Study Note

BUSINESS
AND
ENTREPRENEURSHIP

BUS102: Business – Basics, Ethics and Environment

Business and Entrepreneurship

Topic 1 | Week 1

Instructor
Nadia Afroze Disha (NAR)
Lecturer
BRAC Business School
BRAC University

BBA Program
Summer 2024
 BUSINESS AND ENTREPRENEURSHIP
Topic 1 | Week 1

▪ ▪ ▪
03 Entrepreneurship

04 Serial Entrepreneurs
CONTENTS
05 Social Entrepreneurs

05 Differences Between Business and Entrepreneurship

How Does Entrepreneurship Spur Economic

08
Growth?
How Has Entrepreneurship Boosted Economic
08
Growth in Bangladesh?
Differences Between Entrepreneurship and
10
Employment

11 Business Plan and Its Components

13 Forms of Business Ownership

14 Sole Proprietorships

16 Partnerships

17 Corporations

20 Review and Discussion Questions

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ENTREPRENEURSHIP

Who Is an Entrepreneur?
An entrepreneur is an individual who takes the initiative to start, organize, and manage a
business or enterprise based on a new or unique idea with the goal of creating value, usually
in the form of products, services, or innovative solutions.

Therefore, based on the definition above, we see that an entrepreneur is someone who –

(i) takes the initiative to start, organize, and manage a business or

enterprise

(ii) works on a new or unique idea

(iii) has the goal of creating value, usually in the form of products,
services, or innovative solutions

Entrepreneurs are characterized by their willingness to take risks, embrace uncertainty, and
demonstrate a high level of creativity and innovation. They play a pivotal role in the economy
by identifying opportunities, mobilizing resources, and assuming the associated financial and
personal risks to bring their ideas to fruition.

Entrepreneurs are often driven by a passion for their work and a desire to bring about positive
changes or address specific needs in the market. They may engage in various activities such
as product development, market research, fundraising, and strategic planning to establish

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and grow their businesses. Entrepreneurship involves not only the creation of new ventures
but also the continuous adaptation and improvement of existing ones to thrive in dynamic
business environments.

Successful entrepreneurs exhibit qualities such as resilience, adaptability, leadership, and a

strong work ethic. They are capable of navigating challenges, learning from failures, and
leveraging opportunities to achieve sustainable growth. Entrepreneurs contribute significantly
to economic development, job creation, and technological advancements, making them
essential drivers of innovation and progress.

Example: Ayman Sadiq

Ayman Sadiq is the visionary behind 10 Minute School, the largest online education platform
in Bangladesh that reaches over 250,000 students daily, offering free quality education. This
young entrepreneur’s journey is a testament to the power of innovative thinking, unwavering
determination, and a passion for education.

Ayman’s entrepreneurial journey began while he was still a student. He started small, tutoring
students in his local community, and quickly realized the potential of technology to reach a
wider audience. He was inspired by the impact that technology was having on other industries
and saw an opportunity to bring that same level of innovation to education.

“I saw the potential for technology to revolutionize education and provide access to quality
resources for students who otherwise wouldn’t have the opportunity. I knew I had to take the
leap and start building the solution,” said Ayman.

In 2012, Ayman founded 10 Minute School with the mission to provide free, quality education
to students in Bangladesh. The platform started small, but Ayman’s passion and dedication to
his mission quickly attracted a following. Today, 10 Minute School is the largest online
education platform in Bangladesh, reaching over 250,000 students daily.

SERIAL ENTREPRENEURS
A serial entrepreneur refers to someone who starts multiple businesses. They may sell or
step back from one business before starting another, or they may run multiple businesses
simultaneously, delegating leadership roles to other people. In addition to founding their own
companies, they often invest or become involved in other early-stage startups that excite
them.

This kind of entrepreneur is typically an expert at identifying new business opportunities and
creating a vision for a company. They tend to be most excited about the early stages of a
business, including tasks like product conceptualization, team building, and attracting
investments. They are often ambitious problem-solvers with a strong stomach for risk, an
endless list of new ideas and a keen understanding of the market.

Serial entrepreneurs come in all shapes and sizes — they could have a street stall selling
apples or be the co-founder of Apple Inc. In fact, many serial entrepreneurs are active in
several unrelated industries.

Example 1: Elon Musk

No list of serial entrepreneurs is complete without Elon Musk, the billionaire Tesla CEO and,
at times, the richest person alive.

Musk's first try at entrepreneurship was a little-known company called Zip2, a searchable
business directory that could be considered an online equivalent to the Yellow Pages. After

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founding Zip2 in 1995, the company was sold four years later to Compaq Computers for $307
million. It was later integrated into the AltaVista search engine.

Following the sale of Zip2, Musk moved on to found x.com, an online payments platform that
later became known as PayPal. The company was ultimately sold to eBay for $1.5 billion.

After these early successes, Musk showed no sign of slowing down and went on to found or
invest in companies like SpaceX, Tesla Motors, and The Boring Company. In 2022, he also
purchased the social media platform X (formerly Twitter).

Example 2: Oprah Winfrey

This famous American philanthropist, media leader, and entrepreneur, best known for her
award-winning talk show, “The Oprah Winfrey Show,” started her career as a local TV anchor.
In 1986, she established Harpo Productions, Inc., which owned the rights to the “The Oprah
Winfrey Show” from 1988 onward, establishing the foundation of her entrepreneurial
ventures. She is the third woman to own her own studio.

She co-founded Oxygen, a cable station, and launched the Oprah Winfrey Network (OWN) in
2008. She publishes the O, The Oprah Magazine, and has authored several books.

