Fbm

• Business


  Any organisation that makes goods or provides services
• Types of products


  • Physical products (e.g. burgers, cars)
  • Non-physical products (e.g. hotel accommodation, insurance services, internet service)
• Business


  An organization engaged in commercial, industrial or professional activities that can be a for-profit or a non-profit
• Business objectives


  • Profit
  • Growth
  • Increase added value
  • Survival
  • Service to the community
• Business objectives can conflict because different people in a business want different things at different times
• Sectors


  • Primary (extraction and harvesting of natural resources)
  • Secondary (construction, manufacturing, processing)
  • Tertiary (retail, arts, entertainment, financial, transportation, communications)
  • Quaternary (knowledge, intellectual pursuits, R&D, education)
• Level of activity


  Indicates how close the business is to the customer in the distribution chain and how well a business is performing
• Business size


  • Micro Enterprises (PHP 3,000,000 or less in assets, 1-9 employees)
  • Small Enterprise (PHP 3,000,001 to PHP 15,000,000 in assets, 10-99 employees)
  • Medium Enterprises (PHP 15,000,001 to PHP 100,000,000 in assets, 100-199 employees)
  • Large enterprises (over PHP 100,000,001 in assets, 200+ employees)
• Legal structure


  • Sole Proprietorship
  • Partnership
  • Corporation
  • One Person Corporation
• Sole Proprietorship


  Only a single individual owns and controls the business, owners pay income tax at either a graduated rate or an 8% rate
• Sole Proprietorship


  • Owners have complete control over the business, less paperwork
  • Owners have no protection from the business's liabilities, can't distribute shares
• Partnership


  A business with at least one more person, where each contributes to the work and shares the profit according to their capital contribution
• Partnership


  • Distribute the workload and decision-making among multiple individuals, less paperwork
  • Owners have no protection from the business's liabilities, can't distribute shares, differences in opinion and conflicts among partners, don't have complete control over the business
• Corporation


  Requires two to 15 incorporators, each with at least one share, a separate juridical personality from the stockholders owning the corporation
• Corporation


  • All stockholders have limited liability in the business, it's expensive and highly regulated
• One Person Corporation


  A stock corporation with a single stockholder, owner should register the company under the SEC and comply with LGU and BIR requirements
• One Person Corporation


  • Owner has complete authority over the company, owner's assets are protected from the business's liabilities, it's a more complex registration process
• There are many different types of business, including service businesses, manufacturing businesses and retail businesses. The legal structure of a business varies from country to country.
• Factors of production


  • Land
  • Labor
  • Capital
  • Entrepreneurship
• Outputs


  • Goods
  • Services (personal, commercial)
• Reasons for starting a business

  • Spot a gap in the market
  • Want to be their own bosses and organise their business lives
  • Enjoy a challenge and/or have a passion for an activity
  • Believe they can produce a good or service better than competitors
  • Have skills that are in short supply
  • Want to earn a profit and possibly 'get rich'
  • Want to pass on wealth to their family
• Common steps in starting a business

  1. Identify a business opportunity and a target market, generate ideas

  2. Research the potential market and customer base

  3. Produce a business plan

  4. Select the correct form of business organisation and satisfy legal requirements

  5. Raise the initial finance

  6. Choose a suitable location

  7. Market the product or service
• Problems faced by new businesses

  • High start-up costs
  • Initial low demand and revenue
  • Time before production begins
  • Cash flow problems
  • Inadequate demand
  • Poor marketing and failure to supply sufficient goods
  • Changing external environment
  • Other businesses copy the idea
  • Legal restrictions
  • Uncompetitive prices due to lack of economies of scale
  • Poor location due to lack of finance
  • Inadequate entrepreneur skills and personality
• Business plan


  A written document setting out the business goals and describing how the business will achieve these
• Elements of a business plan

  • States the owners' objectives and how they will achieve them
  • Reminds employees of the purpose, mission, values and key objectives
  • Identifies products/services and unique selling point
  • Informs potential investors
  • Lists key personnel and their experience and skills
  • Provides market information
  • Provides profit forecasts, cash flow projections and break-even point
  • Outlines marketing mix, pricing, promotion, distribution, location
  • Identifies how the product will be made or the service delivered