Chapter 2

PREPARING FOR AN ENTERPRISE

 10 Simple Steps in Developing an Enterprise

• Know your self • Developing Sales Plan

• Are you are risk taker • Decide on an appropriate legal
• Market research business structure

• Examine your business requirements • Be aware of legal obligations that will

affect your business
• Calculate investments requirements
• Write your business plan
• Developing your Marketing strategy
 10 Simple Steps in Developing an Enterprise
1. Know your self 2. Are you a risk taker?
• Assess your self before you assess your
business • Business means risking life
• Who will buy your product or services? savings, secure employment and
• What benefits does your product or family security
services offer to them?
• How much would they be willing to pay? • Are fully prepared for this?
 10 Simple Steps in Developing an Enterprise
3. Market Research
• Essential in identifying target
market and getting to know
potential market
• Helps identify competitors and
how to compete effectively
• Effective in assessing demand
for a new product or services
4. Examine your business
requirements
• Consider the best location for the
business
• Identify basic equipment
requirement and costs
• Consider your workforce
• Identify Insurance requirements
 10 Simple Steps in Developing an Enterprise

5. Calculate Investment Requirements 6. Developing your Marketing Strategy

• Identify all start-up costs associated • Marketing your enterprise is a
with the business fundamental aspect of starting-up
• Identify ways of financing the business • Research the most cost-effective
venture methods of marketing your business
• Seek financial support and benefit from • Write your marketing plan
direct referral to Government Supports
* Attend a Marketing Workshops
 10 Simple Steps in Developing an Enterprise
7. Developing Sales Plan 8. Decide an appropriate legal
• Having assessed your business idea, business structure
estimate selling price • Research the type of business
• How will you promote the enterprise? ownership to help the best decisions
• Who/where is your target market for it
(local/national/international)? Sole trader
• What channels of distribution will be Partnership
used?
• Determine the break-even point Limited Company
 10 Simple Steps in Developing an Enterprise
9. Be aware of legal obligations
that will affect your business
• Register your business name (SEC,
BIR,SSS, PHILHEALTH, PAG
IBIG, etc.)
• Understand tax obligation
• Be aware of statutory obligations
such as trading licenses, planning
permissions, insurance, health and
safety, patents etc.
10. Write your business plan
• Business planning is fundamental
to success in business.
• Key to making things happen and
reaching goals
• Can be use as an operating tools
that can help you to make decisions
and manage your business
effectively.
 Legal Structures of Business
1. Sole trader 2. Partnership 3. Trust
• the simplest form of • A legal form of • A trust company is a legal entity that acts
business structure and is business operation as a fiduciary, agent, or trustee on behalf
relatively easy and of a person or business for the purpose of
inexpensive to set up. between two or more
individuals who share administration, management, and the
• you will be legally eventual transfer of assets to a beneficial
management and party.
responsible for all aspects
of the business profits.
• A trust company or trust department is
• generally make all the • The two most common usually a division or an associated company
decisions about starting types are general and of a commercial bank.
and running your business limited partnerships. Fiduciary is a person who acts on behalf of
another person or persons to manage assets.
 Legal Structures of Business
4. Company
• is a separate legal entity and
can incur debt, sue and be
sued. The company’s
shareholders (the owners) can
limit their personal liability and
are generally not responsible
for company debts.
5. Cooperative
• A cooperative is a private business
organization that is owned and controlled
by the people who use its products,
supplies or services.
• A co-operative is a member-owned
business structure with at least five
members, all of whom have equal voting
rights regardless of their level of
involvement or investment. All members
are expected to help run the cooperative.
FACTORS TO CONSIDER IN CHOOSING
AN ENTERPRISE
1. Control
• It is the level of control you
wish to have over your business.
• Example. You wish to own and
operate the enterprise
completely alone then being a
sole trader would be the most
appropriate structure for you.
2. Limitations of Liability
*Liability-obligation under law: legal
responsibility for something, especially
costs or damages
• The extent you need to be protected
from personal legal liability is important
before choosing a business structure.
• A complex legal structure such as
company, has a protection of personal
assets in becoming liable from debts and
losses incurred.
FACTORS TO CONSIDER IN CHOOSING
AN ENTERPRISE
3. Cost and Complexity of formation 4. Flexibility and Future Needs
and legal structure
• Different legal structure have differing • Reflect on where you envision
set up procedures, cost, and complexities your business in the future
involved.
• Example. While a sole trader is a simple • Example. The expansion of a
to set up and requires few reporting trust is subject to a penalties so is
requirements, a more complex structure
like trust involves strict reporting not an appropriate structure to
requirements and must set up by a choose should expansion be a goal
solicitor or an accountant.
in mind for your business.
FACTORS TO CONSIDER IN CHOOSING
AN ENTERPRISE
5. Tax Implications
• The legal structure of your business
will have a significant effects on the
amount of tax you pay and the kinds
of tax that you must pay.
• Example. A sole trader enjoys tax
benefits from being able to claim on
a personal tax return and those in a
trust do not pay income tax on
profits.
6. Ongoing administration
• Ensure that you have the time, people
and ability to abide by the strict
recordkeeping requirements that are
legally enforceable
• Sole structure has a few reporting and
administrative requirements while
Complex legal structures such as
company have strict and difficult record
keeping and paperwork requirements
FACTORS TO CONSIDER IN CHOOSING
AN ENTERPRISE
7. Continuity of existence
• It is important to consider how you see the business coming to a conclusion
• Example. If you wish for a business to be terminated when you personally
wish for it to end, then becoming a sole trader is the most appropriate
option.
 References
• https://www.smallbusiness.wa.gov.au/business-advice/business-structure/so
• https://www.entrepreneur.com/encyclopedia/partnership
• Microsoft® Encarta® 2009. © 1993-2008 Microsoft Corporation. All rights
reserved.
• https://www.investopedia.com/terms/t/trustcompany.asp
• https://www.smallbusiness.wa.gov.au/business-advice/business-structure/co