SOCIAL ENTREPRENEURS
A social entrepreneur is a person who pursues novel applications that have the potential to
solve community-based problems. These individuals are willing to take on the risk and effort
to create positive changes in society through their initiatives. Social entrepreneurs may
believe that this practice is a way to connect you to your life's purpose, help others find theirs,
and make a difference in the world (all while eking out a living).

Widespread use of ethical practices such as impact investing, conscious consumerism, and
corporate social responsibility programs facilitates the success of social entrepreneurs.

Example 1: Mizanur Rahman Kiron

Mizanur Rahman Kiron is the founder of Physically-challenged Development Foundation
(PDF), engaged in helping disabled youth in Bangladesh. In 2015, The Daily Star recognized
him as a Young Achiever of Bangladesh. Kiron wants to see his organization become the best
platform for Asian youth to learn best practices for policy advocacy and disability rights
movement.

Example 2: Shougat Nazbin Khan

Shougat Nazbin Khan is the founder of H.A. Foundation. She founded the organization on
her family’s land in northern Bangladesh, with the goal of providing education for the rural
poor through digital tools. The school charges a minimal tuition while offering free textbooks,
school uniforms, and transport.

Khan, who has helped 600 children so far, received the Commonwealth Youth Award for Asia
in 2016. She has also developed a low-cost solar irrigation system for which she was awarded
the Green Talent award in 2015.

DIFFERENCES BETWEEN BUSINESS AND ENTREPRENEURSHIP

The terms “business” and “entrepreneurship” are often used interchangeably but they are
distinct concepts that have significant differences. Business and entrepreneurship are both
related to the creation and operation of a company but they differ in their purpose, approach,
and goals.

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Here are a few areas where there are significant differences between business and
entrepreneurship.

Particulars Business Entrepreneurship

Business is the process of Entrepreneurship, on the other

producing, selling, and hand, is the process of creating
distributing goods and services to and developing a new venture or
customers in exchange for enterprise. It involves identifying
1. Definition
money. It involves creating a a need or a gap in the market and
product or service that fulfills a developing a new product,
need or solves a problem for service, or business model to
consumers. fulfill that need.

The purpose of a business is to

generate profits by providing The purpose of entrepreneurship
goods or services that customers is to create value for customers,
are willing to pay for. The focus is solve problems, and innovate.
2. Purpose
on creating a sustainable and Entrepreneurs are driven by a
profitable company that desire to make a difference in the
generates revenue for its owners world and create something new.
and shareholders.

In entrepreneurship, the
In a business, the focus is on
approach is more experimental
optimizing processes and
and iterative. Entrepreneurs are
maximizing profits. The goal is to
willing to take risks and pursue
3. Approach create a sustainable and
unconventional ideas that others
profitable company that
may not have thought of. They
generates revenue for its owners
are focused on innovation,
and shareholders.
creativity, and problem-solving.

Entrepreneurs, on the other

Businesses are typically risk-
averse, and they focus on
mitigating risks and ensuring
4. Risk-Taking
stability. They are often reluctant
to pursue new ideas or ventures
that may be risky or unproven.
hand, are willing to take risks and
pursue unconventional ideas that
others may not have thought of.
They are willing to embrace
uncertainty and ambiguity and
pursue opportunities that have
the potential for high rewards.

Businesses often focus on Entrepreneurs, on the other

incremental improvements to hand, are driven by innovation
existing products or services, and creativity. They are willing to
rather than pursuing radical experiment with new ideas and
5. Innovation
innovation. They may be technologies, and they are
reluctant to invest in research and constantly looking for ways to
development or pursue untested disrupt existing industries or
ideas. create new markets.

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 Particulars Business Entrepreneurship

Businesses typically focus on

maintaining their current market
share and optimizing their
operations to increase profits.
6. Growth
They may be reluctant to pursue
growth opportunities that require
significant investment or involve
high levels of risk.
Entrepreneurs, on the other
hand, are focused on growth and
expansion. They are constantly
seeking out new opportunities
and looking for ways to scale
their businesses.

The mindset of a business owner

Entrepreneurs, on the other
is often focused on maintaining
hand, are characterized by a
stability, managing risk, and
growth mindset. They are
optimizing operations. They may
7. Mindset constantly seeking out new
be more inclined to rely on
opportunities and looking for
established systems and
ways to innovate and disrupt.
processes rather than pursuing
radical change.

Entrepreneurs are often driven

Businesses, on the other hand,
by creativity and a desire to
may be more focused on
create something new. They are
8. Creativity efficiency and productivity, and
willing to take risks and pursue
they may be less inclined to
unconventional ideas that others
pursue radical innovation.
may not have thought of.

Entrepreneurs are often more

Businesses may be more rigid flexible and adaptable than
and resistant to change, businesses. They are willing to
9. Flexibility particularly if they have pivot and change direction if an
established systems and idea is not working, and they are
processes in place. constantly looking for new
opportunities.
Market Entrepreneurs are market
10. Businessmen are market players.
Position leaders.
Businessmen make a place in an
Entrepreneurs create a market
11. Market already existing market with
for their business ideas.
effort and dedication.
12.
Nature Businessmen are calculative. Entrepreneurs are intuitive

13. Risk Factor The risk of failure is less. The risk of failure is very high.
Businessmen are focused on Entrepreneurs are visionary, and
14. Goals
short-term goals and profits. they set long-term goals.
Businessmen face extreme
Entrepreneurs face low
competition since it is difficult to
15. Competition competition for since they enter
obtain a competitive position in
a new market.
an already existing market.

