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Types of Businesses
Forms of Business Ownership
Types of Businesses
Forms of Business Ownership
Forms of business ownership and types of
businesses describe how they are organized and
run. The four main forms of business ownership are
listed below.
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sole proprietorship
partnership
Corporation
Co-operative
 A franchise is a
combination, or
hybrid, of the four
forms of ownership.
Sort of. Kinda.
Co-operatives
A co-operative is owned by the workers or
members who buy the products or use the services
that the business offers. This type of business is
motivated by service and not profit. Adaptations of
this business model include consumer, retail, and
worker co-operatives.
e.g. The Civil Service Co-op, some insurance
companies, Mountain Equipment Co-op.
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Types of Businesses
Forms of Business Ownership
Types of Businesses
Forms of Business Ownership
Sole Proprietorships
A sole proprietorship is a business owned by one
person who is known as the proprietor.
The proprietor does whatever needs doing in the
business (buying, selling, advertising, accounting,
cleaning, etc.) unless he or she hires someone to
do specific tasks.
Sole Proprietorships
 Funds to run the business usually come from the
owner’s savings, friends, family, or from a bank
loan.
 If the business prospers, the owner receives all
of the profits.
 If the business does poorly, the owner is
responsible for its losses. This is called unlimited
liability.
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2017-02-05
Types of Businesses
Forms of Business Ownership
Types of Businesses
Forms of Business Ownership
Partnerships
A partnership refers to a type of business in which
two or more individuals share the costs and
responsibilities of owning and operating it.
The most common form of partnership is a general
partnership. When two or more individuals form a
limited partnership, the limited partners are only
responsible for the funds they both invested in the
initial business. This is called limited liability. But,
generally, there must always be one general partner.
The terms of the partnership are recorded in a
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partnership agreement***.
Types of Businesses
Forms of Business Ownership
Corporations
A corporation is a business granted legal status with
rights, privileges, and liabilities that are distinct from
those of the people who work for the business.
The process to create a corporation is called
incorporation. You will probably need a lawyer to help
you with this.
It can be fairly expensive to incorporate (compared to
sole proprietorships or partnerships), but there are
usually other good financial and liability reasons to do
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so.
Types of Businesses
Forms of Business Ownership
Corporations
Small portions of corporate ownership that are owned
publicly are called stocks or shares. Individuals who
own shares of a corporation are called shareholders
and become owners of the business. Shareholders
have limited liability. A board of directors runs
a corporation that is owned by shareholders.
A publicly traded corporation that makes a profit may
pay out dividends to shareholders.
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Types of Corporations
• private corporations
• Crown corporations
• public corporations
• municipal corporations
Corporations can be small such as a oneperson business or large such as a
multinational that conducts business in
several different countries.
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Types of Businesses
Forms of Business Ownership
Types of Businesses
Forms of Business Ownership
Franchises
The franchisor licenses the rights to its name,
operating procedure, designs, and business
expertise to another business called the franchisee.
Franchises
Requirements before a franchise is awarded may
include
• paying the franchise fee
• agreeing to pay a monthly percentage fee as
well as any national or local advertising costs
• purchasing all supplies centrally from the
franchisor
• participating in franchisor standards training
A franchise agreement can provide the franchisee
with
• a ready made, fully operational business
• brand recognition that is appealing to
consumers
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Types of Businesses
Going into Business
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Types of Businesses
Going into Business
Eight Questions to Ask Before Going into Business
1. Why Start Your Own Business?
People who desire to be the boss and take
responsibility for making decisions often decide to
run their own business. They believe it is the best
way for them to achieve financial independence, to
allow them to use their skills and knowledge, and
to be creative.
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Eight Questions to Ask Before Going into Business
2. What Different Types of Businesses Are There?
service business
retail business
not-for-profit organization
manufacturing business
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Types of Businesses
Going into Business
Types of Businesses
Going into Business
Eight Questions to Ask Before Going into Business
3. What Are Your Skills and Interests?
Different ideas, skills, and knowledge can be used
to start a new business. Two popular ones are
home-based or Web-based businesses.
i. Should Your Business Be Home-based?
Technology has changed how SOHO (“small
office, home-based”) businesses operate.
Computers, scanners, and Internet access are
a few of the tools that home office businesses
use today to be successful.
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Types of Businesses
Going into Business
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Types of Businesses
Going into Business
ii. Should Your Business be Web-based?
E-commerce (“electronic commerce”) is a
marketplace where consumers and sellers meet
without face-to-face contact. In the “real world,”
products are tangible. Products and services are
sold to us by personal contact with the sellers. In
cyberspace or online, we do not interact with
products or come face-to-face with the sellers.
Consumers are often reluctant to purchase online
due to unreliable or dishonest businesses and
privacy issues.
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4. Where Can You Find Information About a
Business?
Businesses require accurate and current
information to make good decisions. Important
resources to find information include:
libraries
trade associations
the Internet
existing businesses
federal and provincial governments
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Types of Businesses
Going into Business
Types of Businesses
Going into Business
5. What Are the Start-up Costs?
Capital resources to run a business are
available through debt financing referred to as
borrowing money to run the business. Using
your savings or investor savings (called equity
financing) is an alternative way to fund a
business.
6. What Level of Risk Can You
Expect?
Even with research and planning,
business can be risky. Risks or
threats beyond and within the
owner’s control can put the business
in financial difficulty.
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Types of Businesses
Going into Business
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Types of Businesses
Going into Business
8. What Resources Will You
Need?
Forecasting is determining
the resources the business
requires and how much
financing it needs to obtain
them.
Revenue is the amount of
money gained from the sale
of products or services.
7. What Steps Are Involved in
Running This Business?
Some types of businesses, such
as manufacturing, are complex.
A complex business requires
many people with different skills
to successfully start and operate
it.
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Types of Businesses
International Business Structures
Types of Businesses
International Business Structures
A number of different business
structures allow businesses to
expand into international
markets.
A number of different business
structures allow businesses to
expand into international
markets.
Joint Ventures
A joint venture can match the
skills and expertise of two
different individuals or
businesses to generate more
benefits for both parties.
International Franchises
An international franchise is
a way to achieve an
international presence by
buying the rights to a chain
operation from the franchisor.
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Types of Businesses
Forms of Business
Ownership
Strategic Alliances
Strategic alliances occur when two or more businesses
agree to commit particular resources to achieve a
common set of objectives. Alliance partners remain
separate and entirely independent of each other.
Mergers
Mergers happen when two or more companies join
together: one of the businesses usually wants to
purchase a controlling interest in the other company, or
both business have combined interests.
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Types of Businesses
Forms of Business Ownership
Offshoring
Offshoring relocates some of a company’s
operations to another country. Usually this happens
to take advantage of lower labour costs, to be
closer to large and emerging buyer markets, and to
have access to skilled workforces.
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Types of Businesses
Forms of Business Ownership
Multinational Corporations
A business enterprise that conducts business in
another country or several different countries is a
multinational corporation. A multinational
corporation offers different benefits to the country it
invests in. Some positive benefits include new jobs
and training for people.
Negative consequences could be less pay and
more financial instability for citizens of that country.
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