ENTRPRENEURSHIP

MODULE 1
 Types of Ventures
Reasons for starting a Business:

1. Financial Independence - Some persons feel restricted financially with the income received
from their job. Starting a business would give them the opportunity to be a successful business
person and achieve financial independence.

2. Being your own boss- You are able to make decisions about the direction and operation of the
business.

3. To use your skills and knowledge for yourself- The skills, knowledge and experience that you
have acquired can be put to work for you.

4. Self-actualization/fulfilment- Owning and operating a successful business will give a feeling

of accomplishment.

5. To create employment for relatives, friends and community members- Business can assist in
providing jobs for persons in communities with high levels of unemployment.

Forms of Business Organizations

An organization is a system that groups people together towards establishing a common goal.
Business organizations are centered on creating goods and services for profit. There are several
types of business organizations that one can start.

1. Sole trader/ Sole Proprietorship.

2. Partnership (Limited and General) – Joint Venture.
3. Franchise.
4. Corporation (C and S corporation).
5. Limited Liability Company (LLC).
6. Private Companies/ Private Limited Companies (PLC).
7. Non-Governmental Organisation (NGO
8. State-owned enterprises (Statutory Organisations).

All forms of business organizations can either be characterized as a part of the private sector or
the public sector.

The Private and Public Sector

Public Sector

● Government control of factors of production on behalf of citizens

● Motive to provide services to citizens

● Consists of nationalized industries, executive agencies, local and municipal authorities,

government departments, public corporations.

Advantages

● Government provides public goods that the private sector will not provide.

● Government provides welfare services to poorer members of society.

● Government sets the control mechanisms on place for the conduct of business.

Disadvantages

● Government can increase taxes to finance expenditure

● Inefficient use of state resources

● Political interference in private sector

Private Sector

● Private individuals or businesses own the factors of production

● Motive to maximise profits

● Consists of sole traders, partnerships, public and private companies multinationals,

conglomerates, franchises

Advantages

● Brings more competition and product variety to the market

● Increased use of technology

● Provides investment and employment

Disadvantages

● Will only provide products that citizens can pay for

● Engages in the production of demerit goods once there is demand

Terms and concepts:

Insolvent – unable to repay debts or bankrupt

Liquidate – This occurs when a business sells off its assets to repay debts
Limited liability- it means that he or she is not personally responsible for business debts and
obligations of the corporation.
Unlimited liability - refers to the legal obligations general partners and sole proprietors because
they are liable for all business debts if the business can't pay its liabilities.

1. Sole Trader (Sole Proprietorship)

• Definition: A business owned and operated by one person who has full control of the
entity.
• Formation: Easy to set up; requires registration of the business name and obtaining a
taxpayer ID.
• Liability: Unlimited personal liability; the owner is responsible for all debts and
obligations.
• Owners: One individual.
• Tax Liability: Income from the business is taxed as personal income of the owner.
• Ownership Transfer: The owner may transfer ownership freely.
• Continuity: The business does not continue if the owner dies or withdraws.
• Cost of Formation: Low; involves minimal registration fees and legal formalities.
• Advantages:
o Full control by the owner.
o Simple and inexpensive to establish and operate.
o Owner receives all profits.
• Disadvantages:
o Unlimited personal liability.
o Limited ability to raise capital.
o The business continuity is tied to the owner.
• Ability to Raise Capital: Limited; relies on personal funds or loans.
• Other Characteristics: Popular among craftsmen, vendors, and small retail operators.

2. General Partnership

• Definition: A business jointly owned and operated by two or more individuals.

 • Formation: Simple; requires a partnership agreement and registration of the business
name.
• Liability: Unlimited liability; partners share responsibility for all debts and obligations.
• Owners: Two or more partners.
• Tax Liability: Income from the business is taxed as personal income of the partners.
• Ownership Transfer: Transfer requires the agreement of all partners.
• Continuity: The partnership dissolves if a partner leaves, unless otherwise agreed.
• Cost of Formation: Moderate; involves drafting a partnership agreement and registration
fees.
• Advantages:
o Easy to establish.
o Shared decision-making and responsibilities.
o Combined skills and resources of partners.
• Disadvantages:
o Unlimited liability for partners.
o Potential for conflicts between partners.
o Dissolution upon the exit of a partner unless otherwise agreed.
• Ability to Raise Capital: Moderate; easier than sole proprietorship due to multiple
sources.
• Other Characteristics: Common in professional services like law firms and medical
practices.

