Organizing A Business

Organizing a Business

• Why Persons Engage in Business• Entrepreneurship• Business Prospecting

the Search for Business Opportunity• Business Promotion

– Discovery– Determination of Feasibility• The Promote

-Assembling the Needed Resources– Liability of Promoters

Most Common reasons for Business Failures

1. Bad or Improper management practices, including poor cost controls and poor hiring practices;

2. Poorly focused and executed marketing or inadequate marketing;

3. Poor location;

Most Common reasons for Business Failures

4. Failure to invest in new products and efficient technology;

5. Lack of adequate financing.

Why Persons Engage in Business

1. Provision of employment to people;

2. Profits;3. Service to the community;4. Personal satisfaction;5. Means to earn a living;

Why Persons Engage in Business

6. Achievement of power; and

7. Protection of one’s self and family

Entrepreneurship

Entrepreneurship

2 Options to engage in Business- To Buy an existing business- To create a business that he will operate

Entrepreneur’s function:- To supply the capital of a firm;- To organize production by buying and

combining inputs;

Entrepreneurship

- To decide on the rate of output in the light of his expectations about demand; and

- To bear the risk involved in these activities

Business Prospecting

Business Prospecting

• First, he should carefully scan the environment for other possible openings;

• Second, he should prepare a list of alternative business opportunities; and

• He should make his choice from the list.

Business Promotion

3 steps involved in business promotion- Discovering the idea for a new business;

- Determining the feasibility of the idea; and

- Assembling the needed resources to start a business.

DISCOVERY

• The identification of an idea for a new business in the first step in business promotion.

• The business promoter may also be induced to consider certain product ideas because of the availability of materials.

Determination of FeasibilityAspects in Determining of Feasibility

• Management study includes proponents, Personnel and Organization

• Marketing study;• Production facilities and the product;

Determination of Feasibility

• Taxation and legal aspects• Financing aspects;• Profitability; and• Social desirability

Management Study

• It is in this particular portion of tfeasibility study where the following aspects are determined:

• The appropriate form of organization;• The internal structure of the organization;

Management Study

• The owners; and

• The staffing pattern of the organization

Assembling the Needed Resources

• Initial capital required;• The essential properties;• Processes;• Personnel

Promoter

• The person responsible for the formation of a

company.

The Promoter is motivated by any or a combination of the following:

• The promoter’s fee;• Shares of stock or bond in the new

business project;• A management position in the new

business project;

• a new customer for his products or services; and

• the desire to contribute to the economic growth of the local community

Classification of Promoters

• Professional promoters – they are those whose main occupation in business promotion;

• Side-line promoters – they are persons who perform promotion activities occasionally;

Classification of Promoters

• Banking promoters – they are banking institutions which provide business promotion services to their clients;

• Financial promoters – they insist of investment houses engaged in a promotion of certain business ventures through the sale of securities; and

Classification of Promoters

• Subdivision promoters – they are those engaged in development of new subdivisions.

• The promoter undertakes to pursue his job with capacity of a temporary trustee.

• He cannot legally bind the firm into contracts and deeds unless approved by the owners or the board of directors.

Liability of Promoters

THANKYOU!