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HOW DOES ENTREPRENEURSHIP SPUR ECONOMIC GROWTH?
Entrepreneurship and economic growth go hand in hand, with innovation acting as a catalyst
for growth. Businesses that prioritize innovation not only create job opportunities but also
enhance productivity, foster healthy competition, and generate wealth. These entrepreneurial
ventures play a vital role in advancing industries and economies. To facilitate innovation-
driven entrepreneurship, governments, policymakers, and institutions play a crucial role by
fostering an environment that supports sustained economic development.

The relationship between innovation entrepreneurship and economic growth is symbiotic, as

each fuels and supports the other in the following ways:

 Job Creation: Innovative entrepreneurs often start new businesses or expand existing
ones which directly leads to the creation of new jobs. In 2022, according to the U.S.
Census Bureau, over 5 million new businesses were made. According to the Small Business
Administration, in the last 25 years small businesses have created over 12.5 million
different jobs.

 Increased Productivity: Innovation in entrepreneurship often leads to the development

of more efficient processes, technologies, and methods. One example is TurboSBIR who
has developed a unique AI for grant searching tool that streamlines the grant search
process for all startups and entrepreneurs. This product leads to improved productivity,
which often results in higher output and increased economic growth.

 Competitiveness: Innovative products and services give businesses a competitive edge

in the market. This can lead to higher sales, increased market share, and greater
profitability. In turn, increased competitiveness drives economic growth and development
as it encourages companies and entrepreneurs to discover newer, more efficient, and cost-
effective ways to address market needs.

 Wealth Creation: Successful innovative entrepreneurship can result in the generation of

profits, which can then be reinvested in further research and development, expansion, or
new ventures. The cycle of wealth creation, reinvestment, and spending stimulates
economic growth.

 Infrastructure and Ecosystem Development: The pursuit of innovative ideas can lead
to the creation of new markets and industries. Some examples include 3D printed homes,
water and sewage recycle systems, solar powered and electric public transportation, and
green roofs. As a result, the necessary infrastructure, supply chains, and supportive
ecosystems develop around these innovations, further contributing to economic
development.

 Global Competitiveness: Economies that foster innovation and entrepreneurship are

better positioned to compete on a global scale. They can adapt more readily to changing
market dynamics, trends, and technologies, enabling them to navigate economic
challenges more efficiently. Innovation in areas of education, health, and the military has
increased the United States global competitiveness when compared to other nations.

How Has Entrepreneurship Boosted Economic Growth in Bangladesh?

At the heart of Bangladesh’s remarkable growth is entrepreneurship. Bengalis were long
known for their interest in poetry, music, and culture. They also had a reputation for being
resilient. Post-independence Bangladesh has shown that they can be entrepreneurial too. An
entrepreneurial spirit has been unleashed across the board in the country, from small rice
farmers diversifying into other crops to large conglomerates with interests as varied as IT and

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steel, from rural non-farm activities selling products in nearby villages to garment
manufacturers operating in the global marketplace.

The latent entrepreneurial resources were harnessed in a succession of waves following the
country’s independence in 1971. One set of activities led to another. The first driver was
growth in rice production, aided by an extensive supply of irrigation facilities and fertilizer. By
1991, rice production was 80% higher than in 1972; now it is three and a half times higher.

As rural incomes grew due to increased rice production, demand increased for a variety of
agricultural products. Enterprising farmers responded by going into the production of
vegetables, potatoes, fruits, dairy and fish. This helped diversify agricultural production and
put the rural economy on a strong footing.

Meanwhile, a new class of traders emerged in the rural areas, engaged in selling or renting
irrigation equipment and distributing fertilizer. As mechanization increased in agriculture,
initially in the form of mechanized irrigation and then expanding into other types of
equipment, a domestic manufacturing industry developed to make some of this equipment
and their spare parts. Moreover, as farmers diversified beyond rice into other crops, as well
as fisheries and poultry, a value chain developed around these activities. New players entered
the scene. These included owners of cold storages for potato, and hatcheries for aquaculture.

As rural incomes increased due to a confluence of factors – agricultural growth, remittance

inflows, and wage earnings of rural women employed in the garment industry – a vibrant rural
non-farm sector emerged. The significant expansion in the rural road network starting from
the late 1980s also helped. By the late 1990s, the notion of subsistence-oriented, isolated
Bangladeshi villages had given way to that of market-oriented rural settlements, well
connected to the rest of the country, and increasingly to distant lands.

In recent years, the rapid spread of mobile telephony and mobile financial services has added
dramatic, new dimensions to this phenomenon. Mobile cellular subscriptions rose from 0.15
million in 2000 to 166 million in 2020, while mobile financial transactions, introduced in 2011,
rose almost nine times, in Taka value terms, between 2013 and 2020. Today, farmers in a
remote village in Bangladesh can use their mobile phones to monitor prices in Karwan Bazar,
a major wholesale market in Dhaka. And if they do decide to supply this market, they can
expect to be paid swiftly through one of the mobile finance providers.

As the rural economy was becoming vibrant, things were also brewing in urban Bangladesh.
The role of remittances and garment exports, two factors linked to the global economy, is well
recognized in the literature on Bangladesh’s growth experience. What is lost in such narratives
is the role of the domestic economy, also an important arena for Bangladeshi entrepreneurs.

Independence led to an exodus of non-Bengali businessmen who had dominated the business
scene in pre-independence Bangladesh. This created opportunities for Bangladeshis, but with
the sweeping nationalization of industry in 1972, these were limited in the manufacturing
sector. The political and economic uncertainty of the time also discouraged long-term
investment in industrial activities, even on a small scale. Entrepreneurial energies were thus
directed towards trading, including importing, where much money was to be made by those
privileged to receive import licenses. Money was also to be made by distributing products
made by public sector enterprises. The origins of some of the large conglomerates of
Bangladesh can be traced to such business ventures of the 1970s.