3. Limited Partnership

• Definition: A business owned by two or more persons, with both general and limited
partners.
• Formation: Requires registration with the Registrar of Companies and a formal
partnership agreement.
• Liability: General partners have unlimited liability; limited partners' liability is limited to
their investment.
• Owners: Two or more partners (at least one general and one limited partner).
• Tax Liability: Income is taxed as personal income of the partners.
• Ownership Transfer: Limited partners can transfer their interest with consent; general
partners usually cannot transfer their interest without consent.
• Continuity: The business can continue if a limited partner withdraws; dissolves if a
general partner withdraws unless otherwise agreed.
• Cost of Formation: Higher due to legal fees for drafting a formal agreement and
registration.
• Advantages:
o Limited liability for limited partners.
o General partners retain control.
 o Can attract investors as limited partners.
• Disadvantages:
o Unlimited liability for general partners.
o More complex and costly to establish.
o Limited partners have no management control.
• Ability to Raise Capital: Higher due to the ability to attract limited partners'
investments.
• Other Characteristics: Suitable for businesses needing significant capital.

4. Corporation (C and S Corporation)

• Definition: A corporation is an artificial legal entity separate from its owners, providing
limited liability and perpetual existence.
• Formation: Requires filing articles of incorporation with the state, creating bylaws, and
issuing stock.
• Liability: Limited liability; shareholders are not personally liable for corporate debts
beyond their investment in stock.
• Owners: One or more shareholders.
• Tax Liability:
o C Corporation: Subject to corporate tax rates. Profits are taxed at the corporate
level and again as shareholder dividends (double taxation).
o S Corporation: Income is passed through to shareholders and taxed at individual
rates, avoiding double taxation.
• Ownership Transfer: Ownership is easily transferable through the sale of stock.
• Continuity: Perpetual existence; not affected by changes in ownership or management.
• Cost of Formation: High; includes fees for incorporation, legal fees, and costs for
maintaining corporate formalities.
• Advantages:
o Limited liability protection for shareholders.
o Ability to raise significant capital through stock issuance.
o Perpetual existence enhances business stability.
• Disadvantages:
o Complex and costly to establish and maintain.
o C Corporation: Double taxation of profits.
o Extensive regulatory and reporting requirements.
• Ability to Raise Capital: High; can issue various classes of stock to attract investors.
• Other Characteristics:
o C Corporation: No limit on the number of shareholders.
 o S Corporation: Limited to 100 shareholders and must adhere to specific IRS
requirements (e.g., all shareholders must be U.S. citizens or residents).

5. Franchise

• Definition: A business where a parent company (franchisor) grants rights to an individual

or group (franchisee) to operate under its brand.
• Formation: Requires signing a franchise agreement and complying with the franchisor's
conditions.
• Liability: Limited liability; depends on the franchise agreement.
• Owners: One or more franchisees.
• Tax Liability: Single taxation; franchisees pay taxes on their share of income.
• Ownership Transfer: Not possible without franchisor’s approval.
• Continuity: The franchise agreement governs continuity; can continue under new
management if approved.
• Cost of Formation: High due to franchise fees and compliance costs.
• Advantages:
o Access to established brand and business model.
o Training and support from the franchisor.
o Lower risk due to proven business concept.
• Disadvantages:
o High initial and ongoing fees.
o Limited control over business operations.
o Dependence on franchisor’s success and reputation.
• Ability to Raise Capital: Moderate to high; easier to attract investors due to established
brand.
• Other Characteristics: Common in fast food, retail, and service industries.

6. Private Limited Company (PLC)

• Definition: A Private Limited Company is a type of privately held small business entity
in which the owner's liability is limited to their shares.
• Formation: Requires registration with the Registrar of Companies, drafting articles of
association, and issuing shares.
• Liability: Limited liability; shareholders are liable only up to the amount unpaid on their
shares.
• Owners: Two or more shareholders.
 • Tax Liability: Income is taxed at corporate rates; shareholders pay taxes on dividends
received.
• Ownership Transfer: Shares can be transferred, but typically with restrictions outlined
in the articles of association to maintain the private status.
• Continuity: Perpetual existence; unaffected by changes in shareholders or directors.
• Cost of Formation: Moderate to high; involves legal and registration fees, and costs for
compliance with regulatory requirements.
• Advantages:
o Limited liability protection for shareholders.
o Separate legal entity status enhances credibility.
o Ability to raise capital through the sale of shares.
• Disadvantages:
o Restriction on the transfer of shares to maintain private status.
o Regulatory and reporting requirements.
o Costs associated with compliance and administration.
• Ability to Raise Capital: Moderate; can raise funds through private equity, venture
capital, or loans, but less flexibility than public companies.
• Other Characteristics:
o Generally cannot offer shares to the public.
o Often used by family businesses and small to medium-sized enterprises.
o Owners can be involved in management.

