facilitating teamwork, ensuring group effectiveness, decision
making, running meetings and presenting work.

Benefits
On a personal basis - we all interact with other people, it is worth
reviewing and improving our interpersonal effectiveness.
In the helping professions good communication and interpersonal
skills are crucial.
Furthermore, many surveys of employers and graduates indicate
that employers want their employees to have good social skills.
The ability to communicate well with others and the ability to
work well in a team are valuable skills.
These skills are also important in business and management
where modern organizations increasingly use teamwork which
requires being able to communicate and collaborate with others.
They are also useful to develop in college where more cooperative
learning is taking place, requiring interpersonal and small group
skills.
These are skills that can be learnt thereby improving an
individuals performance, resilience and overall emotional literacy
(Goleman, 1995).
Working in groups provides the opportunity to share ideas, hear
other perspectives, to benefit from the experience and expertise
of others and to receive help and support.

Aspects of Communication
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The cornerstone of effective communication is the ability to listen

and to accomplish this in an active manner. Often communication
fails because people have not actually heard to the message or
have only listened to part of it. As a result, they may have
assumed or misinterpreted what was actually said. In the
professional arena, good listening skills are necessary in order to
communicate that you want to help.
Expressing refers to the ability to effectively say what we want to
say.
Verbal refers to what we say with words. Non-verbal refers to
all the other ways we communicate, via body language, tone etc.
Well come back to this as its very important part of the
communication process.

Learn to Listen
Listening is not the same as hearing. Take time to listen carefully
to what others are saying through both their verbal and nonverbal communication.

Choose Your Words

Be aware of the words you are using when talking to others. Could
you be misunderstood or confuse the issue? Practice clarity and
learn to seek feedback to ensure your message has been
understood.

Relax
When we are nervous we tend to talk more quickly and therefore
less clearly. Being tense is also evident in our body language and
other non-verbal communication. Instead, try to stay calm, make
eye contact and smile. Let your confidence shine.
Clarify
Show an interest in the people you talk to. Ask questions and seek
clarification on any points that could be easily misunderstood.

Understand Stress
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Learn to recognize, manage and reduce stress in yourself and

others. Although stress is not always bad, it can have a
detrimental effect on your interpersonal communication. Learning
how to recognize and manage stress, in yourself and others, is an
important personal skill.

Negotiate
Learn how to effectively negotiate with others paving the way to
mutual respect, trust and lasting interpersonal relations.

Working in Groups
We often find ourselves in group situations, professionally and socially. Learn all about the different
types of groups and teams.

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