Over time, the substantial growth in consumer demand resulting from a rising middle class
has generated a paradigm shift in entrepreneurial ambitions. The large size of the economy

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(Bangladesh currently is among the top 40 economies of the world in terms of GDP size) is
allowing enterprises to exploit economies of scale and compete with imported goods. After
serving the domestic market for many years, some are now thinking of going global. An
example is the large firms in the pharmaceutical industry.

The story of Bangladesh’s growth is thus a story of linkages – across sectors, between small
and large companies, and between rural and urban enterprises – interlinkages that have
helped create a dynamic enterprise sector.

DIFFERENCES BETWEEN ENTREPRENEURSHIP AND EMPLOYMENT

Following are 15 key differences between being an entrepreneur and being an employee.

Particulars Entrepreneurship Employment

Compensation for employees

depends on their employment
The compensation for type. If they have a salary, then
entrepreneurs depends on the their paychecks contain a fixed
rates they charge for their amount. If they receive an hourly
Compensation services and the number of wage, then the employer
1.
Plan clients they're servicing. Their processes payments based on
incomes may fluctuate based on the number of hours the
the busyness of their work associates worked. Employees
schedules. can also receive income bonuses,
such as commission and
overtime pay.

Since entrepreneurs work for

Employees work on a schedule
themselves, they often have the
that their employers provide,
freedom to design their own work
which can be during the
Work schedules. For example, they
2. company's standard business
Schedule may prefer working during the
hours. They may also have shifts
evening over the morning, or
that their immediate supervisors
they may be available three days
create.
a week.

As business owners, The decision-making role for

entrepreneurs may make all the
Decision- decisions regarding their careers.
3.
Making For example, they may decide
when to expand their clientele or
create a new work schedule.
employees depends on their rank
in the organizational hierarchy. A
professional in an executive
position may make more choices
than an entry-level coworker.

When entrepreneurs find new

When professionals receive a job
clients, they may not receive
offer, the company may agree to
perks outside of their normal
provide a health insurance plan,
compensation. For example, a
4. Benefits a retirement plan and a signing
business owner may pay for
bonus, for example. Benefits can
private health insurance because
persuade a professional to accept
they don't have a traditional
the offer.
employer.

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 Particulars Entrepreneurship Employment

The career of an entrepreneur

can have a higher risk than that
Employees may only devote time
of an employee. To own a
to their roles, and they can have
successful business, owners
the flexibility to pursue other job
invest time and resources on
5. Risk opportunities. With traditional
their own. It can be challenging
employment, the company
to predict if the business will run
founder is taking the risk, not
well enough to yield a livable
members of its workforce.
income and professional
fulfillment.

Entrepreneurs may have more

independence in their roles than Employees may undergo
employees. As their own performance reviews, where they
immediate supervisors, receive feedback from managers
6. Independence
entrepreneurs can work how they on how they can improve. Their
want to and can hold themselves workflow may rely on the
accountable for their work employer's standards.
conduct.

Entrepreneurs may have greater

responsibilities than traditional
employees. Along with
administering the services they
provide to clients, business Employees, especially those who
owners may meet with potential work at the entry level, may only
7. Responsibility
investors and perform be responsible for the tasks that
maintenance at their office apply to their specific job titles.
meetings, for example. They may
also spearhead promotional
efforts to raise awareness of the
business to the public.

BUSINESS PLAN AND ITS COMPONENTS

A business plan is a written document that describes in detail how a business, usually a
startup, defines its objectives and how it is to go about achieving its goals. A business plan
lays out a written roadmap for the firm from marketing, financial, and operational standpoints.

Business plans are important documents used to attract investments before a company has
established a proven track record. They are also a good way for companies to keep themselves
on target going forward.

Although they are especially useful for new businesses, every company should have
a business plan. Ideally, the plan is reviewed and updated periodically to see if goals have
been met or have changed and evolved. Sometimes, a new business plan is created for an
established business that has decided to move in a new direction.

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Following are the five components of a business plan.

Description of the Business and Goals

Customer Analysis - Knowing Your Customer

Operations Plan - Organizing the Business

Marketing Plan - Marketing and Advertising

Financial Plan - Creating a Budget

1. Description of the Business and Goals

When describing your business, the first thing you need to concentrate on is its structure.
By structure, we mean the type of operation, i.e., wholesale, retail, food service,
manufacturing or service-oriented. Also state whether the business is new or already
established.

In addition to structure, legal form should be reiterated once again. Detail whether the
business is a sole proprietorship, partnership or corporation, who its principals are, and what
they will bring to the business.

You should also mention who you will sell to, how the product will be distributed, and
how the business's support systems will work. Support may come in the form of
advertising, promotions and customer service.

2. Customer Analysis - Knowing Your Customer

An important step in writing a successful and useful business plan is analyzing your customers.
Without knowing who your customers are, you can't effectively market your products or
services, nor are you likely to find anyone willing to invest in your business.

The customer analysis section of the business plan assesses the customer segments that the
company serves. In it, the company must –
1. identify its target customers,
2. convey the needs of these customers, and
3. show how its products and services satisfy these needs.

3. Operations Plan - Organizing the Business

This section outlines all the day-to-day operations of the business. It involves detailing all
the processes and resources that the company requires for each of its activities.

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You should include:

Production or
Quality Control Inventory Suppliers
Service Delivery

Legal
Credit policies Location
environment

4. Marketing Plan - Marketing and Advertising

This area describes how the company will attract and keep its customer base and how it
intends to reach the consumers. This means a clear distribution channel must be outlined.
It will also spell out advertising and marketing campaign plans and through what types
of media those campaigns will exist on.

