Establishing a Business

• Entrepreneur


  An individual who combines all the other factors of production (land, labour and capital) with the aim of establishing a profitable venture for the production of goods and services
• Role of the entrepreneur

  • Conceptualising
  • Planning
  • Accessing funds
  • Organising
  • Operating
  • Evaluating the performance of the business
• Entrepreneur


  • Bears all the risk of being involved in the new enterprise but is also entitled to the profits of the business
• Personal traits & leadership qualities of entrepreneur

  • Creative
  • Innovative
  • Flexible
  • Goal oriented
  • Persistent
  • Persevering
  • Be able to calculate risks
  • Self motivated
• Reasons to start a business

  • Financial independence
  • Wanting to be your own boss
  • Self-fulfillment
  • Self-actualization
• Steps for establishing a business

  • Conceptualisation
  • Research
  • Identification of resources
  • Creation of Business plan
  • Acquisition of funds
  • Operation of Business
• Primary research


  Gathering information from direct sources such as the customers themselves
• Primary research methods


  • Sampling
  • Questionnaires
  • Interviews
  • Observation
  • Survey
• Secondary research


  Information gathering from what has already been compiled and documented by others
• Secondary research sources


  • Books
  • Website information
  • Newspapers
  • Consumer review magazines
• Reasons for research


  • To be aware of consumer tastes and to identify if there is the need for a product
  • To find ways to improve on existing products
  • To create new products/services which are lacking
  • To find out how one's product/service is being received or competing with others on the market
  • To identify the target market to see if the production of a product is viable
• Departments in a business

  • Production
  • Marketing
  • Finance
  • Legal
  • Research & development (R & D)
• Reasons for planning


  • Plans act as a check point to compare actual to budgeted performance
  • Planning gives the entrepreneur something to strive towards
  • Information found in plans maybe used by lending agencies to see the future profitability and viability of the organization
  • Short term plans may be broken down into tasks to be completed
• Types of plans


  • Short term plans
  • Medium term plans
  • Long term plans
• Rules for conducting business (local)

  • Business which are incorporated must first register with the registrar of companies which require M.O.A, Articles of Association, Audited reports, Disclosure of shares, Name, location of business etc.
  • Corporation tax must be paid
  • Employees' N.I.S and income tax must be paid
  • Licenses and health certificates are needed for selling alcohol or food respectively
  • Professionals(lawyers, doctors, architects, engineers etc.) must register with their professional bodies and must be controlled/governed by their rules
• Rules for conducting business (regional)

  • How would CARICOM and CSME affect the operation of one's business
  • Some countries may have bi-lateral agreements which may affect the business environment
• Rules for conducting business (global)

  • No more preferential treatment
  • Increase in requirements in areas such as labeling of goods showing ingredients, nutritional value and calories etc.
  • Greater rules relating to environment protection
• Opportunities & challenges of types of organisation

  • Customer service/personal relationship with clients
  • Profits
  • Decision making
  • Creativity
  • Financing
  • Cost of raw materials
  • Overall cost of production
  • Competition
  • Death/ removal of entrepreneur
  • Specialisation of tasks/ access to skilled personnel
• Sources of capital


  • Family & friends
  • Personal savings
  • Lending agencies e.g. banks (commercial or development), credit union, insurance companies etc.)
  • Venture capitalists
• Collateral


  Anything that may be used as a form of security, to safeguard against possible default on payment of what is owed
• Types of collateral


  • Stocks/shares
  • Life insurance policies which have cash values
  • Title deeds to land & building (residential/commercial)
• Ethical & legal issues facing business/entrepreneur

  • Advertising
  • Safety
  • Taxation
  • Environmental Issues
  • Production
• Consequences of unethical & illegal practices

  • Withholding taxes is cheating the government of vital revenue which can be used to improve the economy. It usually attracts penalties/fines.
  • Improper waste disposal leads to pollutions
  • Misleading ads. which are unfair and fraudulent on the population may be brought before a fair trading commission /consumer protection agency and in some cases the law courts.
  • In order to "clean" money made through illegal activity, money laundering may occur. The money passes through a legitimate business so that it cannot be traced.
  • Lawsuits may arise if products cause illness/death.
  • A decrease in sales/profits as word spreads about unethical/illegal practices.