2. 1919: J.W. Longaberger took a job with
the Dresden Basket Factory
Great Depression: The factory closed,
and J.W. got a job at a paper mill, but
kept making baskets nights & weekends
1936: J.W. and his wife Bonnie
purchased the Dresden Basket Factory,
which they ran with their 12 children.
Longaberger Baskets
3. 1934: Dave Longaberger born
Stuttered, had epilepsy, spent 3 years in 5th
grade
Very ambitious – family called him the “25
cent millionaire”
– worked in a grocery store,
– shoveled snow,
– delivered papers,
– mowed grass,
– hauled trash,
– ran the projectors at the local movie house
Longaberger Baskets
4. 1963: Dave Longaberger and his
wife bought & ran “Harry’s Dairy Bar”.
Bought A&P and ran it
Dave noticed department stores selling
imported baskets, and asked his father,
J.W., to make some baskets–they sold well.
1971: Opened J.W.’s Handwoven Baskets
1978: Figured out that the best way to sell
the baskets was home shows
Longaberger Baskets
5. 1984: Dave’s daughter Tami
joined the family business.
1994: Tami became president
Today, 45,000 “home consultants” sell
Longaberger baskets.
Longaberger Baskets
6. Monty Tech Entrepreneur of the
Week: Josh Miner - Miner Leaks
LinkedIn
Plumbing Class of 2002
7. Methods of Going Into Business
Buy an existing business
Start from scratch
Buy a franchise
Reminder:
–Entrepreneur interviews due Friday
9. Buy an Existing Business -
Advantages
Proven record
Established clientele
Established location
Bank and supplier relationships
Trained employees
Established facilities
Low purchase price
11. Buy an Existing Business -
Disadvantages
Poor record?
Ill will?
Wrong location?
Poor physical condition?
12. How do you find a business to buy?
Advertised in classified (“Business
opportunities” section)
Business broker
Chamber of Commerce
Small Business Administration
Bankruptcy announcements
Word of mouth
13. Steps to Purchase a Business
Write specific objectives about the kind
of business you want to buy and identify
businesses for sale that meet your
objectives.
Meet with brokers to investigate specific
opportunities.
Visit during business hours.
Ask for complete financial accounting
for the past 3 years.
14. Purchase Steps
Ask for important information in writing
– Complete list of assets to be transferred
– Statement about any past or pending legal action
against the business
– A copy of the business lease or mortgage
– List of all suppliers
Determine how you would finance the
business.
Get expert help to determine a price to
offer for the business.
18. Start from Scratch -
Disadvantages
No record
No established clientele
Time-consuming tasks
– Training new employees
– Installing machinery, display cases,
furniture
– Ordering goods
Difficulty in obtaining a loan
19. Buy a Franchise
Franchise: contract
Franchisee: person who purchases the
name/concept
Franchiser: corporation who sells the
name/concept
21. Advantages of a Franchise
Start-up help
Advertising
Financial assistance
Established brand name
Proven method
Equipment and supplies may be less
expensive
23. Disadvantages of a Franchise
Limited control
Franchise fees
– Initial franchise fee
– Royalty fees (weekly or monthly)
Potential image problem
The franchisor can terminate the
franchise agreement
24. Evaluation of a franchise
What can a franchise do for me that I
can’t do for myself?
What is the future for this product or
service?
How is the contract?
Are there enough potential customers?
Is this a good fit for me, financially and
the type of business?
25. Sidelines
Work full time and run a business
Advantage: financial security
Disadvantage: less time to make
business successful
26. Family Business
Do you have a business in your family?
What are advantages of a family
business?
What are disadvantages of a family
business?
28. Legal Forms of Business
Sole Proprietorship
Partnership
Corporation
S Corporation
Limited Liability Corporation
29. Advantages of a Sole
Proprietorship
Easy to start
All profits to owner
Complete control & flexibility
Secrecy
Single taxation
Easy dissolution
30. Disadvantages of a Sole
Proprietorship
Unlimited liability
Limited life of business
Difficulty in obtaining capital
Little incentive for employees
31. Advantages of a Partnership
Easy startup
– Articles of Partnership
– Partnership Agreement (see p. 38)
Added capital
Combined management skills
Single taxation
Employee incentives
32. Disadvantages of a Partnership
Unlimited liability
Limited life of business
Divided authority
Frozen investment
33. Corporation
An enterprise that has the legal rights,
duties, and powers of a person
Charter – written document outlining the
conditions under which the corporation
will operate
Stockholders – owners of a corporation
Stock – shares of ownership in a
corporation
34. Corporation
Board of Directors – meet several times
a year to elect senior officers, determine
their salaries, set corporation’s rules for
conducting business
Dividends – distributions of profit to
shareholders by corporations
35. Advantages of a Corporation
Limited Liability
Continuous life
Easy transfer of ownership
Ability to attract funds
Specialized management
36. Disadvantages of a Corporation
Government regulation
Little secrecy
Charter restrictions
Complicated and expensive formation
Double taxation
37. S Corporation
A corporation that chooses Subchapter
S status for tax purposes
Must meet the following requirements:
– No more than 35 shareholders
– Only one class of stock
– All shareholders are U.S. residents
– All shareholders are individuals
– Corporation operates on a calendar year
financial basis
38. Advantages of an S Corporation
Limited liability
Single taxation – income passes
through to individual shareholders and
are reported on their tax returns
39. Disadvantages of an S
Corporation
Owners may be required to pay taxes
on earnings even if they have not taken
any money out of the business
40. Limited Liability Corporation
Same advantages & disadvantages as
an S Corporation, but easier to set up
When you’re ready to start a business
for real, SEE A LAWYER and
understand the current situation!!!
41. Form 2 – Write a paragraph on each question:
Do you plan to buy an existing
business, start a business from scratch,
or buy a franchise? What are the
advantages and disadvantages of this
choice?
What legal organization will you choose
for your company? What are the
advantages and disadvantages of this
choice?