5. Financial Plan - Creating a Budget

Your financial plan is possibly the most important element of your business plan. This is
especially true if the business plan is aimed at investors or lenders. This section includes
projections, budgets, and goals that are unique to each business. In particular, you should
focus on explaining the assumptions on which you based your forecasts more than on the
forecasts themselves.

FORMS OF BUSINESS OWNERSHIP

How you form your business can make a tremendous difference in your long-term success.
The three major forms of business ownership are illustrated below.

Business
Ownership

1.
2. 3.
Sole
Partnerships Corporations
Proprietorships

General Limited Public Limited Private Limited

Partnerships Partnerships Company Company

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1. Sole Proprietorships
A sole proprietorship is an unincorporated business that one person owns and manages.

Characteristics
 As the business and the owner are not legally separate, it is the simplest form of
business structure. It is also known as individual entrepreneurship, sole trader,
or simply proprietorship.
 The business owner, also known as a proprietor or a trader, conducts business using
their legal name. They may also choose to do business using another name by
registering a trade name with their local authority.
 This type of business is the easiest and cheapest form to start. For this reason, it is
common among small businesses, freelancers, and other self-employed individuals.
 A sole proprietorship begins and ends when the business owner decides, or upon their
death.
 A sole proprietorship may transform into another, more complex business structure if
the business grows substantially.

Advantages of Sole Proprietorships

Sole proprietorships are the easiest kind of businesses to explore in your quest for an
interesting career. Every town has sole proprietors you can visit. Talk with some of these
businesspeople about the joys and frustrations of being on their own. Most will mention the
benefits of being their own boss and setting their own hours. Other advantages include:

1. Ease of Starting and Ending the Business. All you have to do to start a sole
proprietorship is buy or lease the needed equipment (a saw, a laptop, a tractor, a lawn
mower) and put up some announcements saying you are in business. You may have to
get a permit or license from the local government, but often that is no problem. It is just
as easy to get out of business; you simply stop. There is no one to consult or disagree
with about such decisions.

2. Being Your Own Boss. Working for others simply does not have the same excitement
as working for yourself - at least, that's the way sole proprietors feel. You may make
mistakes, but they are your mistakes and so are the many small victories each day.

3. Pride of Ownership. People who own and manage their own businesses are rightfully
proud of their work. They deserve all the credit for taking the risks and providing the
needed goods or services to the society.

4. Leaving a Legacy. Owners can leave an ongoing business for future generations.

5. Retention of Company Profit. Owners not only keep the profits earned but also benefit
from the increasing value as the business grows.

6. No Special Taxes. All the profits of a sole proprietorship are taxed as the personal income
of the owner and the owner pays the normal income tax on that money.

Disadvantages of Sole Proprietorships

Not everyone is equipped to own and manage a business. Often it is difficult to save enough
money to start a business and keep it going. The costs of inventory, supplies, insurance,
advertising, rent, computers, utilities, and so on may be too much to cover alone.

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There are other disadvantages.

1. Unlimited Liability. This refers to the risk of personal losses. When you work for others,
it is their problem if the business is not profitable. However, when you own your own
business, you and the business are considered one. You have unlimited liability; that is,
any debts or damages incurred by the business are your debts and you must pay them,
even if it means selling your home, your car, or whatever else you own.

2. Limited Financial Resources. Funds available to the business are limited to what the
one owner can gather. Since there are serious limits to how much money one person can
raise, partnerships and corporations have a greater probability of obtaining the financial
backing needed to start and equip a business and keep it going.

3. Management Difficulties. All businesses need management; someone must keep

inventory accounting, and tax records. Many people skilled at selling things or providing a
service are not so skilled at keeping records. Sole proprietors often find it difficult to attract
qualified employees to help run the business because often they cannot compete with the
salary and benefits offered by larger companies.

4. Overwhelming Time Commitment. Though sole proprietors say they set their own
hours, it is hard to own business, manage it, train people, and have time for anything else
in life when there is no one with whom to share the burden.

Example of a Successful Sole Proprietorship in Bangladesh

Rapunzel's Secret by Sazia Hasan Izu
When the whole world was trying hundreds of oils and shampoos in futile attempts to solve
their hair problems, Sazia Hasan Izu stuck to the homemade organic hair oil that her nani
(grandmother) prepared for her family members. A nutritionist by profession, Sazia never
really planned to make a business out of her ‘nanir tel’ (grandmother’s oil). But when all her
friends started getting immediate results after using this specially prepared oil and asked her
to make the oil commercially available, Sazia decided to see if the idea was fruitful.

Sazia first learned from her grandmother how to prepare the oil and then offered it to the
people on her Facebook friend list. “I remember I sold only 3 bottles in the first month”, Sazia
recalled. “I was a little disheartened, but then I learned about how to boost my sales on
Facebook.” Sazia opened a page and a group named Rapunzel’s Secret on Facebook for her
business; she used the page mainly to post about her products and offers on a daily basis
while she used the group to build an intimate network of people whom she could directly
approach to promote her hair oil. Happy customers started posting positive reviews of the oil
on the feed of the group and it piqued the interest of other women who were facing myriad
hair problems but failed to find an effective solution.

Since then, Sazia’s business has grown based on word of mouth; now she sells more than
1500 bottles every month. She even receives orders from customers living abroad.

Sazia never imagined that she would sell hair oil through Facebook someday but today she
has an established business that is followed by around 90,000 people on Facebook.

“The best thing about using Facebook as a platform for my business is, I can build personal
relationships with all my customers here. It’s more like a big family to me.”

