Basic of business and entrepreneurship

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Today, the determining element of economic activity is doing business. What is considered under the meaning of such a broad concept? The business basis of the economy primarily implies the presence of certain categories of resources, among which a special role belongs to the material, financial, labor and information potentials.

Modern business system

Due to the use of the resources listed above, economic entities try to organize the production of goods (services) for their sale to other economic agents (enterprises, organizations, individuals, and so on) in terms of maximizing profits, but minimizing costs.

It is important to note that, in addition to obtaining an economic effect, it is necessary to highlight additional goals that determine the foundations of business development: organizing the security of doing business, issuing shares, developing strategies to ensure high business results, and so on.

Modern business system includes threecomponents: business entities, components and integrative qualities. The first category includes enterprises, business owners, credit and insurance organizations, stock exchanges, government agencies, and investors. The second group includes the following components: production, trade and commercial mediation. And, finally, the basis of business, in accordance with system analysis, is endowed with a considerable number of properties. Among them, the main ones are socio-economic sovereignty and consensus of interests of the subjects of business relations.

Entrepreneurial activity and its legal forms

Entrepreneurship takes place absolutely everywhere where people produce and sell goods (services) of their own free will. This means that entrepreneurial activity should be defined as independent, but at the same time very risky. First of all, it is aimed at making a profit from the sale of products, the use of property objects, the performance of a certain number of operations or the provision of services by persons who have passed state registration in the prescribed manner.

It would be advisable to consider the organizational and legal forms of entrepreneurship on the example of a particular country. The Civil Code of the Russian Federation provides for two categories of entrepreneurial activity without the formation of a legal entity. In addition, there are seven types of organizations with commercial purposes and seven non-profit complexes.

The foundation of a business can only be built after defining the organizationallegal form of activity. So, a legal entity is not formed in cases of individual entrepreneurship and simple partnership. But it takes place in the formation of commercial and non-profit organizations. The first option provides for subdivision into three categories: business partnerships and companies (general and limited partnerships, as well as limited or additional liability companies and a joint-stock company), unitary enterprises and a production cooperative.

Non-profit organizations and the main aspects of their activities

The basic business processes of non-profit organizations presuppose the exclusion of such a goal as making a profit. It is important to note that otherwise the percentage of entrepreneurship is not divided between business entities. But a commercial organization has the right to make such an exception if it is necessary to achieve the goals of its creation through an appeal to entrepreneurship.

The decision to form the type of organization under consideration is made by citizens and legal entities acting as founders. It should be noted that their number is not subject to limitation. As for the location of a non-commercial object, it must correspond to the state registration, from the moment of which a legal entity is formed.

In the process of registration, a serious role belongs to the constituent documentation, the charter, the memorandum of association and the decision of the owner, where in the mandatoryorder, the following information is indicated:

• Name of non-profit organization.
• Determining the nature of its activities.
• Developing the rights and obligations of subjects.
• Conditions for admission and exclusion from the organization.
• Sources of the formation of the property complex and features of its application.
• Procedure for correcting constituent documentation.

Basics of small business and features of its organization

Small business entities can be individual entrepreneurs, micro-organizations or small enterprises, the average number of employees of which does not exceed 15 people. It should be noted that the considered commercial formations play an important role in a market economy, as evidenced by the following factors:

• The large number of the corresponding market segment relative to the total number of market economy entities.
• Significant contribution of small businesses to GDP.
• Assistance in the formation of the country's budgets at different levels.
• Reducing the number of unemployed people by organizing their employment in small businesses.
• Supplying competitive products to the market.
• The foundation of business and its study as an important component of human development.

State registration of business entities

Only entities registered in the prescribed manner have the right to conduct economic activities (clause 1Art. 2 of the Civil Code of the Russian Federation). This legalization pursues the main goal of controlling their activities. Not only reorganized entities of economic functioning are subject to state registration, but also adjustments in the constituent documentation of active commercial and non-commercial entities.

The basics of your business require the mandatory availability of documents proving the legality of the activities carried out. Thus, when legal entities perform commercial operations without registration, illegality takes place, which entails serious punishment.

The process under consideration is carried out at the location of economic entities by providing them with relevant documentation to the registration authority. Founders must submit the following documents without fail:

• Statement according to a certain pattern.
• Copy confirming the decision to form a legal entity.
• Constituent documents.
• Documents on the formation of the authorized capital.
• Basic information about the owners of the property complex.
• A certificate from the tax authorities regarding the submission of a declaration containing information on income and property.
• Document proving that the legal entity has the right to be located at the location (as a rule, this is a letter of guarantee).
• Confirmation of payment for state registration.

Reorganization and liquidation of business entities

In economic practice, it is knowna considerable number of cases of termination of activities of business entities. This situation happens for one of the following reasons: the need to reorganize, temporarily stop operations or liquidate a legal entity, for example, as a result of bankruptcy.

The termination of the activity of a legal entity through reorganization occurs in accordance with the method chosen by the owner of the business. The most popular options are considered to be the merger of a certain number of enterprises into one set, the accession of a legal entity to a more powerful one in terms of efficiency, the division of an enterprise into several components, separation from other organizations, as well as the transformation of a legal entity (for example, the termination of an LLC and the formation of an OJSC).

