Name: Jerald P.

Dalan Date:
Course and Section:

1. Business Ownership and Organization

Business Organization
- The Business Organization system is involved with the administration and planning
of many activities. This is the gathering and coordination of resources such as men,
materials, money, and machines to produce goods and services; the business
organization strives to coordinate and regulate all of these production factors.

Types of Business Organization

1. Sole proprietorship
A sole proprietorship is an unincorporated business that is owned and managed
by one person. It is the most basic type of business structure because the firm
and the owner are not legally separate. Individual entrepreneurship, lone trader,
or just proprietorship are other terms for it.
The business owner, also known as a proprietor or a trader, uses their legal
identity to conduct business. They can also choose to do business under a
different name by registering a trade name with their local government.
Advantages
 The easiest and cheapest way to start a business
 Few government and laws
 Full management and control
 Flow-through of business profit
Disadvantages
 Unlimited legal liability
 Limited to available capital
 Backup and succession
 Skills and experience

2. Partnership
A partnership is a formal agreement between two or more people to manage
and run a business and share profits.
There are various forms of partnership agreements. In a partnership business,
for example, all partners share responsibilities and earnings equally, whereas in
 others, partners may have restricted liability. There is also the "silent partner,"
who is not involved in the day-to-day operations of the firm.

Advantages
 Partners can pool their labor, capital and expertise.
 Partners can share tasks, allowing greater-work balance.
 More partners can bring their experience and new perspectives to the firm.
Disadvantages
 Partners may bring additional debts and liability
 There is a greater chance of disagreement or mismanagement.
 It may become harder to sell business.

3. Corporation
A corporation is a legal entity formed by individuals, investors, or shareholders
to operate for profit. Corporations can make contracts, sue and be sued, own
assets, pay federal and state taxes, and borrow money from banking institutions.
The incorporation procedure provides the business entity with a special feature
that shields its owners from personal liability in the case of a lawsuit or legal
claim.

Advantages
 Personal liability protection
 Business security and continuity
 Easier access to capital
Disadvantages
 Time consuming
 Double taxation
 Rigid formalities
 Protocols to follow

2. Financing the Venture

Capital Requirements
- Capital rules are established to ensure that the assets of banks and depository
institutions are not dominated by investments that increase the risk of default. They
also make certain that banks and depository institutions have sufficient capital to
bear operating losses (OL) while still honoring withdrawals.
 Source of Capital
- Is a type of private equity and a type of financing provided by investors to startups
and small firms that are thought to have long-term growth potential. Venture money
is typically provided by wealthy investors, investment banks, and other financial
institutions. Venture capital does not always have to be monetary in nature. In fact,
it is frequently presented as technical or managerial competence. VC is often
awarded to small businesses with excellent growth potential or to those that are
rapidly growing and are ready to expand further.
Understanding of IPO and process of IPO
- An initial public offering (IPO) is the process of selling shares of a private firm to
the public for the first time in a new stock issuance. An IPO allows a corporation
to raise equity capital from the general public. Because it often involves a share
premium for current private investors, the transition from a private to a public firm
can be a crucial opportunity for private investors to completely realize rewards from
their investment. Meanwhile, public investors are permitted to participate in the
offering. A corporation is deemed private prior to an IPO. As a pre-IPO private
company, the company has grown with a small number of shareholders, including
early investors such as the founders, family, and friends, as well as professional
investors such as venture capitalists or angel investors.
Dealing with investment bankers; Risks in going public and borrowing from the banks.
- Investment bankers are well-known for playing an important part in the launch of
initial public offerings (IPOs) by emerging companies seeking to go public.
However, this is only one example of one of their work assignments.
Investment bankers are essentially financial counselors to firms and, in certain
situations, governments. They assist their clients in raising funds. This could
include issuing shares, issuing a bond, negotiating the acquisition of a competitor,
or arranging the sale of the company itself. Banks have well-constructed risk
management infrastructures and are expected to obey government rules since they
are exposed to a variety of hazards. Government authorities, such as Canada's
Office of the Superintendent of Financial Institutions (OSFI), establish policies to
mitigate risks and safeguard depositors.
The C’s of credit and using someone’s money.
- The five Cs of credit are a system used by lenders to assess potential borrowers'
creditworthiness. The approach considers five borrower characteristics and loan
terms in an attempt to evaluate the likelihood of default and, hence, the risk of
financial loss for the lender. Character, capacity, capital, collateral, and conditions
are the five Cs of credit.