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2. Partnerships
Partnership is a legal form of business with two or more owners.

Typically, there are two types of partnerships: (1) general partnerships and (2) limited
partnerships.

General Partnerships: In a general partnership all owners share in operating the business
and in assuming liability for the business's debts.

Limited Partnerships: A limited partnership has one or more general partners and one
or more limited partners.
General Partner: A general partner is an owner (partner) who has unlimited liability
and is active in managing the firm. Every partnership must have at least one general
partner.
Limited Partner: A limited partner is an owner who invests money in the business
but does not have any management responsibility or liability for losses beyond his or
her investment.
Limited Liability: Limited liability means that the limited partners' liability
for the debts of the business is limited to the amount they put into the company
and that their personal assets are not at risk.

Advantages of Partnerships
Often, it is much easier to own and manage a business with one or more partners. Your
partner may be skilled at inventory control and accounting while you do the selling or
servicing. A partner can also provide additional money support and expertise as well as cover
for you when you are sick or on vacation.

1. More Financial Resources. When two or more people pool their money and credit, it is
easier to pay the rent, utilities, and other bills incurred by a business. A limited partnership
is specially designed to help raise money. As mentioned earlier, a limited partner invests
money in business but cannot legally have any management responsibility has limited
liability.

2. Shared Management and Complementary Skills and Knowledge. It is simply much

easier to manage day-to-day activities of a business with carefully chosen partners.
Partners give each other free time from business and provide different skills and
perspectives. Some people find that the best partner is a spouse. Many husbands and-
wife teams manage service shops and other businesses.

3. Longer Survival. One study that examined 2,000 businesses starting since 1960 found
that partnerships were four times more likely to succeed than sole proprietorships. Being
watched by a partner can help a business become more disciplined.

4. No Special Taxes. From a tax perspective, partnerships in Bangladesh are not taxed at
the entity level and profits are treated as part of each partner’s personal income and are
taxed at personal income tax rates. A partnership firm will have to take a separate TIN
under the name of their firm. Say, your partnership venture earned BDT 10 lac profit this
year. Up to BDT 250,000 shall be exempted as per the Individual Tax Rate, the rest shall
be taxed and after that the profit gained under the partnership venture will be tax-free for
the partners. There is no double taxation for partners, unlike shareholders of the limited
companies in Bangladesh.

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Disadvantages of Partnerships
Anytime two people must agree, conflict and tension are possible. Partnerships have caused
splits between relatives, friends, and spouses. Let’s explore the disadvantages of
partnerships.

1. Unlimited Liability. Each general partner is liable for the debts of the firm, no matter
who was responsible for causing them. You are liable for your partners' mistakes as well
as your own. Like sole proprietors, general partners can lose their homes, cars, and
everything else they own if the business loses a lawsuit or goes bankrupt.

2. Division of Profits. Sharing risk means sharing profits and that can cause conflicts. There
is no set system for dividing profits in a partnership, and they are not always divided
evenly. For example, if one partner puts in more money and the other puts in more hours,
each may feel justified in asking for a bigger share of the profits.

3. Disagreements Among Partners. Disagreements over money are just one example of
potential conflict in a partnership. Who has final authority over employees? Who hires and
fires employees? Who works what hours? What if one partner wants to buy expensive
equipment for the firm and the other partner disagrees? All terms of the partnership should
be spelled out in writing to protect all parties and minimize misunderstandings.

4. Difficulty of Termination. Once you have committed yourself to a partnership, it is not

easy to get out of it. Sure, you can just quit. However, questions about who gets what and
what happens next are often difficult to resolve when the partnership ends. Surprisingly,
law firms often have faulty partnership agreements and find that breaking up is hard to
do. How do you get rid of a partner you don’t like? It is best to decide such questions up
front in the partnership agreement.

3. Corporations
Most Bangladeshi companies are registered as private limited liability companies,
commonly known as private limited companies. A private limited company in Bangladesh
is a separate legal entity and shareholders are not liable for the company’s debts beyond the
amount of share capital they have contributed. According to the Companies Act 1994, any
person (foreign or local) above the age of 18 can register a company in Bangladesh.

Advantages of Corporations
People are not willing to risk everything to go into business. Yet, for a business to grow,
prosper, and create economic opportunities, many people have willingness to invest money in
it. Let’s explore some of the advantages of corporations.

1. Limited Liability. A major advantage of corporations is the limited liability of their

owners. Remember limited liability means that the owners of a business are responsible
for its losses only up to the amount they invest in it.

2. Ability to Raise More Money for Investment. To raise money, a corporation can sell
shares of its stock to anyone who is interested. This means that millions of people can
own part of major companies like IBM, Xerox, and Cisco, and smaller companies as well.
If a company sells 10 million shares for $50 each, it will have $500 million available to
build plants, buy materials, hire people, manufacture products, and so on. Such a large
amount of money would be difficult to raise in any other way. Corporations can also borrow
money. They borrow from individual investors by issuing bonds, which are promises to
repay the loan in the future with interest. Firms can also obtain loans from financial
institutions.

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3. Size. "Size" summarizes many of the advantages of some corporations. Because they can
raise large amounts of money to work with, big corporations can build modern factories
or software development facilities with the latest equipment. They can hire experts or
specialists in all areas of operation. They can buy other corporations in different fields to
diversify their business risks. In short, a large corporation with numerous resources can
take advantage of opportunities anywhere in the world. But corporations do not have to
be large to enjoy the benefits of incorporating. Many doctors, lawyers, and individuals, as
well as partners in a variety of businesses, have incorporated. The vast majority of
corporations in the United States are small businesses.

