Page 126 - Business Principles and Management

Chapter 5 • Proprietorships and Partnerships

several factors, such as the nature and size of the business, the capital needed,
the tax laws, and the financial responsibility the owner is willing to assume.
Two legal forms of business ownership—proprietorships and partnerships—are
presented in this chapter. Also discussed in this chapter is the selection of a legal
name for a business. But first, let’s investigate the challenging responsibilities
that entrepreneurs face.

CHECKPOINT

Explain why small businesses often fail.

Getting a Business Started

Starting a business entails many more responsibilities than simply being an em-
ployee does. Assume, for example, that you are employed as a delivery person.
Your duties include making pickups and deliveries. After obtaining several years
of valuable work experience, you decide to start your own delivery service. You
need to create a plan and develop an awareness of your responsibilities as the
owner of a business.

PREPARE A BUSINESS PLAN
Before starting a business, you need to prepare a business plan. A business plan is
a written document that describes the nature of the business, its goals and objec-
tives, and how they will be achieved. The business plan requires a great deal of
careful thought. Most plans include the items shown in Figure 5-1 (see p. 114).

PHOTO: © GETTY IMAGES/PHOTODISC. An entrepreneur assumes the

risk of starting and operating
a business for the purpose of
making a profit. What are
some personal characteristics
of entrepreneurs?

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