Liquidation can be voluntary or forced. In the first case, the implementation of the operation can be argued on certain grounds, including the expiration of the organization's activity, the achievement of statutory goals, or the inexpediency of activities to the extent of the unattainability of the previously set tasks. The main reasons for forced liquidation are unlicensed or prohibited by law activities, the appropriateness of violations in the conduct of economic transactions, the bankruptcy of a legal entity or the loss of its property.

The basics of a business plan and the goals of its formation

The business plan is an accurate and accessible description of the planned activities. Thus, this document is able to fully manage the business, so it can confidently be called the most importanta component of strategic planning, as well as guidance for the execution and control of economic operations for the conduct of a particular business.

This document, as the basis of a business, allows you to study the goals of a legal entity and their rationale, and then determine the most effective methods for achieving the goals. Naturally, the choice of these methods is made in accordance with the conditions for maximizing profits and minimizing costs, as well as achieving good financial performance in the process of activity.

Business plans are classified into the following types:

• Document reflecting investments (information for a potential investor or partner).
• Business plan for the development of the organization in accordance with the upcoming planning period.
• A document indicating the formation of a separate subdivision of a legal entity.
• A business plan that aims to get a loan from a bank or participate in a tender.

The role of management in the business system

Management in the system of economic activity is the most important component, because it determines the foundations of business management. This category ensures the profitability of a legal entity through the rational organization of the production process and product sales. In addition, the management service performs many additional tasks, for example, the formation of a plan to improve the technical and technological base of the enterprise.

The manager stimulates the employees of the organization through the formationcomfortable working conditions and changing the system of payment, and if necessary, makes a decision to replace the employees of the organization with highly qualified ones. An employee in the field of management determines the necessary resources and, of course, the sources of their acquisition. In addition, he develops effective strategies for the development of production and sales of products, and also forms the exact goals of the legal entity.

The role of marketing in the business system

An important component that is part of the foundations of business organization is marketing. This service optimizes supply chain operations for sustainable and expanding product sales.

Marketers of any organization solve a large number of tasks, the main ones are:

• Detailed study of the market and its respective segments.
• Analysis of its conjuncture and capacity.
• Identification of the behavior of counterparties.
• Formation of a forecast for the further development of the market and its comparison with the capabilities of the enterprise for the production of products.
• Go-to-market strategy.
• Carrying out activities to increase demand for products and competent sales activities.
• Organization of market research.
• Control the activities carried out by the employees of the unit.

Commercial activities of the enterprise

The success of any organization is determined by the effectiveness of commercial transactions (an agreement between two or more parties to supplyproducts or services in accordance with documented conditions).

The set of commercial transactions is divided into main transactions (the process of buying and selling goods, providing services, selling scientific and technical information, renting economic objects, and so on) and auxiliary (intermediary activities in relation to the transfer of goods or works from the seller to buyer).

Barter transactions take place in conditions of exclusion of funds when the process is carried out in cash or non-cash form. That is, the transaction takes place on the basis of direct commodity exchange. This phenomenon is typical for a market characterized by underdevelopment. Nevertheless, developed countries with market economies accept the practice of barter transactions as an auxiliary element in the implementation of measures for the sale of products (works, services).

The direct type of transactions is appropriate in the case when the buyer independently organizes the transportation, storage, insurance of products, and also takes care of customs operations and bank settlements. As you can see, the process is very expensive, so its popularity in society is quite small: it is much more convenient for buyers to resort to the services of intermediaries.

Business infrastructure

The fundamentals of your business should include the essential element of infrastructure, which is the set of businesses that mediate the interaction between the end participants in economic activity, and the set of processes in which these legal entities play a central role. The main purpose of the presented elementis to ensure the movement of material, labor and information resources and capital as a whole.

The structure of this component consists of two groups of activity types, which create, respectively, two groups of links. Horizontal links involve the implementation of economic activities by economic entities in terms of organizing mediation in certain sectors of the market. The vertical type of links characterizes the economic activity of institutions of a public or state type, the main task of which is to coordinate and control the interaction between economic entities.

Competition as an important element of the system

The market activity of an enterprise is practically irrelevant without its participation in the competition. Competition serves as an effective mechanism of rivalry between market participants for the right to find as many buyers as possible, as well as for the opportunity to sell goods (works, services) on the most favorable terms. It is worth noting that this practice is the best incentive in organizing the quality and optimality of products on the market, because thanks to competition, the manufacturer realizes the need for his efforts, which means that his products become competitive, and society is fully satisfied.

Competition takes place only with a certain market organization, opposite to the monopolistic activity of economic entities. So, it can be classified according tomarket conditions and the ways of competition. In the first case, competition can be perfect, regulated and imperfect. In the second - price and non-price.

Foreign economic activity

Business is based on various elements, which include the cooperation of legal entities with economic agents of other countries. Its main goals are: increasing the volume of exports and imports of products, providing the country with the resources necessary for comfortable social functioning, as well as adjusting prices at the export and import levels. Thus, in order to achieve the above goals, the organization must solve a number of tasks, among which the main ones are the study of theory and practice in terms of international trade, familiarization with pricing methods in other countries, as well as the organization of full awareness of the technique of foreign economic operations.

Thus, in order to start fruitful cooperation with foreign economic entities, a legal entity needs to carry out a number of activities:

• State registration in accordance with the location of the enterprise.
• Registration through the tax authority.
• Obtaining the seal and stamp of the organization.
• Registration in the state register.

As a result of the above operations, the organization can safely begin cooperation with economic agents of other countries, whereby its activities will become more efficient, and products (works, services) will begin to gain popularity notonly in the domestic market, but also outside it.