4. Perpetual Life. Because corporations are separate from those who own them, the death
of one or more owners does not terminate corporation.

5. Ease of Ownership Change. It is easy to change the owners of corporation. All that is
necessary is to sell the stock to someone else.

6. Ease of Attracting Talented Employee. Corporations can attract skilled employees by

offering such benefits as stock options (the right to purchase shares of the corporation for
a fixed price).

7. Separation of Ownership from Management. Corporations are able to raise money

from many different owners/stockholders without getting them involved in management.
The owners/stockholders elect a board of directors, who hire the officers of the corporation
and oversee major policy issues. The owners/stockholders thus have some say in who
runs the corporation but have no control over the daily operations.

Disadvantages of Corporations
The following are a few of the disadvantages of the corporations.

1. Initial Cost. Incorporation may cost thousands of dollars and require expensive lawyers
and accountants. There are less expensive ways of incorporating in certain states but
many people do not have the time or confidence to go through this procedure without the
help of a potentially expensive lawyer.

2. Extensive Paperwork. The paperwork needed to start a corporation is just the

beginning. A sole proprietor or partnership may keep rather broad accounting records. A
corporation, in contrast, must keep detailed financial records, the minutes of meetings,
and more.

3. Double Taxation. Corporate income is taxed twice. First, the corporation pays tax on its
income before it can distribute any, as dividends, to stockholders. Then the stockholders
pay income tax on the dividends they receive. States often tax corporations more heavily
than other enterprises, and some special taxes apply only to corporations.

4. Two Tax Returns. An individual who incorporates must file both a corporate tax return
and an individual tax return. Depending on the size of the corporation, a corporate return
can be quite complex and require the assistance of a certified public accountant (CPA).

5. Size. Size may be one advantage of corporations, but it can be a disadvantage as well.
Large corporations sometimes become too inflexible and tied down in red tape to respond
quickly to market changes, and their profitability can suffer.

6. Difficulty of Termination. Once a corporation has started, it's relatively hard to end.

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7. Possible Conflict with Stockholders and Board of Directors. Conflict may brew if the
stockholders elect a board of directors who disagree with management. Since the board
of directors chooses the company’s officers, entrepreneurs serving as managers can find
themselves forced out of the very company they founded. This happened to Tom Freston,
one of the founders of MTV, and Steve Jobs, a founder of Apple Computer (Jobs later
returned to the company).

Example of a Successful Corporation in Bangladesh

Pran-RFL Group
Pran-RFL Group, a prominent conglomerate in Bangladesh established in 1981 by Amjad
Khan Chowdhury, has made a significant impact across various industries. Headquartered in
Dhaka, the company’s agribusiness division stands out as the largest in the country, providing
a wide range of products from fresh fruits and vegetables to processed foods like juices,
snacks, and dairy items. With complete control over the supply chain through its own farms
and advanced processing facilities, PRAN-RFL Group ensures the highest quality for its
customers. In the plastics sector, the company manufactures a diverse range of household
items, furniture, and packaging materials, investing in cutting-edge technology to guarantee
top-notch quality.

Venturing into electronics, PRAN-RFL Group produces a comprehensive selection of electronic

goods under the brand name Marcel, including televisions, refrigerators, and air conditioners,
with a state-of-the-art manufacturing facility capable of producing over one million televisions
annually. The group also excels in the furniture division, offering a variety of office furniture,
home furniture, and kitchen cabinets known for their durability, quality, and contemporary
design. With its extensive reach and diverse product portfolio, PRAN-RFL Group remains a
major player in Bangladesh’s business landscape. The conglomerate is recognized for its
commitment to delivering excellence in every sector, establishing itself as a symbol of trust
and innovation both within the country and beyond.

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REVIEW AND DISCUSSION QUESTIONS

A. Theoretical/Conceptual Questions

1. Who is an entrepreneur? List and explain three characteristics that differentiate entrepreneurs from
non-entrepreneurs.
2. Describe the role of creativity and innovation in entrepreneurship.
3. Explain the importance of risk-taking in entrepreneurship.
4. What motivates entrepreneurs to start new ventures?
5. Define a serial entrepreneur and explain how they differ from other types of entrepreneurs.
6. Define social entrepreneurship and explain its primary goal.
7. How do social entrepreneurs differ from traditional entrepreneurs in terms of their objectives and
impact?
8. Mention five basic differences between business and entrepreneurship.
9. Explain how entrepreneurship contributes to job creation and increased productivity.
10. How does successful entrepreneurship lead to wealth creation and infrastructure development?
11. In what ways do entrepreneurs contribute to the development of new markets and industries?
12. How does fostering entrepreneurship improve a country's global competitiveness?
13. Provide examples of how innovation in entrepreneurship has led to economic growth.
14. Discuss how entrepreneurship has contributed to Bangladesh’s economic growth post-independence.
15. Explain the role of technological advancements, such as mobile telephone, in boosting
entrepreneurship in Bangladesh.
16. Mention five basic differences between entrepreneurship and employment.
17. What are the key elements that should be included when describing the structure of a business?
18. Why is it important to identify target customers in a business plan?
19. What are the essential components that should be outlined in the operations plan section of a
business plan?
20. Why is it important to include an operational workflow in a business plan?
21. What should be described in the marketing plan section of a business plan regarding attracting and
retaining customers?
22. Why is the financial plan considered one of the most important elements of a business plan?
23. What financial details should be included in a business plan aimed at attracting investors or lenders?
24. Weigh the advantages and disadvantages of sole proprietorships. In what situations might the
disadvantages outweigh the advantages?
25. Can a sole proprietorship grow into a large corporation? If so, what challenges might it face during
this transition?
26. What are some strategies a sole proprietor could use to overcome the limitations of their business
structure?
27. Analyze the relationship between risk and reward for each business structure. Which structure offers
the most potential reward but also carries the most risk?
28. Why is a sole proprietorship considered the simplest form of business structure?
29. Discuss the primary reasons why individuals might prefer to start a sole proprietorship.
30. How does being your own boss in a sole proprietorship differ from being a manager in a corporation?
31. Explain the concept of unlimited liability in the context of a sole proprietorship.
32. Why might limited financial resources be a significant challenge for sole proprietors?
33. How do management difficulties manifest in a sole proprietorship?
34. Compare and contrast general partnerships and limited partnerships.
35. What are the roles and liabilities of a general partner versus a limited partner?
36. Explain why partnerships might have a longer survival rate compared to sole proprietorships.
37. What tax advantages do partnerships have over corporations?
38. Describe the potential risks associated with unlimited liability in a general partnership.
39. How can disagreements among partners impact the business operations in a partnership?
40. Why is terminating a partnership often complicated?
41. In what ways does the ability to raise more money for investment benefit a corporation?
42. How can the size of a corporation both benefit and hinder its operations?
43. Discuss the key factors that influence an entrepreneur's choice between starting a sole
proprietorship, partnership, or corporation.

