NotesVilla Academic Team Notes

Business Enterprises
Author: Vibha Singh
Institution: University of
Lucknow
Purpose:To encapsulate what
businesses and entrepreneurs
mean. This will aid in the
understanding of the
significance of businesses and
the key components of
entrepreneurialism by educators
and students. Recognizing the ten influences on businesses as
well as the many funding options. Additionally, they study the
various corporate entity kinds and their associated benefits and
drawbacks.
Audience:Educators or Postgraduate students of Business
Courses
Keywords - business, enterprise, entrepreneur, the importance
of enterprise, economy, factors influencing enterprises, aspects
of enterprises, types of enterprises
1. Enterprise - An individual or a company that demonstrates
enterprise is willing to take calculated risks, act independently, and
launch new projects.
2. Entrepreneur - An entrepreneur owns, manages, and takes risks
in their firm. The people who take risks and put their own money into a
business and industrial endeavors are called entrepreneurs. When you
hear the word "entrepreneur," you probably think of business moguls like
John D. Rockefeller, Andrew Carnegie, Bill Gates, and others.
Everybody engages in some form of entrepreneurship. entrepreneurial in
terms of self-improvement, autonomy in making decisions, innovation,
and taking risks.

3. The Importance of Enterprises - Businesses offer products and

services. A service is a non-physical, intangible good like a haircut or a
cab ride, whereas a product is a tangible, physical item like a car or
computer. The economy is developed through enterprises. The strength
of a country's economy determines its level of prosperity. Every country
must promote economic growth to raise people's living standards, end
poverty, and advance society. The process of economic growth entails
an increase in GNP (Gross National Product) and is dependent on the
human resources use of physical natural resources to reach the
country's full productive potential.
a. Creates wealth for the country: Every person who looks for
business prospects typically makes money by starting their own
business. The wealth produced by the same contributes
significantly to the growth of the country. Both the company and
the entrepreneur provide some sort of contribution to the economy,
whether it be in the form of goods or services, increasing GDP
rates, or making tax contributions. Their innovations, ideas, and
views are also of immense value to the country.
b. Employs a large number of people: It is a common
misconception that everyone unemployed turns to
entrepreneurship, however, this is inaccurate. An economy is not
burdened by entrepreneurship. Entrepreneurs provide new
employment opportunities. The nation is led toward improved
chances by entrepreneurship, which is a big contributor to the
economy.
c. Contributed to the system of research and development:
Enterprises are responsible for an increasing number of
innovations in today's world. The world would have been a much
more boring place to live if not for the explosion of inventions.
Through improved and standardized technology, inventions offer a
simpler approach to completing tasks.
d. It is a challenging opportunity: Although beginning a business is
a difficult task, in most situations the rewards it brings are
considerably greater than one expects. An entrepreneur is
rewarded in other ways besides only financially, too. It makes
entrepreneurs feel good about them.
 e. It fosters independence: The entrepreneur not only achieves
independence but also raises the level of living for their staff. It
offers opportunities to several employees of the company. Liberty,
financial gain, and the satisfaction one has after completing work
are the fundamental elements that might lead to pleasure. As a
result, the contribution of entrepreneurs enhances the quality of life
in the economy.
f. Economic emergence increases: If someone starts an
enterprise, they have the greatest possibility for growth. Along with
earning money, one can also learn. This is a significant motivator
for any entrepreneur because the information and skills they
acquire while running their business become their assets for life,
something that typically is lacking when an individual is employed.
When someone decides to start their own business, they must go
through a grooming process. In this way, he or she and the
economy as a whole gain from it.
4. Three Most Important Aspects of Enterprising - The three
essential components of enterprise, which include a person's pursuit of
opportunity regardless of the resources under control, are:
a. Taking risks: Being entrepreneurial carries some risks. These are
the dangers related to buying raw materials, investing money,
promoting products, losing money, failing, going out of business, or
dealing with fierce competition. Enterprise activities cannot be
undertaken without taking risks. An intrinsic quality of an
entrepreneur is their ability to take risks. Any time a new product or
service is produced, some risks must constantly be taken. Many
different threats could happen. Any successful business requires a
willingness to take risks.
 b. Taking initiatives - Having initiative entails initiating action. A
person who takes the initiative will engage in product innovation,
market research, the introduction of novel production techniques,
and ways for restructuring entire industries. One of an
entrepreneur's primary traits is the ability to innovate. A creative
idea is executed and used effectively through such innovation. Its
success opens up new economic opportunities and leads to
commercial success.
c. Starting new ventures - This entails searching for innovative
concepts and market gaps. An entrepreneur starts his business
after giving it some thought and, after weighing the advantages
and disadvantages of each option, chooses the best one. This trait
is crucial since it encourages business owners to take on any
endeavour in a variety of challenging circumstances.
5. Other aspects of enterprising include:
a. Skill - Anyone with unique expertise who can also serve as a
source of inspiration for others is a good candidate for beginning a
business. He or she could be an individual acting alone or as part
of a group.
b. Making decisions - A person in an enterprise can decide
appropriately on the start-up of a business, its management, the
acquisition of various factors, and the distribution and coordination
of various precious resources. They need to be able to make
decisions quickly and with strength on a variety of issues. The
enterprise's success is heavily reliant on its decision-making skills.
One of your key duties is to redesign your company's layout to
make it more efficient.
c. Creativity - As the name suggests, creativity refers to any
