Setting up a new enterprise and Types of enterprises.

Setting up a new Enterprise

An enterprise could be set in different ways, at different places, using different methods, an overview is as follows:

• Ways of enterprising at home –
• Organizing a talk.
• Taking responsibility.
• Earning money.
• Organizing yourself.
• Ways of enterprising at school –
• Organizing a talk and putting up posters.
• Self-awareness and Time management.
• Creativity.
• Leadership.
• Ways of being Enterprising, developing wider enterprising skills –
• Applying Technology.
• Building communica5ion and numeracy skills.
• Thinking creatively and independently.
• Learning independently.
• Reasoned Evaluations.

What is the process of enterprising? – The enterprise process is the various

The 4 questions for startups

• Four key questions to consider when starting a business: Why? Who? What? How?
• Why
  • Many people start businesses because they want to meet a challenge and achieve something.
  • They may also desire to be their own boss and make their own decisions.
  • Financial gain can be a motivator, but the image highlights that many non-profit organizations are also considered enterprises.
• Who
  • The success of a business is highly influenced by the skills, resources, and personal qualities of the people who start and run it.
• What
  • The term “enterprise” can refer to for-profit businesses or non-profit organizations, such as charities and clubs.
• How
  • There are several ways to structure a business. For-profit businesses can be sole proprietorships, partnerships, limited companies, cooperatives, or franchises.

Six stages of the enterprising process

1. Identifying the problem or need or want

• This is the first step in the enterprise process.
• An enterprise needs to clearly identify the problem it aims to solve or the need or want it aims to fulfill in order to be successful.

2. Exploring creative solutions

• Once the problem or need or want has been identified, the enterprise needs to brainstorm possible solutions.
• The text emphasizes that these solutions may not always be easy to find and may require creative thinking.
• Thinking “outside the box” is encouraged to arrive at an appropriate solution.

3. Action planning

• The third stage involves planning how the enterprise will achieve its goals.
• Action planning helps to focus ideas and determine the steps required to reach the set goals.
• This includes setting clear, achievable, and measurable objectives.
• It also involves prioritizing tasks and identifying the steps needed to achieve the stated goals.

4. Implementing the plan

• The next stage is putting the action plan into effect.
• An effective action plan provides a clear schedule and a defined set of steps to help achieve the objectives.

1. Monitoring progress

• The next stage is to monitor the progress to check how well the plan has been executed and how we we doin in terms of pursuing our goals.

1. Evaluation

• Here you evaluate the executed plan and how well it has performed. Make sure to consider both the good and the bad and how things can be improved regardless of performance.

Types of businesses.

Sole trader

What is a Sole Trader?

• A sole trader is a simple form of business ownership with just one owner.
• This owner has complete control over the business and keeps all the profits (after expenses).
• They are also personally liable for all the business’s debts. This means if the business cannot pay its debts, the owner’s personal assets (like their house) could be at risk.

Advantages of a Sole Trader :

• Easy to set up: Requires minimal paperwork and legal formalities compared to other structures.
• Quick decision-making: The owner has sole control, allowing for faster decisions without needing to consult others.
• Keeps all profits: The owner benefits from all the business’s success.
• Flexibility: The owner has the freedom to adapt the business to changing market conditions.

Disadvantages of a Sole Trader:

• Unlimited liability: The owner is personally responsible for all debts, which is a major risk.
• Limited access to finance: Raising capital can be difficult as banks may be hesitant to lend due to the high risk.
• Limited skills and experience: One person may not possess all the skills needed for the business to succeed.
• Lack of continuity: If the owner becomes ill or dies, the business may struggle to continue.

Suitability for sole trader Business Analysis:

• Sole traders are suitable for businesses with:
  • Low start-up costs
  • A single owner with a clear vision
  • Limited need for external finance
  • Activities requiring specialized skills possessed by the owner

Examples

• Local bakeries, hairdressers, handyman services, freelance writers, or consultants.

Remember:

• Weigh the advantages and disadvantages when considering a sole trader structure.
• This ownership structure might be suitable for a small business with a limited risk profile.

Partnership

What is a Partnership?

• A partnership is a business owned by two or more people who agree to work together to achieve a common goal and share profits (and losses).
• Each partner contributes something to the business, which could be money (capital), skills, or experience.
• Partners share the responsibility for managing the business and making decisions.

