Types of Business

1. Manufacturing Businesses
❑ A manufacturing business (manufacturer) converts materials into goods suitable for use and
then sells those goods to others.
❑ Industrial & consumer.
❑ Industrial goods are sold to other manufacturing businesses. Examples include metal and
plastic parts, lumber, and heavy machinery.
❑ Consumer goods are products that are eventually bought by the public.

❑ Small manufacturing businesses that produce consumer goods sometimes sell directly to the
public. For example, entrepreneurs making baked goods, silk-screened T-shirts, or jewelry
most often sell their products directly to consumers.
2. Wholesaling Businesses

❑ A wholesaling business (wholesaler) buys goods in large quantities, typically from

manufacturers, and resells them in smaller batches to retailers.

❑ Wholesalers are also known as middlemen, go-betweens, distributors, or intermediaries

because they provide a link between manufacturers and retailers, who sell goods to consumers.
3. Retailing Businesses

❑ A retailing business ( retailer) buys goods, often from wholesalers, and resells them directly to
consumers, who are the end buyers.

❑ Retailing businesses are stores, shops, and boutiques.

❑ A business that is either a wholesale or retail business is commonly referred to as a trade

business.
4. Service Businesses

❑ A service business provides services to customers for a fee.

❑ Service businesses provide a wide variety of professional, technical, and everyday services that
people need and want.
❑ Examples:
❑ engineering, legal, medical
❑ accounting, garbage, pick-up, package delivery, dry cleaning, auto repair
❑ music lessons, tutoring,
❑ house cleaning, and landscaping.
Liability of Business Owners
❑ Owner’s liability: This is the legal obligation of a business owner to use personal money and
possessions to pay the debts of the business.
❑ Un limited liability means that a business owner can be legally forced to use personal money
and possessions to pay the debts of the business.
❑ Limited liability means that a business owner cannot be legally forced to use personal money
and possessions to pay business debt.

❑ The level of liability for a business owner depends on the type of ownership structure used by
the business.
Sole Proprietorships
❑ A sole proprietorship is a legally defined type of business ownership in which a single
individual owns the business, collects all profit from it, and has unlimited liability for its debt.
❑ Advantages
❑ the simplest and least expensive option for business ownership.
❑ less paperwork and easier tax accounting for the sole proprietor.
❑ The sole proprietor is also the sole decision maker, with complete control over the
management of the business.
❑ Disadvantages
❑ That person has to carry a heavy workload—raising the financial backing to set up, operate,
and expand the business.
Partnerships
❑ Owned by at least two individuals share the management, profit, and liability.
❑ It requires an oral or written agreement among the partners
❑ A partnership is deed is the written form of the agreement among partners that is stamped and
registered
❑ It involves no legal formalities; however, firm can be registered to avail certain benefits.
❑ It carries equal right and authority for all partners to participate in business activities.
Partnerships (Cont..)
❑ In a general partnership, all partners have unlimited liability. Like sole proprietors, general
partners are personally responsible for business debt.
❑ A limited partnership is structured so that at least one partner (the general partner) has limited
liability for the debts of the business.
❑ Advantages: general partnership can rely on the entrepreneurial skills and financial backing of at least
two individuals instead of just one.
❑ Disadvantages: First, profit is split between the partners. Second, each partner is responsible for the
business-related actions. And third, partners may have trouble agreeing on how the business should be
operated.
Private Limited Company (Pvt. Ltd.)
❑ It is a voluntary association of minimum two and maximum 50 members
❑ It contains a different identity from its members legally
❑ The Directors are shareholders of the company, and the shares are distributed in the ratio of
their capital investment
❑ It involves a limited liability of the members
❑ It enjoys unlimited life
❑ Disadvantages:
➢ Allows no transfer of shares
➢ Does not allow public to subscribe to its shares
➢ Represents undemocratic control
Public Limited Company
❑ The shares are freely traded in the stock market
❑ It requires minimum seven members for its startup
❑ It is separate legal identity that is different from people who have incorporated it
❑ A share of stock is a unit of ownership in a corporation.
❑ It contains legal rules and regulations for the entry, working and exit of a company

❑ Drawbacks:
➢ Represent undemocratic control
➢ Provides scope for directors for personal profit
CO-OPERATIVE
❑ It is the voluntary association of ten or more members residing or working in a same locality
with the aim of fulfilling their economic, social, cultural or business interest
❑ It provides a right to members to leave the co-operative and pull out their capital at any time,
after giving a notice
❑ It requires the compulsory registration with the Registrar of Co-operative societies
❑ It involves the liability of members, which is limited to the extent of their capital contribution
❑ The primary motive of co-operatives is to serve its members rather than profit making

❑ Drawbacks:
➢ Shows instability to collect sufficient capital
➢ Includes organizational limitations
Cooperative

❑ A cooperative is an association of persons

(organization) that is owned and controlled by the

people to meet their common economic, social,

and/or cultural needs and aspirations through a

jointly-owned and democratically controlled

business.
Entrepreneurial
Management
Entrepreneurial Management

❑ Entrepreneurial management is the concept of utilizing the creative

and innovative abilities, skills and expertise to efficiently open and

manage a startup organization.

❑ It is a means of solving a mass problem through a unique and

profitable business solution.

Entrepreneurial Management

❑ The Risk management is important to understand entrepreneurial management

in details.
Entrepreneurial Management (Risk Management)

❑ When business is itself big challenge, an entrepreneur should never overlook

even the smallest concerns of uncertainties.

❑ There are some of the major forms of risk which an entrepreneur needs to take

care of:
Entrepreneurial Management (Risk Management)

Technical People
Risk Risk

Strategic Market
Risk Risk

Economic
Risk Risk Personnel
Risk
Entrepreneurial Management (Risk Management)

❑ Strategic Risk: The entrepreneur needs to ascertain (determine) the risk involved

in the business strategy.

❑ Strategic risk refers to the internal and external events that may make it difficult,

or even impossible, for an organization to achieve their objectives and strategic

goals.

❑ It includes competition, public relations, alliances, etc.

Entrepreneurial Management (Risk management)

❑ Economic Risk: Being aware of the economic ups

and downs, such as recession, inflation, interest rate

variations, economic cycles and government policies,

is equally important for an entrepreneur.

Entrepreneurial Management (Risk management)

❑ Financial Risk: Finance acquisition is a

major challenge for any entrepreneur.

❑ Therefore, the fund requirement and its

sources should be pre-planned for every

stage of the business cycle.

Entrepreneurial Management (Risk management)

❑ Market Risk: Determining the product’s

acceptability, competitiveness and

sustainability in the market are essential

for mitigating the risk of failure.

Entrepreneurial Management (Risk management)

❑ People Risk: Forming a team of

suitable personnel for goal

accomplishment seems easy.

❑ But analyzing the team

composition, roles and spirit from

time to time is a complex task.

Entrepreneurial Management (Risk management)

❑ Personal Risk: An entrepreneur’s life balance

along with the business entity is itself a great

challenge.

❑ Commitment towards family, natives and

peers, when managed well with the new

venture, leads to success.

Entrepreneurship in Service
Institutions
Entrepreneurship in Service Institutions

❑ Public-service institutions such as

government agencies, mosques, churches,

universities, and schools, hospitals,

community and charitable organizations,

professional and trade associations and the

like, need to be entrepreneurial and innovative

fully as much as any business does.

Entrepreneurship in Service Institutions

❑ Indeed, they may need it more.

Let’s Debate
❑ Universities should be self-

sustaining organizations rather

academic institution only.

Thank you