Starting a Business for entrepreneur.pptx

Reference to start business

1. Dr. V - Entrepreneurship 1 4.1 Entity and its legal structure 4.2 Business life cycle 4.3 Types of business 4.4 Legal Structure for new business 4.5 Sources of business capital 1.1 Introduction 1.2 The importance of entrepreneurship 1.3 Entrepreneurial Characteristics 1.4 Entrepreneurship development in Malaysia 2.1 Components of Business Environment 2.2 Macro Environmental Influence 2.3 Micro Environmental Influence 3.1 Business Opportunity 3.2 Business idea 3.3 What is Innovation? 3.4 Strategies to Encourage Creativity & Innovation What is a Business Plan? The importance of a Business Plan - Business plan format: i. Executive summary ii. Vision and mission statement iii. Business description segment iv. Marketing segment v. .Research, design & development segment vi. Location segment vii. Management segment viii.. Production plan segment ix. Critical risk segment x. Financial segment xi. Milestone schedule segment xii. Appendix segment C5 Developing a Business Plan C4 Starting a Business C3 Developing Entrepreneurial Creativity & Innovation C2 Business Environment Assessment C1 What is Entrepreneurship Entrepreneurship

2. Learning Objectives: Identify the different types of business organizations . Explain the advantages and disadvantages of the different types of organizations . Differentiate the characteristics of the different types of business organizations . Identify the various sources of finance.

3. Dr. V - Entrepreneurship 3 4.1 Entity and its legal structure 4.2 Business life cycle 4.3 Types of business 4.4 Legal Structure for new business 4.5 Sources of business capital Starting a Business Refer to 4. C5 Developing a Business Plan C4 Starting a Business C3 Developing Entrepreneurial Creativity & Innovation C2 Business Environment Assessment C1 What is Entrepreneurship Entrepreneurship

4. Dr. V - Entrepreneurship 4 Starting a Business Striking out on your own? Find out if you have what it takes to start a business Are you prepared to work very hard? Do you have stamina & commitment? Do you have adequate resources? Do you have a solution to every problem? Are you willing to commit time & energy to the business? Are you Flexible? Do you have a “no Failure, only feedback” mentality

5. How to Start A Business in Malaysia Select the type of business ventures Register the venture Start-up Buy-Over Franchise

6. Why We Need to Register the Business?? Entitlement as “ Legal Entity ” status Brand Image/ Branding Reputation/ Trust Financing Ease of Business Activities

7. Governing Regulations/Acts under SSM ’ s Administration Companies Act 1965 (Act 125) Other Subsidiary Legislation e.g. Companies Regulation 1966, & Registration of Business Rules 1957 Registration of Business Act 1956 (Act 197) Kootu Fund (Prohibition) Act 1971 (Act 28) Trust Companies Act 1949 (Act 100)

8. Sizes of Business [Source: SME Corporation (M)] Category A: Manufacturing, Mfg-Related Services & Agro-based Manufacturing Category B: Services, Primary Agriculture & ICT Type Sales Turnover No. of Employees (Full time) Micro Less than RM 250K Less than 5 Small Between RM250K – RM10 mil. 5 – 50 Medium Between RM 10 mil. – RM25 mil. 51 – 150 Type Sales Turnover No. of Employees (Full time) Micro Less than RM 200K Less than 5 Small Between RM200K – RM1 mil. 5 – 19 Medium Between RM 1 mil. – RM5 mil. 20 – 50

9. Dr. V - Entrepreneurship 9

10. Dr. V - Entrepreneurship 10

11. Dr. V - Entrepreneurship 11 4.1 Entity and its legal structure Identifying Legal Structures Three primary legal forms of organization; Sole proprietorship The Partnership The Corporation More : Page : 427 4. Co-operative

12. Types of Legal Entities 4 most common forms of business entities: a) Sole Proprietorship (Enterprise/ Milikan Tunggal) b) Partnership ( Perkongsian ) c) Private Limited Company ( Sdn Bhd ) d) Public Limited Company ( Bhd )