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B. Situational/Contextual Questions

44. Michael is considering leaving his stable job to start a tech startup. He understands that
entrepreneurship involves significant risks and uncertainties. What strategies can Michael employ to
manage these risks, and how can his willingness to embrace uncertainty contribute to his potential
success?
45. Alex is a successful entrepreneur who has sold his first business and is now looking to start another
venture in a completely different industry. What skills and experiences from his previous business
can Alex leverage in his new venture, and what challenges might he face when entering a new
market?
46. David wants to start a business that not only makes a profit but also addresses homelessness in his
city. How can he balance the dual goals of financial sustainability and social impact, and what
challenges might he encounter in achieving this balance?
47. Laura is considering starting her own business but is unsure whether she wants to be a traditional
business owner or an entrepreneur. How do the purpose and approach of a business differ from
those of entrepreneurship, and which path might be more suitable for someone who is driven by
innovation and a desire to create value?
48. Carlos is currently running a profitable retail store but is interested in exploring more innovative and
riskier ventures. How does the risk-taking and innovation aspect of entrepreneurship differ from the
risk management typically seen in traditional business operations, and how might this impact
Carlos's decision to transition from a business owner to an entrepreneur?
49. Megan is starting a new tech company and is excited about the potential for job creation. How does
entrepreneurship contribute to job creation and increased productivity, and what impact might
Megan’s tech company have on the local economy?
50. Ali is developing a new agricultural technology that he believes will improve crop yields significantly.
How can Ali’s entrepreneurial venture spur economic growth in his community, and what role might
government policies play in supporting his innovation-driven entrepreneurship?
51. Maria is considering leaving her job to become a full-time entrepreneur. How will her work schedule
and level of independence change compared to her current employment, and what are the potential
benefits and drawbacks of this transition?
52. James is debating between continuing his career as an employee or becoming an entrepreneur. How
do the compensation plans and risk factors differ between entrepreneurship and traditional
employment, and how should these differences influence James's decision?
53. Imagine someone who is considering starting a bakery. They are good at baking but not great with
finances. Would a sole proprietorship be a good fit for them? Why or why not?
54. Imagine a business that requires a large initial investment and ongoing research and development.
Which business structure (sole proprietorship, partnership, or corporation) would be most suitable
and why?
55. Sarah has been running a small bakery as a sole proprietorship for five years. Recently, she has
been considering hiring employees and opening a second location. What challenges might she face
as a sole proprietor, and how might converting to a different business structure help her address
these challenges?
56. John, a freelance graphic designer, operates his business as a sole proprietorship. He recently faced
a lawsuit due to a contractual dispute with a client. How does the concept of unlimited liability affect
John in this situation, and what steps can he take to protect his personal assets in the future?
57. Maria has successfully run a family-owned jewelry store for decades as a sole proprietorship. She
wants to ensure the business continues after she retires and eventually passes it on to her children.
What are the implications of sole proprietorship on her plan, and what alternatives could she consider
to achieve her goal?
58. Ahmed and Hassan are co-owners of a marketing firm in a general partnership. Recently, they have
disagreed on how to reinvest the firm's profits. How can they resolve their differences, and what
measures can they take to prevent such conflicts in the future?
59. Nina and her friend Alok want to start a tech startup. Nina has technical expertise, while Alok is
experienced in marketing. They are considering forming a limited partnership. What financial
advantages could they gain from this structure, and how might it impact their respective roles and
responsibilities?
60. Laura and Tom operate a local café as a partnership. Laura feels she contributes more to the
business's daily operations and wants a larger share of the profits. How should they approach the
division of profits, and what factors should they consider to ensure fairness?

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61. After years of running a successful fashion boutique as a sole proprietorship, Zara wants to expand
her business internationally. She is considering incorporating her company to raise the necessary
capital. What advantages does incorporation offer Zara in terms of raising funds, and how might it
change the way she manages her business?
62. Emily is starting a new venture and is unsure whether to operate as a sole proprietor, form a
partnership, or incorporate. She has moderate startup capital and wants to minimize personal
liability. Considering her situation, which business structure would you recommend, and why?
63. Lena has been operating her digital marketing firm as a sole proprietorship. Due to rapid growth
and the need for significant capital investment, she is considering converting to a corporation. What
steps should Lena take to transition smoothly, and what potential challenges might she face during
this process?

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