7. Limited Liability Company (LLC)

• Definition: A business entity that offers limited liability to its owners while allowing for
flexible management structures.
• Formation: Requires filing articles of organization with the Registrar of Companies and
drafting an operating agreement.
• Liability: Limited liability; members are not personally liable for business debts.
• Owners: Two or more members.
• Tax Liability: Income is usually taxed as personal income of the members, but can
choose corporate tax status.
• Ownership Transfer: Members may transfer interest, often requiring approval from
other members.
• Continuity: Can continue if a member leaves, per the operating agreement.
• Cost of Formation: Moderate; includes registration and legal fees for drafting operating
agreements.
• Advantages:
o Limited liability protection.
 o Flexible management structure.
o Tax advantages and flexibility.
• Disadvantages:
o More complex to establish than sole proprietorships and partnerships.
o Can be subject to self-employment taxes.
o Operating agreement complexity.
• Ability to Raise Capital: High; can issue membership interests to attract investors.
• Other Characteristics: Suitable for various types of businesses, combining benefits of
corporations and partnerships.

8. Non-Governmental Organization (NGO)

• Definition: Organizations that operate independently from the government, often aiming
to address social or political issues.
• Formation: Requires registration with the Registrar of Companies and often government
approval.
• Liability: Usually limited; members are not personally liable for debts.
• Owners: Typically managed by a board of directors.
• Tax Liability: Subject to statutory regulations; often tax-exempt.
• Ownership Transfer: Governed by the organization’s bylaws; often not applicable as
NGOs do not have owners in the traditional sense.
• Continuity: Can continue indefinitely as per the bylaws and mission.
• Cost of Formation: High due to extensive documentation and registration requirements.
• Advantages:
o Potential for tax-exempt status.
o Ability to attract donations and grants.
o Focus on social impact.
• Disadvantages:
o Complex regulatory requirements.
o Dependence on fundraising.
o Limited profit-making potential.
• Ability to Raise Capital: High; relies on donations, grants, and fundraising activities.
• Other Characteristics: Includes social enterprises, charities, and advocacy groups.

9. State-Owned Enterprise (SOE)

• Definition: A business enterprise owned and operated by the government.

• Formation: Established by legislation or government decree.
• Liability: State liability; government is responsible for debts.
• Owners: The state or government.
• Tax Liability: Subject to statutory regulations; may have special tax considerations.
• Ownership Transfer: Not applicable; remains with the state.
• Continuity: Continues as long as supported by the government.
• Cost of Formation: High; involves government resources and legislative procedures.
• Advantages:
o Government support and funding.
o Can focus on public good rather than profit.
o Stability and continuity.
• Disadvantages:
o Bureaucratic inefficiencies.
o Limited flexibility and innovation.
o Potential political interference.
• Ability to Raise Capital: High; funded through government budgets and revenues.
• Other Characteristics: Includes utilities, transportation, and public services.
 Legal & Regulatory Framework
Registration of a Venture

Registration Process

The initial step in starting a business venture involves registering the business name with the
appointed state authorities. This ensures no other business exists with the same name, providing
identity and ownership, thereby establishing the business legally within the economy. In many
countries, this is done through the Intellectual Property Rights Office. In Jamaica, the Companies
Office of Jamaica handles this process.

Upon receiving the business registration certificate, the entrepreneur should take it to the Inland
Revenue Department to obtain a tax identification number for the business.

Benefits of Registration

• Financial Access: Enables opening accounts at financial institutions.

• Attraction: Appeals to clients and investors.
• Identity: Provides the business with an identity and image.
• Government Contracts: Eligibility for government contracts.

Industrial, Personnel/Labour Laws

Key Labour Laws

• Employment Contracts: Legal agreements between employer and employee.

• Leave Privileges: Regulations on vacation, sick leave, and other absences.
• Remuneration and Working Hours: Standards for wages and working hours.
• Severance and Dismissal: Rules on termination of employment.
• Trade Unions: Rights related to union membership and collective bargaining.
• Hiring and Firing Policies: Guidelines for fair hiring and termination practices.
• Employee Representation: Collective bargaining rights and procedures.

