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BUSINESS ENTITIES & FORMATION (Business Formation: (Family Business…
BUSINESS ENTITIES & FORMATION
Types of Business Entities:
Partnership
legal business entity with two or more partners (not exceed 20 persons); professional businesses; share capital, profit, loss
incorporated under Business Act 1956 (Amendment 1978)
Advantages: :star:easy to set up :star:business risk can be reduced :star:lots of ideas, talents, skills
Disadvantages: :explode:liabilities are unlimited :explode:risk of personal clashes :explode:life span of partnership depend on life span of partners
Private Limited Company
under Companies Act 1965
private limited company; separate identity
Characteristics: :!:specific right and responsibility :!:life span is not dependent on owners :!:limited liabilities :!:at least two members in membership
Conditions: :warning:not exceed 50 people :warning:must use the word Sdn. Bhd. :warning:specific authority to transfer ownership :warning:not allowed to offer/sell any share to general public :warning:not allowed to offer general public to deposit money within stipulated time frame
Requirements: :check:memorandum of association :check:share capital of company :check:BOD :check:auditors :check:company seal
Advantages: :<3:funds are easy to acquire :<3:protected by law :<3:limited liablities
Disadvantages: :forbidden:more rules and regulations :forbidden:pay corporate tax :forbidden:cost setting up company is high
Sole Proprietorship
under Business Act 1956 (Amendment 1978)
owned by one person; liability unlimited; simplest business structure; small amount of capital
Advantages: :red_flag:easy to manage :red_flag:easy to form and dissolve :red_flag:all profits goes to owner
Disadvantages: :black_flag:limited source of capital :black_flag:liability is unlimited :black_flag:life span of business depends on the owner's age
Partnership Agreement
necessary in partnership
to avoid any misunderstanding occurs among partners
written agreement between partners
Important elements
: :check:name of business :check:duration :check:individuals involved
Business Formation:
Family Business Succession
Advantages:
:red_flag:freedom in decision making :red_flag:good exposure to business environment :red_flag:high possibility of great monetary success
Disadvantages
: :black_flag:difficult to get right successor :black_flag:tradition give resistances to change :black_flag:nepotism
Acquiring a Franchise
Advantages:
:red_flag:Lower business risk :red_flag:Better market acceptance :red_flag:expansion :red_flag:HR problems reduced
Disadvantages
: :black_flag:Limited freedom :black_flag:limited product varieties :black_flag:difficult to manage franchisees :black_flag:competition
Buying existing business
Advantages
: :red_flag:time to start business faster :red_flag:probability of getting finance is greater :red_flag:existing market & loyal customers
Disadvantages
: :black_flag:requires bigger amount of capital :black_flag:respect agreement made :black_flag:conflicts could arise
Cyber Entrepreneurship
Advantages:
:red_flag:easy to compete :red_flag:save time
Disadvantages:
:black_flag:F2F limited :black_flag:marketing complexity
Starting from scratch
Advantages
: :red_flag:free to make own decisions :red_flag:has opportunities to practise own idea :red_flag:free to develop business image
Disadvantages:
:black_flag:need to put a lot of efforts :black_flag:higher chances of losses :black_flag:no track record
1. Starting from scratch
most popular method to start-up
Entrepreneur has to make decision on: form of business, trade name, location of business etc.
2. Buying existing business
taking over an existing business
Entrepreneur must investigate before buying
3. Family Business Succession
Business started by earlier family members
Did not face difficulties in starting business
Level of Family Business:
:fountain_pen:Level 2: Business Growth & Development (Founder & 1st Generation)
:fountain_pen:Level 3: Business Maturity (Founder & 1st Generation & 2nd Generation)
:fountain_pen:Level 1: Business Inception (Founder)
:fountain_pen:Level 4: Business Transition Period (1st, 2nd & 3rd Generation)
Challenges:
:no_entry:financing :no_entry:liquidity/cash :no_entry:emotion :no_entry:rivalry
4. Acquiring a Franchise
Products/ Services distribution system governed by contract
selling and marketing products; use trade mark; owned by franchisor; use set of system developed
Types:
:recycle:Product/Trade name Franchise :recycle:Business Format Franchise
5. Cyber Entrepreneurship
Current trend
Globalization
How to form?
Registration with Policymaker / Regulator
Register with SSM
Get a domain name, hosting account, properly designed websites
Register & declare income
Mandatory Guidelines for Cyber Business
Name of Company
Name of Business Owner
Company Registration No.
Email address, Location, Phone no.
Details of Business, Products, Services
Price
Term of payment
Terms & Condition
Delivery Time