individual who uses resources economically wisely and engages in
 useful activities. They can invent new things. They develop fresh
concepts and nurture them in the context of their expertise,
wisdom, and intellect. A creative mindset and personality are
crucial in all such endeavors.
d. Planning - A business needs an owner, an employer, a producer,
a market-creator, a decision-maker, a risk-taker, a coordinator, an
information-user about the market, as well as a creative thinker
and an inventor. For this, a planner is needed to lead the
company's economic development and meticulously organize all
subsequent attempts. To create a new product for your company,
you must also create a production schedule.
e. Leadership- A leader uses leadership to properly motivate his or
her team members so that they can work tirelessly for the good of
the company. This requires having a vision for where your
business will be in two to three years.
6. Ten Factors that Influence Enterprises - Business environments
change often, necessitating care when activities are planned and carried
out. The following variables have the greatest impact on businesses:
a. Legal- Small businesses in specialized industries have few
resources and are unable to compete with large-scale
manufacturers. One legal strategy to safeguard the interests of
small businesses is to reserve specific products for exclusive
manufacturing in the small sector.
b. Infrastructure- The government should provide land and factory
sheds at discounted rates, adequate power, water, coal, and other
energy sources, transportation facilities, the availability of wagons,
a supply of raw materials, and other physical facilities to make it
easier for new enterprises to be established.
c. Financial- If the new businesses are to provide services and
expand, significantly fixed and operating capital needs to be
required. Potential entrepreneurs are discouraged from starting
new businesses due to a lack of funding. In developing nations
with little capital, where businesses and industries must learn to
deal with an underdeveloped capital market, the issues become
more severe. The governments of these nations should ensure
that the capital market is developed with cutting-edge financial
institutions and new, cutting-edge capital market instruments. The
practice of borrowing money is fairly widespread. It can
occasionally leave the company in debt. Additionally, it implies that
the amount borrowed must be repaid with interest. Costs rise due
to interest, and certain financial sources have higher interest rates
than others.
d. Globalization - Due to the absence of geographic borders,
commerce now takes place in an open atmosphere. As a result,
competition is very fierce. A corporation must be fiercely
competitive in terms of quality, price, and delivery to thrive in
today's market.
e. Stakeholders - Today's stakeholders are more informed and stay
current on industry trends as well as the development of specific
industries in which they are interested. As a result, the stakeholder
is aware, which increases his level of involvement.
f. Research and development (R&D) - To compete in the global
market, businesses are spending a lot of money on R&D projects
today.
g. Technological developments - Industries are introducing
computerized production and process controls and increasing
automation significantly. Industries and services are being brought
 about by the geographic reach and the demand for the items. The
business that has made the most technological strides benefits
from economies of scale in manufacturing and marketing.
h. Communicational - The lack of knowledge causes many
businesses to fail. Without knowledge of market potentials, market
competition, technology advancements, and other developments,
an entrepreneur has a low chance of success. Government
agencies, business associations, financial institutions, and
consultants to the private sector all have a part to play in this. The
success of an organization depends on many factors.
i. Availability of resources- Enterprises not only need sources of
funding but other resources too. In addition to selling shares,
businesses need external resources to survive. Typically, raising
capital is substantially more difficult for smaller enterprises.
j. Time - The amount of time required can have an impact on the
source of funding. For instance, you might use trade credit if you
only need money for a short time to buy some stock. However, if
you need a significant amount of money to purchase an expensive
piece of machinery, you might need to take out a loan that you can
repay over a longer period.
7. Sources of Financing – To launch and grow a business to
profitability, financing is required. When seeking start-up financing, there
are many options to take into account, including:
a. Leasing- Equipment can be rented if a company needs it but
cannot afford to acquire it outright. Leasing of equipment is mostly
done to make it easier for businesses to increase their capacity,
diversify, and update their technology in response to market
demands. Legal expertise in leasing contracts and agreements is
required.
b. Government Grants - Some organizations offer start-up grants to
fledgling firms. These are frequently accessible in places where
the unemployment rate is high. Grants that businesses may get
individually or as a group are used. Governmental evaluations rate
these grants that they create for a specific sector. There is a
mechanism for government funding to be used to finance new
businesses. The government often offers sufficient funding in the
form of grants and subsidies to situations that are recognized as
priority industries. Thus, the government provides capital to
entrepreneurs through grants and subsidies.
c. Mortgage - A mortgage is a long-term debt used to purchase real
estate. Interest is added to the repayment. The property will be
repossessed if is not paid. To
get a loan while beginning a
small business, the lone
proprietor frequently needs to
put up their home or other
personal assets as collateral.
Debt financing is a type of
financing strategy in which
money is raised through
selling bonds, debentures, and mortgages.
d. Loan- Money borrowed from a bank or other financial institution to
launch a business or pay for an expensive item Interest is added to
the repayment. For instance, microloans are very tiny loans
provided to the poor to assist them in starting their own business.
Loans can be obtained from friends and family members as well as
local money lenders. One may also apply for a term loan, which is
 a sum of money that is repaid over a predetermined period in
regular installments.
8. Types of Business Entities- An entrepreneur can choose from a
variety of companies to suit their needs, goals, preferences, and
designs, including:

