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How Does An Enterprise Work?

Your perfectly optimized content goHow Does an Enterprise Work?

An enterprise usually starts when an entrepreneur mobilizes resources, and they’re ready to take a risk while expecting to earn a profit in the process. Some of the reasons why an enterprise is set up include:

To Exploit Ideas

You can establish a small business to exploit an idea. If the invention is turned into a service or goods that add value, they can command a price and earn a profit in the process. 

To Solve a Problem

Some enterprises are established to solve issues that entrepreneurs are facing. For instance, some websites deal with internet comparison, and they help to save time such that a consumer will not have to research the entire market.

To Fill a Gap

If entrepreneurs notice a gap in an emerging or existing market, they can establish a small business. For instance, online deliveries are convenient since consumers can place an order for any item they need online.

Exploiting Knowledge

Some companies can exploit the readily available knowledge, such as travel or real estate agents. In each instance, the entrepreneur will anticipate their success, and they will earn a profit for the risk-taking and the skills they possess. The firm will only survive when consumer demand is satisfied effectively.

Produce at Lower Costs

Some firms get into the market, and their sole aim is to produce products cheaply compared to other companies in the market.

How to Finance an Enterprise

You need to finance an enterprise to produce, test, and distribute the products. Finances can be obtained from different sources, including:

  • The entrepreneur will use their funds, and that is referred to as private equity

  • Selling shares is called share capital

  • Credit from the suppliers, and this is a lo

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Types of Enterprises

There are different types of enterprises, all for profit business entities. The only difference between them is legal ownership. The legal documents required for each enterprise type will vary.

1. Sole Proprietorship

The sole proprietorship is the smallest of firms, and they include ‘trade’ entities such as decorators and painters. In the modern era, any online business will fall into this category.

2. Partnerships

A partnership is owned and is managed by a group of people, and each one of them has specialized in a particular aspect of the enterprise. Decisions are usually made jointly, and the risks and rewards will be distributed equally among all the partners, which is where enterprise risk management comes in. There are some partnerships where the partners don’t bear the risks equally in the company’s operations. Some partners will have unlimited liability for the debts the term enterprise has incurred.

3. Private Limited Companies (Ltd)

A limited company is a firm that has been legally ‘incorporated,’ which means it has a legal identity. They will be owned by the shareholders, that have limited liability for the company’s debts. 

In the limited company, the shareholders will appoint key executives, and they will make the major business decisions. The directors can also be shareholders, and they will make decisions collectively.

The business structures will vary from one limited company to another. The Board of Directors will also be taking the major risks. Professional managers can also be a part of the entrepreneurial ventures, and company wide collaboration will be necessary, especially in the decision-making process.

4. Public Limited Companies (plc)

Public limited firms are also incorporated legally, and they’re owned by shareholders that have limited liability for the company’s debts. The only difference is that the shares can be sold to the general public.

For the firm to ‘be public,’ the shares should be listed on the stock exchange. They’re supposed to satisfy the criteria mandated by the law revolving around the liquidity of a business and the publicizing of the financial accounts.

The regulations that govern the limited liability business are more complex. The main advantage is that it can raise funds since shares can be sold to any individual. The shares can also be resold through the stock exchange if an investor wants to regain liquidity.

4. Public Enterprise

The state owns the public corporations, and they can be funded in the following ways:

  • License fees

  • Government subsidies and grants

  • Charges for offering a service

The company’s operations will vary from one corporation to another; however, there will be a Board of Governors for a public limited company instead of a Board of Directors. If the income is more than the cost of the enterprise, there will be a ‘surplus’ and not a profit. When such an issue occurs, privatization is a suitable solution.

5. Not-for-Profit Organizations

Some companies have not been established to make profits. Instead, they will earn through running on commercial lines. 

Does a Firm Need an entrepreneur?

Such a distinct legal entity doesn’t necessarily need an entrepreneur besides the competitive market since all participants possess perfect knowledge about the enterprise business process. The transactions taking place won’t have risks attached. For imperfect markets, an entrepreneur will exploit their knowledge to generate a profit and learn more about company culture.

About Enterprise Software

There are different tasks you’ll handle for the new entrepreneurs, and some of them may seem overwhelming. To delegate some of these tasks to the dedicated staff is unrealistic unless there is communication involved. You can also use enterprise software to conduct business since everything will be automated.

The software is in the form of an application that can offer different solutions to all the tasks you’re supposed to handle. The software can deal with security, accounting, and other tasks. The software has various tools, including:

  • Billing

  • CRM (Customer Relationship Management)

  • Business Intelligence

  • ERP (Enterprise Resource Planning)

  • Online Payment Processing

  • Human Resources

  • IT service management

  • Enterprise Content Management

  • Email marketing

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Qualities of a Good Entrepreneur

To succeed as an entrepreneur, you need to know where you’ll access the funds you need. You’ll also need to possess certain qualities if you are to oversee the company departments successfully, and they include:

Vision

There are some professionals who’ll see the vision as being a part of their plan, and it can also be part of their long-term goals. The plan you formulate initially will cover your first year to the next at least five years. You should then ask yourself where you see your business in the next five years. As a visionary, you’ll think long-term and take advantage of all the business opportunities that come your way.

Planning

The ability to plan and ensure a business is successful matters, and this is beyond formulating a business plan meant to seek funding. You need to set goals and look into how you’ll achieve them. You’ll need to follow a particular path, and success will follow.

Being Decisive

Decisiveness is a quality you need to possess if you want to lead an enterprise successfully. You need to spare some time to ponder significant decisions, and there will be many occasions whereby you need to make a decision quickly and firmly.

Passion

A successful entrepreneur needs to believe in the products they offer. They need to be passionate as they sell their idea.

We have looked into how enterprises work and the role of an entrepreneur. As an entrepreneur, you now understand which qualities you need to possess if you are to succeed in your endeavors.

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