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Lim Sei cK.  What motivates someone to become an entrepreneur?  The chance to earn significant profits, buy a yacht, take numerous holidays, buy.

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Presentation on theme: "Lim Sei cK.  What motivates someone to become an entrepreneur?  The chance to earn significant profits, buy a yacht, take numerous holidays, buy."— Presentation transcript:

1 Lim Sei Kee @ cK

2  What motivates someone to become an entrepreneur?  The chance to earn significant profits, buy a yacht, take numerous holidays, buy designer goods and send the kids to the best private schools.

3  Every business starts small.  But by taking on some calculated risks, a lot of determination and some luck, a start-up business can become very large, profitable and valuable.  However, not every entrepreneur wants to build a big business and earn a fortune.

4  The objectives when starting a business can be broadly split into two categories:  Financial objectives, and  Non-financial objectives

5  Most business start-ups begin with one main financial objective – to survive.  Because a large percentage of new businesses do not survive much beyond their launch.  The entrepreneur discovers that the business idea is not viable – the business cannot be run profitably or it runs out of cash.  Start-ups have a high failure rate.

6  To survive, a business needs to have:  Sufficient sources of finance (e.g. cash, a bank overdraft, share capital)  A viable business model – i.e. one which can make a profit

7  If survival can be assured, then profit is the next most important financial objective for a new business.  A profit is earned when the revenue of the business exceeds the total costs.  The entrepreneur can choose to reinvest (“retain”) the profit in the business, or take it out as a personal payment or dividend.

8  For many small business owners, profit is the return for all the hard work and risks taken.  Profit is the reward for taking a risk and making an investment.  Ideally, the profit earned is sufficient to provide the entrepreneur with enough income to live.

9  However, it is important to appreciate that, to make a sustainable profit, a new business needs to be able to:  Add value  Sell into a large enough market

10  Another financial objective is personal wealth. Some entrepreneurs have an objective that goes beyond wanting to earn an adequate income.  They aim to build a valuable business that can substantially increase their personal wealth.

11  Contrary to popular belief, starting a business is not always about financial objectives.  Very often a new business is started with other, non-financial objectives in mind.

12  More control over working life  Need a more flexible and convenient work schedule  Want to escape an uninteresting job or career  A desire to pursue an interest or hobby  Fed up with being told what to do – want to be the boss!  Want the feeling of personal satisfaction from building a business  Want a greater share of the rewards from the effort being put in – compared with simply being paid by an employer

13  Sole proprietorship  Partnership  Private limited company  Public limited company

14  Advantages of setting up as a sole trader are:  Total control of the business by the owner.  Cheap and easy to start up  Keep all the profit  Business affairs are private

15  Disadvantages of being a sole trader are:  Unlimited liability  Can be difficult to raise finance  Can be difficult to enjoy economies of scale, i.e. lower costs per unit due to higher levels of production  There is a problem of continuity if the sole trader retires or dies

16  A partner is normally set up using a Deed of Partnership. This contains:  Amount of capital each partner should provide (i.e. starting cash).  How profits or losses should be divided.  How many votes each partner has (usually based on proportion of capital provided).  Rules on how to take on new partners.  How the partnership is brought to an end, or how a partner leaves.

17  Advantages of setting up a partnership are:  Spreads the risk across more people  Partner may bring money and resources to the business (e.g. better premises to work from)  Partner may bring other skills and ideas to the business  Increased credibility with potential customers and suppliers

18  Disadvantages of becoming a partnership are:  Have to share the profits  Less control of the business for the individual  Disputes over workload  Problems if partners disagree over of direction of business

19  A limited company is a business that is owned by its shareholders, run by directors and most importantly whose liability is limited.  Limited liability means that the investors can only lose the money they have invested and no more. This encourages people to finance the company, and/or set up such a business, knowing that they can only lose what they put in, if the company fails.

20  Advantages of setting up a limited company (plc) are:  For people or businesses who have a claim against the company, “limited liability” means that they can only recover money from the existing assets of the business.  It is easier to raise money through other sources of finance e.g. from banks

21  Disadvantages of setting up a limited company (plc) are:  Costly and complicated to set up  Certain financial information must be made available for everyone, competitors and customers included  Shareholders in public companies expect a steady stream of income from dividends  Threat of takeover

22  A franchise is where a business sells a sole proprietor the right to set up a business using their name.  The franchisor is the business whose sells the right to another business to operate a franchise  A franchise is bought by the franchisee – once they have purchased the franchise they have to pay a proportion of their profits to the franchiser on a regular basis.

23  Advantages of setting up as a franchisee are:  The franchisee is given support by the franchiser.  Less investment is required at the start-up stage since the franchise business idea has already been developed  A franchise allows people to start and run their own business with less risk. The chance of failure among new franchises is lower as their product is a proven success and has a secure place in the market

24  Disadvantages of setting up as a franchisee are:  Cost to buy franchise – can be very expensive  Have to pay a percentage of your revenue to the business you have bought the franchiser from.  Have to follow the franchise model, so less flexible.

25  All businesses in Brunei Darussalam must be registered with the Registrar of Companies and Business Names at the Attorney General’s Office.  The proposed names of business or company must be submitted to the Registry of Companies and Business Names for approval and a fee of B$5.00 is imposed for each proposed name.  [Source: in-brunei-darussalam/setting-up-businesses] in-brunei-darussalam/setting-up-businesses

26  BUSINESS AND INVESTMENT INCENTIVES  His Majesty’s government has announced the reduction of the corporate income tax rate from 30% to 22% for the financial period 1 January 2010 onwards  Corporate tax relief of up to 5 years for companies that invest B$500,000 to B$2.5 million in approved ventures  8-years tax relief for investing more than B$2.5 million  An 11-year tax break if the venture is located in a high-tech industrial park  Exemption from import duties on machinery, equipment, component parts, accessories, building structures and raw materials

27  1. Do you want to start a business? Why or why not?  2. Which of the business organizations is the best – Discuss.  3. How can a sole trader raise capital for the business?  4. How can a limited company raise capital for a business?

28  Read on : Onebiz, online biz licensing system.

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