Entrepreneurship

Business Ownership

• Discuss the importance of carrying out a

business
• Factors in selecting an appropriate
business ownership
• Four types of business ownership
• Procedures involved in registering each
type of ownerships
 Factors in Selecting a
Business Ownership
• Capital determines the probability of an
individual obtaining credit or loans from
external sources
• Personal Asset – taken into account when
selecting the kind of business one wants
to venture
• Span of Control – full power and authority
• Sharing of Information – sharing of
information with counterparts
Types of Business Ownership
• Three forms of business ownership
– Sole proprietorship
– Partnership
– Company
• A company can be categorised into:
• Private limited company
• Public limited company
 Sole Proprietorship
Definition:
A sole proprietorship is an attractive form of
legal status for a new business
This form of business structure is solely
owned and operated by one individual,
this means that it has a single owner
 Characteristics of a
successful sole proprietor
• Willing to accept sole responsibility for
firm’s performance
• Willing to work long hours
• Has strong organizational skills,
leadership skills and communication skills
• Has had previous experience working in
the industry
 Partnership
Definition:
A partnership is formed under the Business
Registration Act 1956 (Amendment 1978)
and the Procedures of Businesses
Registration 1957
Owned by at least two or more individuals
but not exceeding 20 people
The owners of the business are called
partners
 Types of partnership
• All partners have unlimited liabilities and
personally liable for all obligations In a
limited partnership, some of the partners
have limited liabilities
• A limited partnership must have at least
one general partners who accepts
unlimited liability.
• The general partner manages the
company, receives a salary and shares of
firm’s profits or losses
 Company
Definition:
Companies are registered as legal entities
and are formed by several individuals who
own property, draw contracts and employ
people
There are two types of companies which are
- private limited companies
- public limited companies
 Private limited company

• A company limited by shares and owned

by a group of people with at least two or
more individuals but not exceeding 50
people who pool their capital and work
together to form a company
• A private limited company is medium in
size
• The owners of a company are called
shareholders
 Public limited company

• A company limited by shares with at least

seven or more individuals and there is no
maximum limit in terms of membership
• Is very large in size and raises capital
through the sale of shares
• Is run by a board of directors elected by
shareholders
• The term ‘public’ means publicly held
 Sole Proprietorship

Advantages:
•Easy and inexpensive to form & dissolve
•Profits all go to the owner
•Direct control of business
•Freedom from government regulations
•No special taxation
 Sole Proprietorship

Disadvantages:
•Hard to raise capital
•Unlimited liability & potential loss
•Limited expertise in all areas
•Trouble finding employees
•Large personal time commitment
•Unstable business life
 Partnership
Advantages:
•Ease of formation
•Availability of capital
•Diversity of skills & expertise
•Flexibility to respond to changing business
conditions
•Relative freedom from government control
•No special taxes
 Partnership

Disadvantages:
•Unlimited liability for general partners
•Potential for conflict between partners
•Limited life
•Sharing of profits
•Difficulty in leaving a partnership
 Private limited company
Advantages:
•limited liability
•Ease of attracting skilled employees
•Ease of expansion
•Ease of raising capital
•Independent of the members and
shareholders
 Private limited company

Disadvantages:
•High set-up costs
•High taxation
•Limited membership
•Lack of freedom in the transfer of
ownership
•Subject to more rules and regulations
 Public limited company
Advantages:
•Limited liability
•Ownership can be transferred through the
sale of stock
•Ease of expansion
•Economies of scale
•Relative ease of securing capital in large
amounts
•Increase in ability and expertise
 Private limited company

• A company limited by shares and owned

by a group of people with at least two or
more individuals but not exceeding 50
people who pool their capital and work
together to form a company
• A private limited company is medium in
size
• The owners of a company are called
shareholders
 Registration of Sole
Proprietorship/Partnership
• Step 1: approved name of the business
• Step 2: registration of business
• Step 3: Preparation & sending the document
• Step 4: Certificate of Approval
• Step 5: Renewing Business Registration
• Step 6: Notification of changes in business
registration
• Step 7: Notice of termination
 Registration of a
private/public limited
• Step 1: proposed name of the business
• Step 2: reserve the name of company
• Step 3: Preparation & sending the document
• Step 4: Stamp duty and registration fee
• Step 5: Corporate declaration certificate
• Step 6: Commencement of business
• Step 7: Duration and dissolution
 Factors in Starting a new
Entrepreneurial venture
The critical factors in initiating a new
business venture:
• Capital
• Location of business
• Interest, knowledge and experience
• Size of business
• Competitors
• Law and regulations
Alternatives in starting a new
entrepreneurial venture
Venture can be classified into three forms:
• Start-up Company – creates a completely
new business starting from scratch
• Buy an existing Company – buying or
acquiring either the shares of the existing
company or all the assets
• Franchise – any arrangement in which the
owner of a trademark, trade name or
copyright has licensed others to use it and
sell its goods or services
Sources of Capital and Business
Support Systems
• Understand the sources of capital that
can be used by an entrepreneur to finance
the venture
• Discuss the types of business support
system available for an entrepreneur
 Sources of Capital

