What are the Types and Forms of Enterprise in Business?
Have you got the solution to the world’s economic crisis and challenges? “How Enterprising!” would perhaps be people’s exclamation. Being enterprising is playing creative role in the sculpting of the global financial image. And an enterprise is usually set up to meet a particular need for a people; the nature of the need implies the king of enterprise.
A business, which we also call an “enterprise”, is an entity which oversees the sales of goods to a people. It is the cartilage of capitalism, where individuals aim at maximizing their worth by providing goods and services and gain profiting returns.
This does not discount other businesses that are public or government owned, that are not inclined to making profit. We can classify enterprises into Agric/Mining, Financial enterprises, Information, Real Estate, Transportation, Utilities, etc.
The world as we know it, though built with the clays of science and technology, is shaped with the power of enterprise. For this reason, the finest economic shapes of the world are associated with countries with strong wit of enterprise like the US, where we have the Silicon Valley containing most of the top business organizations in the world—this makes it no surprise that America is found as the leading economy.
Five different types of enterprises are considered in this post, they are:
1) Sole Proprietorship
This is a one-man-win one-man-lose kind of venture in which all the liabilities and responsibilities incurred in the course of operating the business lay on the shoulders of only one man called the sole proprietor or sole trader.
They are usually small scale enterprise where only a few workers are employed; it could also be medium scale enterprises too.
All assets that pertains to the business, as well belongs to the sole proprietor. He is solely accountable for the management. Business equipment that facilitates the smooth running of the enterprise such as manufacturing equipment, computer wares, stocks/inventory, and any general property pertaining to the business are all owned by the sole proprietor.
Examples of sole proprietorship enterprises include Protech Gas, Deli Foods, and numerous more.
Unlike sole proprietorship, this kind of enterprise is owned by two or more people. Partnership comes in variants. As much as the partners share in the assets and liabilities of the firm, they do so in proportions which may or may not be equal.
As a matter of fact, in most partnership enterprise, there is always a partner that has unlimited liability and one or more that has limited liability for costs incurred by the enterprise. Given these variants, partnership further splits into 3 major factions which are: the general partnership, limited partnership, and limited liability partnership; where
• General Partnership: This is a coming together of two or more people with a proof of existence and bound by agreement. The crucial feature is that all partners share equally in any liability or assets of the enterprise.
• Limited Partnership: This is a coming together of two or more people under similar conditions as the form of general partnership but in which there is/are a limited partner, as well as a general partner, at least.
So this implies that the liabilities/assets of the enterprise is not shared in equal proportions. The limited partner is much like a shareholder, who is affected little by the company’s liabilities. The limited partner gets returns on their investment.
• Limited Liability Partnership: Much akin to limited partnership, except that it is possible for all the partners to be limited. Examples of partnership enterprises in Nigeria include Envoy continental car tracking Ltd, Anchor Nova Enterprise, etc.
A company or group of people authorized to act as a single entity legally. It is much like a limited liability enterprise where the owners are called shareholders. They delegate other activities like decision making to a team of director elected by them.
Private individuals, as well as Governments run corporation, either for or not-for profit. The enterprise has a distinct legal image disjoint from its owners. One of the most popular in this category is McDonald’s corporation.
4) Co-operative Enterprise
Again this is a limited liability enterprise, however, unlike corporation; its owners are not shareholders. Its members take up active role in making decisions, and managing the economic atmosphere of the enterprise.
Examples of cooperative enterprises include Floxy Queens enterprises, Elegance Agro-allied multipurpose enterprise, etc.
5) Limited Liability Companies
It is a hybrid limited liability enterprise, but one in which investors are responsible for its debts in similar proportion to how much they have invested. It is an enterprise in which a distinct line is drawn between the assets of the business and the owner’s property. It is seen as a fine blend of partnership and corporation.
They are usually large scale enterprises. Examples include Julius Berger, and Nago Tropical technology Ltd, Mr. Biggs, etc.