PB 201

ENTREPRENEURSHIP

BUSINESS OWNERSHIP
INTRODUCTION
• Owning a business is
probably one of the
most fulfilling ways of
making a living.
• Must decide on before
embarking on his
venture is the proper
from of business
ownership.
 FACTORS
IN
SELECTING
A BUSINESS
OWNERSHIP
• Capital
• Personal assets
• Span of control
• Sharing of
information
 TYPE OF
BUSINESS
OWNERSHIP
• Sole proprietorship
• Partnership
- general partnership
- limited partnership
• Company : 1) Private
2) Public
 ADVANTAGES
AND
DISADVANTAGES
OF DIFFERENT
FORMS OF
BUSINESS
OWNERSHIP
 SOLE
PROPRIETORSHIP
ADVANTAGES
• Ease of formation
• Total independence in decision
making/ freedom of choice/
complete control
• Full and total responsibility
• Retaining all business profits
• No requirement for authority and
disclosure of financial reports
• Taxation advantage
• Confidentiality
• Fewer legal restrictions
DISADVANTAG
ES
• Unlimited liability
• Lack of continuity
• Lack of experience and ability
• Incurs all losses
• Limited access to funds
• Limited skills
• Long working hours
• Relative difficulty in obtaining
long-term financing
 PARTNERSHIP

• Increase in resources for

capital
• Distribution and sharing of
business risks
• Direct rewards
• Taxation advantage
• Combined talents and
business acumen
• Ease of formation
• Ability to specialize
• Unlimited liability
• Limited life span
• Lack of continuity
• Shared profits
• Shared control
• conflict
 PRIVATE LIMITED
COMPANY

• Limited liability • High set-up costs

• Perpetual life
• Attracts skilled employees
• Ease of expansion
• Independent of the
members and shareholders
• Ease of raising capital
• High taxation
• Limited membership
• Lack of freedom in the
transfer of ownership
• Full of Regulations
 PUBLIC LIMITED
COMPANY

• Limited liability • High set-up cots

• Perpetual life
• Transfer of ownership
• Ease of expansion
• Economies of scale
• Relative ease of securing
capital in large amounts
• Increase in ability and
expertise
• High taxation
• Agency problem
• Full of Regulations
• Restrictions of activities
• Financial disclosure
REGISTRATION
PROCEDURES
AND LEGAL
ASPECT OF
BUSINESS
OWNERSHIP
a) Registration procedure of a Sole
Proprietorship

Approved of the business to be

registered
Registration of business
Preparing and sending the document
Certificate of approval
Renewing business registration
Notification of changes in business
registration
 Notice of termination
b) Registration procedure of a
Partnership

o Approved name of the business to be

registered
o Registration of business
o Preparing and sending the document
o Certificate of Approved Registration
o Renewal of business registration
o Notification of changes in business
registration
o Notice of termination
c) Registration procedure of a
Private Limited Company

o Proposed name of business to be

registered
o Reservation of the approved name
o Preparing and sending the
documents
o Stamp Duty and Registration Free
o Corporate Declaration Certificate
o Commencement of Business
o Duration and dissolution
 d) Registration of a Public Limited
Company

Selection of name for the proposed

company
Reservation of the approved name
Preparing and sending the document
Prepare the prospectus to have share
Stamp Duty and Registration Free
Obtaining Certificate of Incorporation
Commencement of Business
Duration and dissolution
COMPARISON AND DISTINCTION
BETWEEN A COMPANY,
PARTNERSHIP AND SOLE
PROPRIETORSHIP

 A comparison highlighting the

distinction between a company,
partnership and sole
proprietorshipmis summarized and
simplified.
 FACTORS IN
STARTING
A NEW
ENTREPRENEURIAL
VENTURE
• Capital
• Location of business
• Interest, knowledge, and
experience
• Size of business
• Competitors
• Law and regulations
ALTERNATIVES IN STARTING A
NEW ENTREPRENEURIAL
VENTURE

• Start-up company
-Prestart-up phase
-Start-up phase
-Post start-up phase
 START-UP COMPANY

• Complete freedom • Long process

• Tendency to be creative • Maximum risk
• Authority • Difficulty in obtaining funds
• Free from government • Extra effort
intervention • No historical record
• Immediate operations
BUYING AN EXISTING COMPANY/
ACQUISITION
• Conducting self-assessment
• Evaluating business opportunities
• Reviewing a potential target
• Exploring financing options
-details of the business/ sales particulars
-accounts for the last three years
-financial projections (if accounts are not
available)
-details of their personal assets and liabilities
• Ensuring a smooth transition
 STEPS THE
ACQUISITION
PROCESS
1. Identify type of business
2. Sign non-disclosure document
3. Sign letter of intent/ make an offer
4. Conduct due diligence/ investigation
5. Draft/ preparation of purchase agreement/
formal agreement
6. Close the final deal/ matters
7. Begin the transition/ ready
for business
 EXISTING COMPANY/
ACQUISITION
• Immediate operations
• Existing intangible assets/
equipment installed and
productive capacity is
known
• Employees established
• Supplier relationships
• Less competition
• Easier financing
• Quick cash flow
• Continuous success
• Business may be overpriced
• Equipment and goods may
be obsolete or inefficient
• ‘inherited’ employees may
be unsuitable
• Uncollectible receivables
• Outstanding contracts
• Inherent problems
• Location may have become
unsatisfactory
 TYPE OF
FRANCHISE
• Trade name franchising
• Product distribution franchising
• Pure/ business format/ system franchising
 BUYING A FRANCHISE

• Self evaluation
• Conduct market research
• Consider the franchise options
• Ask the franchiser some tough questions
 FRANCHISE

• Proven track record on • Unsatisfactory training

products and business formats programes
• Standardized quality of goods • Franchise fees
and services
• Strict franchisor control/
• Management training and
adherence to standardized
support/ guidance
operations
• Brand name appeal
• Limited product line
• Financial support/ assistance
• Name recognition • Less freedom
• Shared prifits