Entrepreneurship

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