a. Sole Proprietorship - The sole proprietorship is the most basic

and common type of business structure. The fact that it is the least
regulated of all business structure types is a significant factor in
this. Technically speaking, the classic unincorporated one-person
firm is a sole proprietorship. The company is the owner for tax and
legal reasons. It does not have a life of its own. The business
terminates upon the death of the owner, and the owner is
personally liable for its debts. On the other side, the owner keeps
all of the profits for themselves, and they also have complete
control over the company.
b. Partnership - A partnership is a relationship between two or more
people who work together to conduct business or engage in
commerce. Each partner invests money, assets, labor, skills,
 and/or other resources into the partnership and anticipates
receiving a portion of the company's gains or losses in return.
Collaboration is typically based on some sort of formal partnership
agreement; however, this is not required. It might even just be a
verbal agreement between the parties; however, this is not
advised. Both a simple co-ownership of property that is maintained
and leased or rented, as well as a simple joint endeavor to split
expenses, are not regarded as partnerships.
c. Limited Liability Company (LLC)- This hybrid corporate structure
is known as a limited liability company. It combines aspects of a
corporation and a conventional partnership. A relatively recent
corporate structure is the limited liability company. It has only
recently become a legal form of commerce in all fifty states and
Washington, D.C. It is special in that it provides both the tax
advantages of a partnership and the limited personal liability of a
corporation. A limited liability company is made up of one or more
owners who are actively involved in running the company's
operations. Additionally, managers who are not members could be
hired to run the company.
d. Corporation- A Company is a legal construct. Both the laws of the
state in which it was incorporated and the state or states in which it
conducts business apply to it. It has evolved into the preferred
corporate structure for many small enterprises in recent years.
Compared to a sole proprietorship or a partnership, corporations
often operate at a higher level of complexity. Additionally, there are
a lot more state requirements that apply to corporations' creation
and functioning. The purpose of the following discussion is to give
the prospective business owner knowledge of this kind of business
operation.
Type of Enterprise Advantages Disadvantages
Sole Proprietorship ● Total Control of ● Risk to the
the Owner Assets of Sole
● Simplicity of Owner
Organization ● Potential
● Least Regulated Difficulty in
of all Business Obtaining Loans
● Lack of
Continuity
Partnership ● Greater ● Potential for
Opportunity for Conflict between
Business Partners
● Tax Advantages ● Unlimited
● A Simple Form Personal
of Business Liability
● Legal Liability
Limited Liability ● Limited Liability ● Conflict among
● Limited Risk members
Company (LLC)
● Easier to Attract ● Limited Liability
Investors ● Subject to more
Paperwork
requirements
Corporation ● Limited Liability ● Loss of
● Perpetual Individual
Existence Control
● Corporate Stock ● Technical
can be freely Formalities
sold or traded ● Profits are
without the other distributed to all
member’s the shareholders
consent

Bibliography:
4 Types of Business Structure. (n.d.). Slide Bazaar.

https://slidebazaar.com/items/4-types-business-structure/

Villegas, Y. (2022, July 19). Entrepreneur. Investopedia.

https://www.investopedia.com/terms/e/entrepreneur.asp

Dave, M. (2020, March 30). Top 5 Takeaways On The Importance of

Entrepreneurship. DCID. https://dcid.sanford.duke.edu/importance-of-

entrepreneurship/

Miller, K. (2020, July 7). 10 Characteristics of Successful Entrepreneurs |

HBS Online. Business Insights Blog.

https://online.hbs.edu/blog/post/characteristics-of-successful-

entrepreneurs

Indeed Editorial Team. (2022, June 23). General Environment: 6 Factors

That Influence Business. Indeed. https://www.indeed.com/career-

advice/career-development/general-environment

7 sources of start-up financing. (2022, October 11). BDC.ca.

https://www.bdc.ca/en/articles-tools/start-buy-business/start-business/

start-up-financing-sources

Prakash, P. (2022, March 31). Types of Business Entities. NerdWallet.

https://www.nerdwallet.com/article/small-business/business-entity
Want more?

Visithttps://www.notesvilla.com/notes to gain
access to hundreds of study notes created by
students, teachers and professional learners.

Got notes of your own?

Create an account on https://www.notesvilla.com/

and begin uploading your study notes for cash
payments and credit rewards.