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MGT602 - Entrepreneurship - Lecture Handout 28

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Transferability of Interest

  • Each of the forms of business offers different advantages as to the transferability of interest.
  • In a proprietorship, the entrepreneur has the right to sell any assets.
  • In the limited partnership, the limited partners can sell their interests at any time without consent of the general partners. A general partner cannot sell any interest unless specified in the partnership agreement.
  • In a corporation shareholders may transfer their shares at any time.
  • In the S Corporation, the transfer of interest can occur only as long as the buyer is an individual.

Capital Requirements

The need for capital during the early months can become one of the most critical factors in keeping a new venture alive.

  • For a proprietorship, any new capital can only come from loans or by additional personal contributions. Often an entrepreneur will take a second mortgage as a source of capital. Any borrowing from an outside investor may require giving up some equity. Failure to make payments can result in foreclosure and liquidation of the business.
  • In the partnership, loans may be obtained from banks or additional funds may be contributed by each partner, but both methods require change in the partnership agreement.
  • In the corporation, new capital can be raised by:

MGT602 - Entrepreneurship - Lecture Handout 15

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  1. To explain the aspects of the entrepreneurial process.
  2. To explain the differences between entrepreneurial and managerial domains.
  3. To explain the organizational environment conducive for entrepreneurship.
  4. To identify the general characteristics of an Entrepreneur.
  5. To explain the process of establishing entrepreneurship in an organization.


A sound idea for a new product or service, properly evaluated, is essential to successfully launch a new venture. Some of the more frequently used ideas for new entrepreneur include consumers, existing companies, distribution channels, the federal government and research and development


Potential entrepreneurs should pay close attention to the final focal point of the idea for a new product or service the potential consumer. This can be an informal or formal survey of consumers expressing their opinions. Care should be taken to ensure that the idea represents a large enough market.

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