CHAPTER 6- ORGANIZING THE ENTERPRISE

WHY DO PEOPLE GO TO BUSINESS?

Even if you have plenty of money, going to business is not easy as simple
as it seems. You should:

● Evaluate your interest, experiences skills and the community needs.

● have social contacts;
● have good human relations;
● Is your health fit for the business?
● Is there a good market for your projected product or service?
● Do you have positive personal qualities as an entrepreneur?
● Do you have the resources needed?
● You must have planning acumen

Putting up a business enterprise is an investment. As such you should take into

consideration the criteria of good investment like:

● Safety of the capital

● Stability of income and possibility of growth

Business is not really very risky if it is well studied, planned and managed.

REASONS WHY PEOPLE VENTURE INTO BUSINESS

1. Personal satisfaction-they enjoy challenges and risk-taking ventures. Their

business success gives them a sense of fulfillment.
2. Family involvement—they feel it is their responsibility to continue the
business of their parents, especially if it is profitable.
3. Independence and power- they want to be the boss. They love to make
their own decisions and implement them.
4. Social activities- there are people who are really born socializers. They
love social activities. Such extroverted personalities are good for business.
They take advantage of their social contacts to promote their business
interests.
 5. Profit expectations- some individuals are greatly motivated by profit of
the chance amass wealth. This is the best way for them to become rich. In
our country, most employees remain poor throughout their lives. On the
other hand, those who are engagd even in small enterprises become
prosperous. This is the reason why the government has been encouraging
the people to be entrepreneurs instead of job seekers.

CHECKLIST FOR GOING TO BUSINESS

Here is a test on your probable success in starting your business:

1. ABOUT YOU
● Why do you want to put your own business?
● Do you have experience in the business you like to start?
● Did you work before as a manager?
● Do you have business training?
● Do you have money for your business?
2. ABOUT CAPITAL
● Do you know how much money you need for your business?
● Do you know how much credit you can get from your suppliers?
● Do you know where to borrow in case your funds are not enough?
● Do you have an estimate of your income per year?
3. ABOUT A PARTNER
● Do you need a partner who has the money and skills?
● Do you know the positive and negative points in choosing the type
of business ownership?
● Have you consulted an expert?
4. ABOUT YOUR CUSTOMERS
● Who are your customers?
● Do people need a store like yours?
● Do people like to live in the place where you intend to put up your
business?

5. ABOUT YOUR QUALITIES

 ● Are you a self-starter?
● How do you feel about other people?
● Can you lead others?
● Can you make decisions?
● Can you take responsibility?
● Are you good in planning and organizing?
● Can people trust what you say?
● Are you hardworking?
● Is your health good?

WHAT IS AN ORGANIZATION?

ORGANIZATION is a group of two or more persons who work together to attain

a common set of goals.

WHAT IS ORGANIZING?

It is a process of combining and coordinating resources and activities in order

to accomplish efficiently and effectively certain objectives. It is the proper
development of human resources. The best resources of the organization are its
employees, not money, machines, materials or buildings, and others.

ORGANIZATIONAL STRUCTURE

An organizational structure indicates positions and relationships. These are

shown in the organizational chart. Of course in micro-business like sari-sari
store, backyard poultry and piggery, positions and relationships are very few. .
In small business enterprise, we have only the owner-manager, supervisor,
bookkeeper and the sales staff or workers.

In case of big corporations, they have several layers of management. Below

is an example of a simple organizational chart.
 Mananer-
owner

Office Sales
Supervisor Supervisor

Accountant Clerk Salesmen

FORMS OF BUSINESS ORGANIZARTION/OWNERSHIP

1. SINGLE OR SOLE PROPRIETORSHIP-it is owned and usually managed by

one person. It is the oldest and the simplest form of business ownership.
It is the easiest to start. They dominate the retailing, agriculture and
service industry

ADVANTAGES OF SINGLE PROPRIETORSHIP

● Ease and low cost of formation and dissolution

● Retention of all profits
● Independence and flexibility
● Tax advantage and less government regulations

DISADVANTAGES OF SOLE PROPRIETORSIP

● Unlimited liability
● Lack of stability
● Limited access to credit
● Limited skills and knowledge
 2. PARTNERSHIP- it is an association of two or more persons who act as co-
owners of a business. Each partner contributes money, property or
service to their organization. Most partnership have two partners. They
are usually engage in accounting, law, advertising, real estate and
retailing
TYPES OF PARTNERS
● GENERAL PARTNERS-the liability of the general partner extends up
to his personal properties
● LIMITED PARTNERS-he is only liable to the extent of his
contribution to the business.
● CAPITALIST PARTNERS-Contributes money
● INDUSTRIAL PARTNERS- provides services or management.

ADVANTAGES OF PARTNERSHIP

● Easy to organize-the legal requirements include articles and The by-laws

of partnership and business to be submitted to the SEC, registration of
business name to BIR for the TIN, business permit from the
city/municipal hall, and registration of employees with SSS.
● Availability of more capital and credit
● Retention of profits
● Better business skills and knowledge

DISADVANTAGES OF PARTNERSHIP

● Unlimited liability
● Lack of stability
● Management disagreement
● Idle investment
3. CORPORATION-it is an artificial being created by operation of law, having
the right of succession, and the powers attriburtes and properties,
expressly authorized by the law or incident of its existence. The shares or
certificates of ownership of a corporation are called” Stocks”. The owners
of the stocks are called” stockholders o shareholders”
ADVANTAGES OF CORPORATION

● Limited liability-the liability of stockholders is only up to his share of stock

● Easy to raise capital-selling shares of stock to public for additional funds.
● Perpetual life- the life of the corporation does not end with the
withdrawal or death of the owners. It can exist for 50 years and is subject
to renewal.
● Specialized management-a corporation can hire professional managers and
specialists. It has funds to develop its human resources.

DISADVANTAGES OF CORPORATION

● Difficult and expensive to organize. It requires the services of

professionals for its legal requirements (lawyer, accountants.
● Strictly regulated and supervised by the government
● Some corporations are socially irresponsible.
● Formal and impersonal employer-employee relationship.

THE DIMENSION OF ORGANIZATIONAL STRUCTURE

The following are the five (5) major steps in organizing an enterprise:

1. Job Design-Dividing the work of the organization into separate parts.

Assign these parts to positions within the organization. The result is
specialization.
2. Departmentalization- Grouping the various positions into manageable
units.
3. Centralization-distributing the responsibility and authority within the
organization.
4. Span of management-determining the number of subordinates who will
report to each manager.
5. Chain of command- distinguishing between positions with direct authority
and those that are support positions.
ENTREPRENEURIAL CONSIDERATION

1. FINANCIAL-the entrepreneur must be knowledgeable about the financial

aspects of business decisions. He must be able to know the following:
● What expenses must be incurred? How much capital to be needed
● How much profit to get to sustain the business and the owner.
2. MARKETING-he must be well versed on the four P’s of marketing
(product, pricing, place and promotion)
3. MANAGERIAL SKILLS- he must be able to identify the strengths and
weaknesses of his personnel. He should be able to develop fully their
managerial skills.
4. OVERALL PERSONAL DECISION-MAKING PROCESSS- he should have a
thorough evaluation of what is to be attained by going into business and
what human and financial resources are available and necessary

STEPS IN STARTING A NEW BUSINESS

1. Plan the business

2. Select the appropriate form of business organization
3. Scout for reasonable credit/financing
4. Choose a good location
5. Secure licenses/permits for the business operation
6. Set up records for financial, physical and personal resources
7. Insure the business if necessary
8. Promote the business
9. Manage the business well.
10.Do your social responsibility