13. Types of Business Ventures

14. Dr. V - Entrepreneurship 14 Business Registration Act (Amendment 1978) And Procedures of Business Registration 1957 I Sole Proprietorship Business Partnership Business

15. Dr. V - Entrepreneurship 15 Company Act 1956 II Limited Company by Share Limited Company By Guarantee Unlimited Company Private Limited Company Public Limited Company Foreign Owned Company

16. Dr. V - Entrepreneurship 16 Identifying Legal Structures Before deciding how to organize an operation, prospective entrepreneurs need to identify the legal structure that will best suit the demands of the venture 3 Primary Legal forms of Organization Proprietorship The partnership The Corporation

17. Dr. V - Entrepreneurship 17 Sole Proprietorship Is a business that is owned and operated by one person. The individual also has unlimited liability, which means his or her business and personal assets stand behind the operation. If the company cannot meet its financial obligations, the owner can be forced to sell the family car, house and whatever assets that would satisfy the creditors. To establish a sole proprietorship, a person merely needs to obtain whatever local and state licenses are necessary to begin operations.

18. Dr. V - Entrepreneurship 18 Partnerships A partnership is an association of two or more persons acting as co-owners of a business for profit. Each partner contributes money, property, labor or skills and each shares in the profits (as well as the losses) of the business The following are examples of the types of information customarily written into the agreement: Name Duration of agreement Character of partners (general or limited, active or silent) Contributions by partners (at inception, at later date) Division of profits and losses Draws or salaries Death of a partner (dissolution and windup) Release of debts Business expenses (method of handling) Authority (individual partner’s authority on business conduct)

19. Advantages vs Disadvantages Advantages Disadvantages Set up does not require any legal formalities. Independent – quick to respond to mkt place & customer. Partner , however, need to consult before take action. Reward commensurate with the effort put in by the owner. Personal relationship with employees and customers is developed. Owner(s) not obliged to make information about the business available to the public. Competitive pricing and quality are possible. Limited capital available – partnership may have more capital to a certain extend. Unlimited liabilities – liability for business debts fall directly upon the owner(s). Owner(s) work long hours, perhaps even foregoing holidays. Partnership may suffer less in this respect. Some background business activities such accounts may not be undertaken well through shortage of time/expertise. a) Sole Proprietorship & Partnership

20. Differences Private Limited Company & Public Limited Company Private Limited Co. (Sdn Bhd) Public Limited Co. (Bhd) Any size. Usually large or very large. Minimum 2; maximum 50 shareholders. Minimum 7; maximum no limit. Transfer of shares restricted. No restrictions on share transfer. No public invitation allowed. Public may be invited to take shares.

21. Dr. V - Entrepreneurship 21 Corporation A corporation is an “artificial being, invisible, intangible, and existing only in contemplation of the law A corporation is a separate legal entity apart from the individual who own it. A corporation is created by the authority of state laws and is usually formed when a transfer of money or property by prospective shareholders (owners) takes place in exchange for capital stock (ownership certificates) in the corporation The procedure ordinarily required to form a corporation are Subscription for capital stock must be taken and a tentative organization created. Approval must be obtained from the secretary of state in the state in which the corporation is to formed. Corporations that do business in more than one state must comply with federal laws regarding interstate commerce and with the varying state laws that cover foreign (out-of-state) corporations.

22. Advantages vs Disadvantages Advantages Disadvantages Limited liability protects the personal assets of the owners/shareholders. More capital through investment by shareholders. More self-sufficient with greater proportion of in-house activities. Larger size - able to tender for larger projects with significant capital investment/resource requirements. Involves a lengthy/complex set-up procedure/registration. Legal requirements – Company administration legally imposed with information being publicly available. Impersonal approach to staff and customers. Decision made by Board of Directors (elected by the shareholders) – slower response to market pressure. The type of business activities are limited to that stated in the company ’ s memorandum of association. Company/double taxation – undistributed profits/dividend are taxed at 45% in Malaysia. b) Company (Private Limited Co. & Public Limited Co.)

