Entrepreneurship is a critical factor in the world economy. At a certain point in life, everyone wants to leave the vicious circle of his routine and start a unique business, such as developing a new software product, designing, opening his brewery, or launching an initial startup.
Accordingly, it would help if you learned in advance about the types of entrepreneurship that are effective today and their strengths. In economically developed countries, there are three main types of entrepreneurial activities:
- Individual enterprise. This is a common form of small business that will delight you with simplified taxation and simplicity of running.
- Partnership. This is a business organization method in which two or more persons participate in the joint management of a particular company.
- Corporation. In many ways, this is a shareholder type of business in which the shareholders themselves are not accountable for the liabilities of the company.
Individual enterprise
It is the independent conduct of activities in the entrepreneur’s personal interests. It is a form of entrepreneurship in which an owner is a natural person who owns a business, manages it and is fully liable for obligations of his property and does all this alone. The main feature of individual entrepreneurship is that the property of such an entrepreneur is not separated from management.
Strengths:
- The process of establishing an enterprise does not constitute significant problems.
- The entrepreneur has complete control over his activity.
- The simplest taxation is where all income is taxed at the rates of individuals.
Weaknesses:
- Unlimited liability for the obligations of the company. The entrepreneur risks his personal property.
- Financial resources are insufficient for the entrepreneur to reach a new level and become a larger enterprise. These are the resources that he has engaged in his entrepreneurship.
- An individual entrepreneur can hire employees based on the concluded contract.
Partnership
It is a mutually beneficial union of two or more entrepreneurs with such a mission as increasing profits.
There are several types of partnerships:
- Full or general partnership. Both business partners are equal, as well as they have total responsibility for the company’s obligations and have the status of general partners.
- Limited partnership. At least one general associate and one limited partner are part of the company. The general partner manages the business, while the limited partner does not participate in business management. However, he is not entirely responsible for the company’s obligations.
- Partnership with Limited Liability. All partners can manage the company but have limited liability for its obligations.
Strengths:
- Easy to organise. As a rule, only a written agreement is concluded.
- More opportunities for development and consolidation.
Weaknesses:
- Power-sharing in managing a company can lead to inconsistent policies.
- The withdrawal of one of the partners may have risks of reorganization or company disruption.
When organizing this form of business, entrepreneurs conclude a partnership agreement, which is not always a binding document. However, its design helps entrepreneurs avoid conflicts between business partners afterward.
Corporation
A corporation is a legal entity whose property is divided into shares or shares. In this case, the firm is liable for obligations by its authorized capital. Also, shareholders do not risk their personal property.
Strengths:
- The entrepreneur has unlimited opportunities to attract investment.
- Shareholders are responsible for the company’s obligations within the limits of the share price.
- Prospects for expansion and advancement.
Weaknesses:
- Business registration will require significant investments from the entrepreneur and time for bureaucratic procedures.
- Double taxation is essential for it.