• Personal funds/Personal Saving

• Family and Friends
• Retirement Accounts
• Banks and other financial institutions
– Long-term financing, Medium-term financing,
& Short-term financing
• Government Loan
• Stock Market
Business Support Systems

• Financial Support
• Entrepreneur and Management Training
• Technological Support
• Infrastructure Support (Location and
Premise)
• Marketing Support
• Research and Project Recognition
• Informational Support
 Incentives in
Entrepreneurial Activities
• Pioneer Status – tax exemption
• Quota – limit on the quantity of products
that is permitted to enter a country
• Embargo – duty/tax that a government
puts on products that are imported
• Tariff/Import duty – is an import duty
• Export Encouragement – assistance given
to help local entrepreneur to sell his
products overseas
 Financing Facilities
• Supplier Trade Credit
• Overdraft
• Term Loan
• Hire Purchase
• Leasing
• Factoring
• Government Loan
 Creativity, Innovation &
Environment Assessment
• Understanding of creativity, process and
techniques
• Understanding of innovation, types of
innovation, sources of innovation and
principles of innovation
• Importance and barriers to creativity and
innovation
 Definition of Creativity
• Creativity come form the Latin word
creatus, which literally means ‘to have
grown’
• Creativity is used to refer to the act of
producing new ideas, approaches or
actions which apply specifically to the
generation of new ideas by individuals or
groups
 The Creativity Process

• The four main stages in the process of

generating creative ideas:
– Information: gathering of information
– Incubation: involves fantasizing and a period of
relazation
– Illumination: whereby idea or experience comes
into play
– Verification: transforms the idea into reality
 Creativity Techniques
There are several techniques to generate
creative ideas:
• Brainstorming
• Forced Analogy
• Do IT: Define problem, open mind and
apply creative techniques, Identify best
solution and Transform
• Mind Mapping
• Nominal Group
 Definition of Innovation
• Innovation is defined as putting ideas into
valuable action
• Three core elements of innovation:
– Ideas
– Implementation
– profit
 Types of Innovation
• Five broad categories of innovation:
– Product innovation
– Service innovation
– Process innovation
– Position innovation
– Paradigm innovation
• Four basic types of innovation:
– Invention
– Extension
– Duplication
– Synthesis
 Sources of Innovation
The idea to innovate derives from a variety
of source:
• Internal Sources
– Unexpected occurrences
– Incongruities
– Processing needs
• External Sources
– Demographic charges
– Changes in perception
– New knowledge
 Principles of Innovation
The major motivation principles:
• Be action oriented
• Start small
• Aim high
• The rule of try, test and revise
• Learn from failures
• Follow a milestone schedule
• Reward heroic activity
• Work, work and work
 Importance of Creativity
& Innovation
• Importance to an Entrepreneur
– Creates new product and services
– Competitive value for the entrepreneur
– Reduces cost
– Increases quality
– Increases performance
 Importance of Creativity
& Innovation
• Importance to a Business Organization
– Ensure an organization's survival
– Explore new markets
– Exploit natural resources
 Barriers to Creativity
& Innovation
• Individual: negative attitude, fear of failure,
executive stress, following rules, making
assumptions
• Group Behaviour
• Insufficient resources
• Traditional management behaviour
• Organization is not conducive to
innovation
 Strategies to encourage
Creativity & Innovation
• Recognize personal abilities
• Change your perception
• Change the organization culture
• Dare to fail
• Create an organization conducive to
creativity and innovation
 Barriers to Creativity
& Innovation
• Individual: negative attitude, fear of failure,
executive stress, following rules, making
assumptions
• Group Behaviour
• Insufficient resources
• Traditional management behaviour
• Organization is not conducive to
innovation
 Networking in
Entrepreneurship
• Understanding the role of networking in
entrepreneurship
• Types of networking
• Importance of networking
 Advantages of
Good Networking
The advantages of forming a good network:
• Accessibility: able to obtained are financial
support, transfer of technology and
accessibility in gaining information
• Reputation: situations in which an
entrepreneur may have to exercise
leadership or influence
• Expectation: can either facilitate or resist
the freedom of the company
 Importance of Networking

• Builds confidence
• Reduces bureaucracy
• Increase reputation and information
• Develop trust
• Creates an interdependence relationship
• Produces creativity
 Techniques to build
confidence
• Communicate effectively with confidence
• Prove his ability to others
• Concerned for others
• Always be fair
• Be ready to admit mistakes
• Show the spirit of teamwork
• Be confidence of others
 Barriers to Networking

• Emotional Barriers
• Physical Barriers
• Psychological Barriers
• Behavioural Barriers
• Expression Barriers
 Strategies for
Effective Networking
The strategies for developing effective
networking are:
• Ready to listen
• Ready to compromise
• Be confident
Methods of Establishing a
Strategic Network
Three are three ways for an entrepreneur to
establish a strategic network:
• Carry out an effective planning process
• Determine the goals to be achieved
• Learn the techniques of networking
Thank you