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PLANNING AND ORGANIZING A BUSINESS - Coggle Diagram
PLANNING AND ORGANIZING A BUSINESS
KEY MANAGEMENT FUNCTIONS
PLANNING
Involves making systematic decisions about goals and the necessary actions to achieve them. Activities include:
• Analyzing the current situation
• Anticipating the future
• Setting organizational objectives
• Choosing strategies and resources
ORGANIZING
Assembling and coordinating resources to achieve goals, which includes:
• Resource allocation
• Specifying job responsibilities
• Grouping jobs into work units
LEADING
Stimulating high performance through directing, motivating, and communicating with employees.
CONTROLLING
Monitoring progress and making necessary adjustments to ensure goals are met, involving:
• Setting performance standards
• Evaluating staff performance
• Identifying and addressing performance issues
TYPES OF BUSINESS STRUCTURES
Sole Proprietorship
Simplest form, but with unlimited liability and limited capital.
Can have a lot of employees
Owned by one person
Advantages of Sole Proprietorship
• As a sole proprietor, you have absolute freedom in decision making.
All profits will be your personal property.
No reports of accounts are required.
You only need to pay personal income tax and not business tax.
Disadvantages Sole Proprietorship
Limited source of capital limit the business activity.
The lability of business is unlimited. The owner must be prepared to settle the debt with his personal assets.
The future development of the busines. is limited and depends on the management capability of the owner and the condition of his healthi
Partnership
Shared expertise and resources, but partners share liabilities and responsibilities.
• Private Limited Company (Sdn Bhd
Limits liability to shareholders' contributions, allowing for easier transfer of shares but requiring compliance with more regulations.
• Public Limited Company (Berhad):
Shares can be offered to the public, with unlimited membership but also subject to stringent regulatory requirements.
Berhad (BHD) is a public limited company where its shares can be offered to the public forfixed periods and any otherforms ofsubscription.
STARTING A BUSINESS
• Establishing a New Business
Involves creating a business plan, choosing a structure, obtaining licenses, and financing.
• Buying an Existing Business: Offers
Offers a quicker start with established customer bases but may require significant upfront investment.
• Running a Franchise
Provides a proven business model and brand recognition, but may come with higher costs and operational restrictions.
SOURCES OF CAPITAL
• Personal funds, family and friends, banks, and supporting agencies provide financial resources for entrepreneurial activities.
Basic of accounting
the purpose of financial
statements
To report on the financial position of an entity
To show how the entity has performed (financially) over a particularly period of time (an "accounting period")
MAIN FINANCIAL STATEMENT
Profit and Loss Statement: Summarizes revenues, costs, and expenses over a specific period, showing a company's ability to generate profit.
Balance Sheet: Provides a snapshot of what a business owns (assets) and owes (liabilities) at a specific point in time.
Cash Flow Statement: Reports cash inflows and outflows from operating, investing, and financing activities.
KEY COMPONENTS
Assets: Resources owned by the business (e.g., cash, inventory, machinery).
Liabilities: Obligations or debts owed to others (e.g., loans, accounts payable).
Owner's Equity: The residual interest in the assets after liabilities are deducted, representing the owner's stake in the business.
ASSETS
A resource with economic value that an individual, corporation or country owns or control with the expectation that it will provide future benefit
LIABILITY
A company's legal debts or obligations that arise during the course of business operations
Can be settle through transfer of economic benefits including money, goods or services
Liabilities are a vital aspect of a company's operations because they are used to finance operations and pay for large expansions
OWNER EQUITY
Owner's equity represents the residual interest in the assets of a business after deducting liabilities.
EXPENSES
The economic costs that a business incurs through its operations to earn revenue.
Expenses are the opposite of revenues. Examples of expenses include payments to suppliers,employee wages, factory leases and depreciation.
REVENUE
The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise.
Revenue is the amount of money that is brought into a company by its business activities.