Advantages of a Partnership:

• More capital: Partners can combine their financial resources, making it easier to raise money for starting or growing the business.
• Shared skills and experience: Partners bring different skills and knowledge to the table, creating a stronger team.
• Shared decision-making: Partners can discuss ideas and make more informed decisions.
• Motivation and commitment: Partners may be more motivated due to shared ownership and potential for higher rewards.

Disadvantages of a Partnership):

• Unlimited liability: Each partner is personally liable for all the business’s debts, similar to a sole trader.
• Potential for disagreements: Differences in opinions or work styles can lead to conflicts between partners.
• Profit sharing: Partners need to agree on how profits and losses are shared, which can be complex.
• Dissolution: If a partner wants to leave the partnership, it can be difficult and costly to dissolve the business.

Suitability for Business Analysis:

• Partnerships are suitable for businesses with:
  • Need for more capital than a sole trader
  • Complementary skills and experience among partners
  • Strong communication and conflict resolution skills
  • A clear partnership agreement outlining roles, responsibilities, and profit sharing

Examples for:

• Law firms, architectural practices, medical practices, or small businesses requiring diverse expertise.

Remember:

• A partnership agreement is crucial to avoid future disputes and clearly define partner roles and responsibilities.
• Consider the potential for disagreements and ensure strong communication between partners.
• This structure can be beneficial for businesses requiring more resources than a sole trader but with a limited number of owners.

Limited Companies

What is a Limited Company?

• A limited company is a separate legal entity from its owners. Ownership is divided into shares, and shareholders have limited liability. This means their financial risk is limited to the amount they invested in the company (the value of their shares).
• There are two main types of limited companies:
  • Private Limited Company (Ltd): A private company with a smaller number of shareholders who are typically known to each other (friends, family, investors). Shares cannot be freely traded on a stock exchange.
  • Public Limited Company (PLC): A larger company with shares listed on a stock exchange, allowing anyone to buy and sell them.

Advantages of a Limited Company:

• Limited liability: Shareholders’ personal assets are protected, reducing their financial risk.
• Easier access to capital: Companies can raise large amounts of money by selling shares to the public (PLCs) or attracting investment.
• Continuity: The business can continue to exist even if shareholders change (shares can be bought and sold).
• Professional image: Limited companies can project a more professional image, which can be helpful in attracting investors and customers.

Disadvantages of a Limited Company :

• More complex to set up: Requires more legal paperwork and formalities compared to sole traders or partnerships.
• Greater regulation: Limited companies are subject to more regulations and reporting requirements.
• Separation of ownership and control: In PLCs, shareholders may not be directly involved in running the business, which can lead to a separation of ownership and control.
• Double taxation: Profits of the company are taxed, and then dividends paid to shareholders are also taxed (depending on the tax system).

Suitability for Business Analysis:

• Limited companies are suitable for businesses with:
  • Need for significant capital to start or grow
  • Multiple owners who want limited liability protection
  • A plan for long-term growth and expansion
  • The resources to comply with legal and financial regulations

Examples:

• Large corporations, technology companies, retail chains, or any business requiring substantial investment.

Remember:

• The type of limited company (private or public) depends on the ownership structure, size, and future growth plans.
• Consider the increased complexity and regulations involved in setting up and running a limited company.

Co-operatives

What is a Cooperative?

• A cooperative is a business owned and democratically controlled by its members, who are also its customers or users.
• Members typically pay a joining fee and may contribute to the business or use its services.
• Profits are shared amongst members based on their participation, not just investment.

Advantages of a Cooperative:

• Shared ownership and control: Members have a say in how the business is run, fostering a sense of community and shared goals and may help in staying more ethical to the rest of the world
• Focus on member needs: Cooperatives aim to provide benefits and services to their members at fair prices.
• Democratic decision-making: Important decisions are made through voting by members, ensuring their voices are heard.
• Potential for profitability: Cooperatives can still generate profits, which are then shared amongst members.

Disadvantages of a Cooperative:

• Slower decision-making: Reaching consensus among members can take longer than in a hierarchical structure.
• Raising capital: Attracting external investment might be more challenging compared to traditional structures.
• Focus on member needs: Balancing member needs with the need to generate profits can be complex.
• Member commitment: The success of a cooperative relies on active participation and commitment from its members.
• Shares are not usually sold in the public market

Suitability for Business Analysis:

• Cooperatives are suitable for businesses with:
  • Strong focus on member benefits and community
  • Democratic decision-making and member involvement
  • Limited need for external investment
  • A clear understanding of members’ needs and wants

Examples:

• Worker cooperatives (owned by employees), consumer cooperatives (owned by customers), housing cooperatives (owned by residents), or agricultural cooperatives (owned by farmers).

