Day 8- we looked at both chapters 11 and 12. Chapter 11 starts out by looking at some of the different types of business you can start. The three broad types of businesses are: sole proprietorship, partnership, and corporation. A sole proprietorship is the simplest and easiest type of business to form. It has one owner and all profit goes to him. While this is a decent idea because you get all the profits, you also assume all the risk. A partnership is similar to a sole proprietorship, but you can have multiple partners that are in charge of the business. A corporation is the most difficult and expensive business to form. However, there are also numerous tax benefits such as lack of risk. There are numerous different types of corporations such a C corp., S corp., and Limited Liability corp. Limited Liability Corp. or LLC, is a relatively new type of corporation, but is very useful if you want to form a corporation as a small business.
Chapter 11 then moves into some basic other information you need to know, such as information about bankruptcy and intellectual property. Intellectual property is a key factor because you do not want other people stealing your ideas or brand. A trademark is any words, symbols, or designs that identify or distinguish the source of the goods (products) of one party from those of others. Another extremely important part of starting a new business is securing a patent. This basically ensures that if you invent a new product or process, the United States government guarantees you and only you the right to use this product or process.
We then moved into chapter 12, which focuses on actually operating your new business. The beginning of this chapter focuses a good amount on manufacturing businesses. The traditional route of manufacturing businesses is that they manufacture the product, then sell it to a wholesaler, who then in turn sells the product to a retailer, who then sells to the consumer. However, with the use of new technology, there are often times that less people touching the product before the consumer receives it. With the invention of the internet there is often times where the consumer can directly buy the product from the manufacturer. The example we gave in class is that you can now simply go to Nike’s website and order directly from Nike, often cheaper than you can buy it in the store.
There two entrepreneurs we saw on Shark Tank today were very interesting. There first idea was a party for children. I thought it was a little stupid, but I suppose I could see where some parents would like this for their kids. They also did a horrible job of explaining where their income came from. At first it sounded like they got all their money from ticket sales, and then they kept saying stuff about sponsorships, which I was generally confused on what they meant by that. They did not get any money from any of the “sharks”. This did not surprise me, but if they had exampled their income better and had better business plan, I think they would have had a much better shot as getting cash. The second entrepreneur was a cowboy who invented his own work-out system. Honestly, I was surprised that only one “shark” invested. I am not a super huge fan about those work-out commercials, but his system seemed a lot better than some of the stupid work-out fads I have seen on TV. He had a really huge personality and it seemed like his product worked. On top of his work out system, he also had a work out machine which actually looked decent. I am glad he got money for his idea.
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