Business Ownership: Sole, Partnership, Corporation

Forms of Business Ownership

• A sole proprietorship is easily created and terminated, offering ownership and rewards to one person with flexibility and minimal regulation/taxation, but it has unlimited personal liability, limitations in capital, ends when the owner dies/becomes ill, and has limited skills/capabilities.
• A partnership involves two or more partners pooling resources to co-own a business and share profits, offering the ability to obtain capital and incentives with limited regulation/taxation, but it has unlimited liability, potential for termination, difficulty reconciling personal/business interests, and problems in share liquidation.
• A corporation exists in contemplation of law, distinct from stockholders, providing limited liability, legal protection, transferable ownership, easier access to capital, employee benefits, and voting rights, but it involves legal formality, is costly/time-consuming, has separate taxation, and potential loss of control.
• A cooperative is a registered group with open, voluntary membership and democratic control, offering limited interest in shares with potential inequality of profit distribution, education, cooperation among members, benefits, tax privileges, and may have pro-poor bias, deviating from profit orientation.

Types of Entrepreneurship

• Agripreneurship focuses on producing and selling agricultural goods/inputs, with opportunities in crop cultivation, aquaculture, and agro-bio products.
• Buyer Entrepreneurship involves acquiring established or merging with smaller businesses using substantial capital, leveraging existing brands and customer bases.
• Ecopreneurship creates "green" businesses with the goal of saving the Earth while generating profit.
• Imitator Entrepreneurship creates a business by copying or adapting existing successful concepts.
• Intrapreneurship involves being an entrepreneur within a company, taking risks, innovating, and developing ideas.
• Large Business Entrepreneurship involves calculated risks to create new market offerings and adapt to changing markets.
• Scalable Startup Entrepreneurship launches a small-scale enterprise intended for rapid expansion and high profitability.
• Small Business Entrepreneurship involves starting a business on a smaller scale, easy to manage with minimal employees.
• Social Entrepreneurship focuses on innovative solutions to address social issues like poverty, education, and healthcare.
• Technopreneurship solves complex problems by combining entrepreneurial skills and technology.

Entrepreneurial Competencies and Motivation

• Leadership involves displaying passion, vision, and mission in interactions with stakeholders.
• Entrepreneurs must be articulate, recognizing communication importance in all directions, vital for sales, morale, conflict resolution, and contracts.
• Sociable entrepreneurs align organizational approach with business characteristics and employee management.
• Adaptable entrepreneurs are decisive, passionate, and willing to make changes.
• Collaborative entrepreneurs connect with managers, investors, and partners as equals, valuing each person's contribution.
• Multifaceted entrepreneurs are adaptable and multi-skilled, managing sales, marketing, and client/stakeholder relations.
• Resilient entrepreneurs embrace failure, seek motivation, and view setbacks as learning opportunities.
• Proactive entrepreneurs address problems preemptively, considering finances, market expansion, and benchmarking.
• Innovative entrepreneurs grow businesses and satisfy customers with new offerings.
• Risk-taker entrepreneurs are aware of and mitigate potential business risks.
• Creative entrepreneurs possess curiosity to explore novel concepts and profitable ventures.
• Passionate entrepreneurs are motivated to revolutionize methods and introduce innovative concepts.

Motivation Theory

• Extrinsic motivation involves using rewards to motivate individuals, but it may fade when rewards are absent.
• Intrinsic motivation stems from passion for the task at hand.

Importance of Entrepreneurship in Society

• Entrepreneurs create employment by hiring employees for various tasks.
• Entrepreneurship drives economic growth through expansion, investment, and workforce strengthening.
• Technological advancement is spurred by entrepreneurs bringing new ideas and products to improve lives.
• Market dynamics are influenced by new competition, expanding consumer options and providing better goods/services at lower costs.
• Entrepreneurship revolutionizes how societal challenges are approached and solved.

Financial Aspect - Financial Statements

• The income statement shows a company's revenues, expenses, and net profit over a specific period.
• The statement of owner’s equity shows changes in owner's equity during a period, including balances, income/loss, investments, and withdrawals.
• The balance sheet shows a company's financial position at a specific time, providing a snapshot of assets, liabilities, and equity.
• The statement of cash flow shows how cash is generated from operating, investing, and financing activities.

Elements of Financial Statement

• Assets: Resources owned/controlled by entities that can provide future economic benefits or generate income.
• Current Assets: Assets convertible to cash within one business year, useful for operational expenses, e.g., cash, accounts receivable, inventory, prepaid expenses.
• Fixed (Non-current) Assets: Non-current resources used to produce goods/services with a life of more than one year.
  • Tangible Fixed Assets: Trucks, office furniture, machinery, buildings, and land.
  • Intangible Fixed Assets: Goodwill, patents, copyrights, trademarks, and franchises.
• Liabilities: Obligations to be paid to another entity, representing creditor's claims on assets.
  • Current Liabilities: Debts to be paid within the next 12 months.
  • Non-current (Long-term) Liabilities: Debts not due for more than 12 months.
• Equity: The sum invested by owners plus retained earnings.
• Revenue: Measurement of total gross activity, e.g., service and product sales.
  • Operating Revenue: Income from selling goods/services directly related to main operations.
  • Non-operating Revenue: Money earned from a side business unrelated to day-to-day operations.
• Expenses: Reduction in asset value when used to make money.
  • Operating Expense: Expenses related to the company's main activities.
  • Discretionary Expense: Nonessential spending.