23. Other Form of Business Entity CO-OPERATIVE (KOPERASI) Governed by: A cooperative is a business that is owned and controlled by a group of people (min. 50 persons) of similar interest or category.  Its primary purpose is to provide goods and/or services to its members for their mutual benefit.

24. Other Form of Business Entity (cont.) CO-OPERATIVE (KOPERASI) Types of Cooperative: Finance Consumer Construction Transportation Plantation

25. Other Form of Business Entity (cont.) CO-OPERATIVE (KOPERASI) Characteristics of Cooperative: Owned by and run for the subscribing members Required to register with the Suruhanjaya Koperasi Malaysia Minimum 50 members and maximum no limit The aim: to encourage the virtues of thrift loyalty and voluntary service among members and promote the interest and welfare through mutual help. A member may not have more than 20% of the total cooperative shares. Has a separate legal entity from its members and thus, has the power to hold property, enter into contracts, sued and be sued. The members share the profit from the dividends. Minimum number of directors is 6 and maximum number of directors is 15. Examples: Angkatan Koperasi Kebangsaan (ANGKASA), Bank Rakyat (Bank Kerjasama Rakyat Malaysia), Koperasi Permodalan FELDA Bhd, Koperasi Angkatan Tentera Malaysia Bhd., Koperasi Polis.

26. Dr. V - Entrepreneurship 26 4.2 Business life cycle Profit, Productivity, Revenues Start-up Activities New-Venture Development Venture Growth Business Stabilization Innovation Or Decline Stages (Number of years) Failure

27. Dr. V - Entrepreneurship 27 4.3 Types of business A going venture Value creation New products, services Processes Technologies Profits and/ or personal benefits Employment, asset, & revenue growth

28. Dr. V - Entrepreneurship 28 TARGET INDUSTRIES WHERE KNOWLEDGE IS APPLIED Aviation & Aerospace Automotive Medical & Health Services Oil & Gas Biotech/ Bioprocess Marine Engineering Electrical & Electronics ICT Building Technology Transport & Logistics 120 110 75 30 40 No of Techno 170 295 50 75 35 No of Techno

29. Dr. V - Entrepreneurship 29 4.5 Sources of business capital Venture Capital Banker Government Program Official Bank Loans Family & Friends Private Equity Public Equity Corporate Support International Finance The Right Contacts More Page: 480

30. Dr. V - Entrepreneurship 30 Manufactures Manufacturers produce products, from raw materials or component parts, which they then sell at a profit. Companies that make physical goods, such as cars or pipes, are considered manufacturers.

31. Dr. V - Entrepreneurship 31 Service businesses Service businesses offer intangible goods or services and typically generate a profit by charging for labor or other services provided to government, other businesses or consumers. Organizations ranging from house decorators to consulting firms to restaurants and even to entertainers are types of service businesses.

32. Dr. V - Entrepreneurship 32 Retailers and Distributors Retailers and Distributors act as middle-men in getting goods produced by manufacturers to the intended consumer, generating a profit as a result of providing sales or distribution services. Most consumer-oriented stores and catalogue companies are distributors or retailers.

33. Dr. V - Entrepreneurship 33 Agriculture and mining Agriculture and mining businesses are concerned with the production of raw material, such as plants or minerals.

34. Dr. V - Entrepreneurship 34 Financial businesses Financial businesses include banks and other companies that generate profit through investment and management of capital.

35. Dr. V - Entrepreneurship 35 Information businesses Information businesses generate profits primarily from the resale of intellectual property and include movie studios, publishers and packaged software companies.

36. Dr. V - Entrepreneurship 36 Utilities Utilities produce public services, such as heat, electricity, or sewage treatment, and are usually government chartered.

37. Dr. V - Entrepreneurship 37 Real estate Real estate businesses generate profit from the selling, renting, and development of properties, homes, and buildings.

38. Dr. V - Entrepreneurship 38 Transportation Transportation businesses deliver goods and individuals from location to location, generating a profit on the transportation costs