TYPES OF BUSINESS AVAILABLE TO ENTREPRENEURS

In general, entrepreneurs can identify more ideas and opportunities from the types of
business available to them in the community and the country at large. There are a number of
ways to classify enterprises which they can choose from: According to size: The size of the
enterprise is based on its total assets or number of employees who work for it. The Department
of Trade and Industry, through the Bureau of Small and Medium Enterprise Development
(BSMED), categorized them as micro, cottage, small, medium, and large enterprises, for
purposes of rationalizing assistance and incentives to these business enterprises. Description
of each are as follows:

1. Micro Enterprise

It has an asset size not exceeding 50,000. It is usually a home-based enterprise,

operating in makeshift or temporary quarters. The owner heads the enterprise and
employs from on not more than 10 people to help him/her. Examples of these are the
self-employed vending food like taho, puto, or fishballs; those selling in the public
market; and those having sari-sari or rolling stores.

2. Cottage Enterprise

It has an asset of 250,000 but not exceeding 500,000. It is home-based business which
is often managed and operated by the members of the family. Examples of these are
the subcontractors or footwear like shoes and slippers; and food manufacturers of
peanut butter/coco jam or pastillas, as well as decorative products like vases, candles,
and lanters.

3. Small Enterprise

It has an asset of 500,00 but not exceeding 2.5 million. It is owned by an individual or
group and has enough resources to continue operating. It employs from 10 to 20
people. Examples of these are groceries, bakeshops, beauty salons medical/dental
clinics, toy makers, jeepney manufacturers, and travel/tour agencies.

4. Medium Enterprise

It has an asset of 5 million to less than 20 million and employs 100 or more workers. It is
owned by a single individual, business partners, or a corporation. It employs more than
20 to 100 people. These workers are more skilled and possess technical expertise to
run the business with machines/equipment and utilize various quality controls to make
the products. Examples of these are fine dining restaurants withy branches, computer
importer-dealers, garment manufactures, human resources providers, and private
educational institutions.
5. Large Enterprise

It has an asset of 20 million or more. It is often owned and managed by a corporation. It

is large in scope pf operation and number of products or services that it offers to the
market. It employs 100 or more workers who are hired on the basis of their expertise.
Its Board of Directors is responsible for its governance and it has a Chief Operating
Officer to oversee the implementation of the directives of the Board. It operates in highly
formalized but complex systems of management. Examples of these are these are the
big fast food chains, large department stores, big bookstores, family-owned commercial
banks and insurance companies.

According to forms of ownership: There are four forms of business based on ownership,
namely: single proprietorship, partnership, corporation, and cooperative. The table
below describes briefly each form of ownership with its corresponding advantages and
disadvantages culled from the DTI handbook and other sources. Most of our business
are in the form of single proprietorship. This form dominates the retailing, agriculture
and service industries.

FORMS OF BUSINESS
OWNERSHIP
Single Proprietorship is
owned and usually
managed by one person.
They register with the
Department of Trade and
Industry (DTI).
A partnership is an
association of two or more
persons who act as co-
owner of a business.
Each partner contributes
money, property, or
service to the business.
They register with the
Securities and Exchange
Commission (SEC).
Corporation is an artificial
being created by
operation of law, having
the right of succession,
ADVANTAGES
 Easy to set up
 Decision-making left
entirely to owner
 Easy to dissolve
 Retention of all profits
 More flexibility
 Tax incentives and less
government regulation
 Relatively easy to set
up
 Check and balance
maintained with two or
more owners
 Availability of more
capital and credit
 Retention of profits to
fewer owners
 Risks and losses are
shared with other
shareholders
 Maximum flexibility for
DISADVANTAGES
 Demanding on owner’s
personal time
 Growth limited by
owner’s financial
means
 Unlimited liability
 Lack of stability
 Limited access to
credit
 Limited business skills
and knowledge
 Partnership may be
endangered by
conflicts between
partners
 A decision made by
one partner is binding
on all other partners
 Generally, liability for
debts incurred is
unlimited
 Lack of stability
 Complicated setting up
process
 Individual stockholders
may have limited
 growth
 Limited liability of influence on
and the power, attributes individual shareholders management
and properties expressly
 Greater room for  Tendency to
authorized by or incident
professionalism in institutionalize a
to its existence. They
management bureaucracy
register with the Securities
 Easy to rise capital  Strictly regulated and
and Exchange
 Assured of at least 50 supervised by the
Commission (SEC)
years of existence by government
law
Cooperative is adult
registered association of
person, with a common
interest, who have
voluntarily joined together
to achieve a lawful
common social and  Least likely to be
economic end, making dissolved
equitable contribution to  Limited liability  Shared control of the
the capital required. And  More people benefit business
accepting a fair share of from the business  Consensual decision
the risks and benefits of  Professional manager making
the undertaking in may be employed by
accordance with the the members.
universally accepted
principles of the
cooperatives. They
register with the
Cooperative Development
Authority (CDA).