Marketing Aspects of New Ventures - Objectives of Pricing

• Competition-Based Objective: Pricing strategy is determined by the level of competition.
• Cost-Based Objective: Price is determined by considering total production cost.
• Customer-Value Objective: Value determines the price and benefits to customers.
• Market Share Objective: Pricing aims to expand market share and build customer awareness/loyalty.
• Sales Orientation Objective: Prices are strategically designed to boost sales volume and maximize profits during a specific timeframe.
• Customer-Driven Objective: Price depends on customer willingness to pay.

Service Costing

• Fixed Costs: Expenses that remain constant regardless of business activity, e.g., rent, salaries, utilities, insurance.
• Semi-variable Costs: Combination of fixed and variable costs, like labor costs with fixed salaries and variable hourly wages.
• Variable Costs: Costs that change with the number of units produced.
• Unit of Measurement: The standard method used to measure service quantity or volume.

Types of Market Research

• Primary Research: Direct interaction with consumers or third parties is done to gather valuable data.
• Secondary Research: Existing data and insights are gathered from other sources.

Facility Management and Layout

• Facilities Management coordinates people, places, and processes to maintain business structures and improve productivity.
• Hard services are physical modifications to a building, e.g., fire safety.
• Soft services enhance the workplace environment.

Media Framework

• Paid media: Companies pay for public relations, marketing, and promotional activities.
• Earned media: News articles, blogs, and discussions generating word-of-mouth and PR.
• Owned media: Online platforms owned by a business, like blogs and websites.

Workplace Structure

• Virtual Office: Used by startups for efficiency, reduced costs, and flexibility.
• Physical Office: Open layouts promote collaboration and visibility.
• Manufacturing/Plant: Layout design depends on equipment size, products, and employees.

Common Pricing Strategies

• Premium Pricing: High price to create a perception of high quality.
• Economy Pricing: Low price targeting customers seeking savings.
• Price Skimming: High initial price to generate initial interest.
• Penetration Pricing: Low initial price to quickly enter the market and gain customers, with the intention of raising the price later.
• Psychological Pricing: Prices are set to influence consumer perception.
• Bundle Pricing: Multiple products/services offered at a discount to create a sense of value.
• Dynamic Pricing: Prices adjust based on market conditions.

Product and Service Development

• Service Requirement: Intangible offering that fulfills customer needs.
• Output/Goods Requirements: Physical products with specific features, performance, quality, reliability, and durability.

Idea Generation - Opportunity Seeking

• Environmental changes can significantly impact the world, through climate change, deforestation, pollution, and biodiversity loss.
• Technological progress drives entrepreneurship, groundbreaking discoveries, and cutting-edge technology.
• Government initiatives and policies provide inspiration.
• People's interests and hobbies inspire entrepreneurial ideas.
• Experiences and knowledge gained in a field are valuable.

Opportunity Screening

• Relevance: Align the opportunity with the business vision, mission, and goals.
• Resonance: Ensure harmony with desired values and virtues.
• Reinforcement of Entrepreneurial Interests: Opportunities should match entrepreneurs’ interests, talents, and skills.
• Revenues: Verify substantial potential for growth and sales.
• Responsiveness: Effectively meet customer needs and desires.
• Reach: Use branches, franchises, etc to grow businesses.
• Range: Create a range of products/services to meet diverse needs.
• Revolutionary Impact: Visualize the business as a revolutionary force.
• Returns: Aim for low initial investment with substantial returns.
• Relative Ease of Implementation: Ensure the opportunity is easy to seize.
• Resources Required: Choose opportunities requiring fewer resources.
• Risks: Recognize high-risk opportunities with clarity and confidence.

Opportunity Seizing

• PESTEL Analysis helps identify external forces impacting the business.
  • Political: Governmental policies, trade, fiscal, and taxation factors.
  • Economic: Impact of the economy and performance on the business.
  • Social: Social environment and trends affecting profitability.
  • Technological: Impact of innovation and tech development.
  • Legal: Understanding laws and procedures.
  • Environmental: Impact of the environment and ecology.
• Competitor Analysis: Crucial to develop strategies and secure market share.
• SWOT Analysis: Performed before operations to analyze strengths, weaknesses, opportunities, and threats.

Risks Involved in Innovation

• Economic risk
• Financial risk
• Risks of security and fraud
• Compliance Risk
• Human risk
• Risk of Reputation
• Competitive Risks