Tax Obligations

Importance of Taxes

Taxes are compulsory payments to the government, vital for funding public expenditure, paying
national debts, and providing benefits to the poor.
Business Taxes in the Caribbean

• Income Tax: Based on business profits.

• Import and Export Licenses: Required for international trade.
• Social Security, Medical Benefits, and National Insurance: Mandatory contributions
for employee benefits.
• Value Added Tax (VAT): Sales tax on goods and services.
• Unincorporated Business Tax: Specific to small businesses in some regions.
• Property Tax, Education Tax, NHT, and HEART Contributions: Various local taxes
in Jamaica.

Steps for Registration and Tax Incentives

• Register the Business Name: Obtain a registration certificate.

• Tax Identification Number: Acquire from the Inland Revenue Department.
• Tax Filing and Payment: Regular submission of tax returns and payments.
• Incentives: Some countries offer tax breaks for new businesses or specific industries.

International Standards and Regulations

ISO Standards

The International Organization for Standardization (ISO) develops standards to ensure product
and service quality, safety, and efficiency. Benefits include expanded market potential, improved
efficiency, cost savings, and increased worker motivation.

Duty of Care and OSHA

• Duty of Care: Legal and moral obligation to protect all associated individuals from
harm.
• OSHA: Enforces workplace safety, provides training, and mandates documentation and
publication of health and safety practices.

HACCP

A food safety management system addressing hazards in production, procurement, handling,

manufacturing, and distribution. It reduces the risk of foodborne illnesses.

Financial Regulations

Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT)

Businesses must comply with regulations to prevent money laundering and terrorist financing,
involving stringent record-keeping and reporting requirements.

International Financial Reporting Standards (IFRS)

Global standards for financial reporting, ensuring transparency, accountability, and efficiency in
financial markets.

Environmental Stewardship

Sustainable Practices

Entrepreneurs should use conservation and sustainable practices to protect the natural
environment, regulated by laws governing hazardous materials, pollutants, and noise.

Intellectual Property Rights (IPR)

Protection of Intellectual Property

Registering patents, trademarks, and copyrights protects innovations, brand identity, and creative
works from unauthorized use, fostering innovation and business growth.

Open Innovation

Collaborative Innovation

Encourages businesses to use external and internal ideas to advance technology and market
solutions, promoting collaboration and reducing costs.

Contracts

Types and Components

• Legal Contracts: Binding agreements enforceable by law.

• Sales Contracts: Agreements on the sale of goods and services.
• Leases: Contracts for renting property or equipment.
• Components: Offer, acceptance, consideration, legality, and capacity.
• Contextual/Situational: Tailored to specific business needs and environments.

Accreditation and Certification

Standards and Quality Assurance

Achieving accreditation and certification ensures compliance with industry standards, enhances
reputation, and can be essential for market access and competitiveness.
 Ethics and Social Responsibility

Importance of Business Ethics and Integrity

Role of Ethics and Integrity in Ventures

• Business Ethics: Governs moral principles, policies, and values in business, building
trust between the company and its customers.
• Integrity: Involves honesty, trustworthiness, and reliability, ensuring that individuals
consistently do the right thing and adhere to high standards.
• Benefits:
o Maximize Profits: Ethical businesses are more profitable.
o Orderly Environment: Promotes a non-hostile, organized workplace.
o Attract Quality Stakeholders: Draws in top-tier workers, suppliers, investors,
and clients.

Code of Ethics

Reasons and Importance

• Guidelines: Establishes ethical guidelines and best practices for honesty, integrity, and
professionalism.
• Sanctions: Violations can lead to termination or other penalties.
• Entrepreneur's Role:
o Create and enforce a clear code of ethics.
o Ensure employees understand and agree to the code.
o Lead by example and promote ethical behavior.
o Incentivize adherence and highlight/correct behaviors.

Business Etiquette

Professional Business Practices

• Definition: Expectations of social and business conduct prescribed by social conventions

and ethical behavior among professionals.
• Good Manners: Demonstrates professionalism and respect in all business interactions.
• Awareness: Be mindful of varying business practices with trading partners.
Corporate Social Responsibility (CSR)

Overview and Benefits

• Definition: Integrative management concept aligning company behavior with ethical,

social, environmental, and human rights considerations.
• Obligations:
o Economic: Make money.
o Legal: Adhere to laws and regulations.
o Ethical: Do what is right, beyond legal requirements.
o Philanthropic: Contribute to societal projects.
• Benefits:
o Improved Public Image: Attracts consumers by demonstrating commitment to
social causes.
o Increased Brand Awareness: Ethical practices spread positive news about the
brand.
o Cost Savings: Sustainable practices can reduce production costs.
o Competitive Advantage: Differentiates from competitors.
o Customer and Employee Engagement: Higher engagement due to positive
public image.
o Employee Benefits: Creates a positive and productive workplace environment.