Remember:

• Cooperatives operate with a different set of goals compared to traditional businesses, prioritizing member benefits over maximizing profit.
• The success of a cooperative hinges on a strong sense of community, shared values, and active member participation.

Types of Cooperatives:

There are two main types of cooperatives commonly encountered in business studies:

1. Producer Cooperatives:
   • Owned and democratically controlled by producers (e.g., farmers, artists, craftspeople).
   • Members typically pool resources, share production costs, and work together to market and sell their products.
   • Focuses on achieving better prices and fairer market access for members’ products.
2. Consumer Cooperatives:
   • Owned and democratically controlled by consumers who purchase goods or services from the cooperative.
   • Members typically pay a membership fee and may receive benefits like patronage dividends (rebates) based on their purchases.
   • Aims to provide high-quality goods and services to members at competitive prices.

Franchise

What is a Franchise?

• A franchise is a business relationship where a franchisor (owner of a business model) grants permission to a franchisee (individual or company) to operate a similar business under the franchisor’s brand name.
• The franchisee pays a fee for the right to use the franchisor’s brand, products, processes, and marketing strategies and may also take a percentage of the profits.

Advantages of a Franchise:

• Proven business model: Franchisees benefit from a successful and established business model, reducing the risk of failure.
• Brand recognition: Franchisees leverage the franchisor’s brand reputation and established customer base.
• Marketing and support: Franchisors often provide marketing campaigns, training programs, and ongoing support to franchisees.
• Bulk purchasing power: Franchisees may benefit from lower costs due to the franchisor’s bulk purchasing power with suppliers.

Disadvantages of a Franchise:

• Limited control: Franchisees must follow the franchisor’s established business model, limiting their flexibility and innovation. The franchisor may have the rights to terminate working together at their discretion.
• Franchise fees and royalties: Franchisees pay ongoing fees to the franchisor, impacting their profits.
• Dependence on franchisor success: The success of the franchisee is tied to the overall success of the franchisor brand.
• Finding the right franchise: Choosing a reputable franchisor with a strong track record is crucial.

Suitability for Business Analysis:

• Franchises are suitable for:
  • Entrepreneurs who want to own a business but lack experience
  • Individuals seeking a proven business model with brand recognition
  • Businesses looking to expand into new territories

Examples:

• Fast-food chains (McDonald’s, KFC), coffee shops (Starbucks), retail stores (7-Eleven), hotels (Holiday Inn), or cleaning services (Merry Maids).

Remember:

• Carefully evaluate the franchise agreement and potential costs before entering into a franchise relationship.
• Consider the level of control you have over the business and the ongoing financial obligations to the franchisor.
• Franchises can be a good option for individuals who want to own a business with reduced risk but are comfortable operating within a defined framework.

Social enterprises

What is a Social Enterprise?

• A social enterprise is a business that combines social objectives with commercial activities.
• They aim to generate a profit, but the primary goal is to achieve a positive social or environmental impact.
• Social enterprises operate in various sectors, tackling issues like poverty, unemployment, environmental sustainability, or social inclusion.

Advantages of Social Enterprises:

• Social impact: Social enterprises address social or environmental problems and contribute to positive change.
• Sustainable business model: By generating profits, they become financially self-sufficient and less reliant on donations.
• Attracting talent: The social mission can attract employees who value making a difference.
• Innovation: Social enterprises may be more innovative in seeking solutions to social challenges.

Disadvantages of Social Enterprises:

• Balancing priorities: Balancing social goals with financial needs can be challenging.
• Measuring success: Quantifying the social impact can be more complex than measuring financial profit.
• Access to finance: Social enterprises may face difficulties attracting traditional investors who prioritize high financial returns.
• Competition: Social enterprises may compete with traditional businesses for resources and customers.

Suitability for Business Analysis:

• Social enterprises are suitable for:
  • Entrepreneurs who want to combine business success with social impact
  • Businesses addressing social or environmental needs
  • Individuals seeking a sustainable and purpose-driven business model

Examples:

• Fair-trade businesses selling ethically sourced products.
• Social care providers offering services with a focus on community integration.
• Renewable energy companies generating clean energy and creating jobs.
• Recycling or waste management companies promoting environmental sustainability.

Remember:

• Social enterprises operate within a different business framework, prioritizing social impact alongside financial goals.
• Consider how the social enterprise generates profit and how those profits are used to achieve its social mission.
• Social enterprises can be a powerful tool for addressing social challenges while offering a viable business model.