Corporate Governance

Principles and Practices

• Definition: Set of fiduciary and managerial responsibilities binding a company's

management, shareholders, and board within a societal context.
• Elements:
o Legal and Regulatory: Adherence to laws and regulations.
o Ethical and Societal Forces: Aligning with societal expectations and ethical
standards.

Social Entrepreneurship

Characteristics and Impact

• Mission-Driven: Focused on delivering social value to the underserved.

• Entrepreneurial Behavior: Innovative and open-minded approach to problem-solving.
• Financial Independence: Sustainable and self-sufficient business models.
• Organizational Culture: Strong culture of innovation and dedication to mission.
Social Sector Actors/Non-Governmental Organizations (NGOs)

Role and Importance

• Definition: Organizations focused on addressing social, environmental, and community

issues without seeking profit.
• Activities:
o Health: Promote health initiatives.
o Environmental Stewardship: Implement sustainable practices.
o Community Development: Engage in projects that benefit local communities.
o Anti-Corruption: Work to eliminate corruption.
o Employee Voluntarism: Encourage volunteer activities.
o Human Rights: Advocate for human rights and social justice.
 The Triple Bottom Line
The Triple Bottom Line (TBL) is a framework that expands the traditional reporting framework
to include social and environmental performance in addition to financial performance. It
encourages businesses to focus not just on profit but also on people and the planet.

Components of the Triple Bottom Line

1. Profit (Economic Performance)

o Traditional Measure: Reflects the financial health and economic performance of
a business.
o Economic Sustainability: Ensures the business remains profitable and viable in
the long term.
2. People (Social Performance)
o Social Responsibility: Considers the impact of business activities on all
stakeholders, including employees, customers, communities, and society at large.
o Employee Welfare: Promotes fair labor practices, safe working conditions, and
equitable treatment.
o Community Engagement: Involves contributing to community development and
enhancing the quality of life for people affected by the business.
3. Planet (Environmental Performance)
o Environmental Stewardship: Focuses on reducing the ecological footprint of
business operations.
o Sustainable Practices: Encourages the use of renewable resources, waste
reduction, and minimizing pollution.
o Conservation Efforts: Includes activities aimed at protecting natural habitats and
biodiversity.

Importance of the Triple Bottom Line

• Holistic Business Approach: Encourages businesses to consider the broader impact of

their operations beyond mere financial gains.
• Sustainability: Promotes long-term sustainability by addressing the interconnectedness
of economic, social, and environmental factors.
• Stakeholder Trust: Builds trust and credibility with stakeholders by demonstrating a
commitment to responsible and ethical practices.
• Risk Management: Identifies and mitigates risks related to social and environmental
factors, which can affect the long-term viability of the business.
 • Competitive Advantage: Differentiates businesses in the marketplace, attracting
customers, investors, and employees who value sustainability and ethical practices.

Implementing the Triple Bottom Line

1. Developing Strategies
o Integration: Integrate TBL principles into the core business strategy and
operations.
o Goals and Metrics: Set specific, measurable goals for social, environmental, and
economic performance.
2. Reporting and Transparency
o Sustainability Reporting: Publish regular reports detailing TBL performance,
using recognized frameworks such as the Global Reporting Initiative (GRI).
o Stakeholder Communication: Engage with stakeholders through transparent and
honest communication about TBL efforts and progress.
3. Continuous Improvement
o Feedback Loops: Implement systems to gather feedback and continuously
improve TBL performance.
o Best Practices: Learn from and adopt best practices in sustainability from other
organizations and industry standards.

Benefits of the Triple Bottom Line

• Enhanced Reputation: A strong commitment to TBL can enhance a company's

reputation and brand image.
• Increased Efficiency: Sustainable practices often lead to more efficient use of resources,
reducing costs in the long term.
• Employee Satisfaction: Ethical and socially responsible businesses tend to have higher
employee morale and retention.
• Market Opportunities: Opens new markets and opportunities, especially as consumer
preferences shift towards sustainable products and services.
• Resilience: Builds a more resilient business model that can better withstand economic,
social, and environmental challenges.