Types of Enterprise
Enterprise
An enterprise is any organisation, be it a business, community group, or charity, which can be set up for profit or not-for-profit.
Enterprising describes individuals who establish these organisations and undertake new or different challenges.
Types of Enterprise
There are three main types of enterprises:
Financial
Social
Cultural
Financial Enterprise
A financial enterprise is primarily focused on generating profit by producing or supplying goods/services to consumers or other businesses. Examples include Manufacturing firms, shops, insurance companies, and construction companies.
Advantages:
Provide a wide range of goods and services.
Create jobs.
Contribute taxes to the government.
Supports for Financial Enterprises in Ireland:
Local Enterprise Office (LEO) (www.localenterprise.ie):
Located throughout Ireland, LEOs encourage new enterprise creation to boost employment.
Support small enterprises (up to 10 employees).
Offer advice, training, and financial assistance (grants) to new and existing small businesses.
Enterprise Ireland (www.enterprise-ireland.com):
Provides support to Irish enterprises with international sales potential and job creation.
Assists with business plan development and employer-related aspects.
Offers incubation spaces and financial grants.
Microfinance Ireland:
Offers small loans (between and ) to start-ups and established businesses.
Supports businesses with 1-10 employees and annual turnover less than .
Social Enterprise
A social enterprise is designed to provide essential services to a local community and generates income from those services, operating differently from a charity. Examples include Co-operatives, tourism services, charity shops, childcare facilities and community radio stations.
People who set up social enterprises are often referred to as social entrepreneurs. Their main objective is to make a difference rather than to make a profit.
Advantages
Provide essential services to meet the needs of local communities.
Offer solutions to problems in their locality.
Create employment in their communities.
Social Enterprise Examples:
Clann Credo (www.clanncredo.ie):
Provides loans to community organisations, charities, amateur sports clubs, and social enterprises.
Helps with projects such as building childcare facilities, developing sports training facilities, and constructing social housing.
Social Entrepreneurs Ireland (SEI) (www.socialentrepreneurs.ie):
Supports new social entrepreneurs in finding solutions to social problems in Ireland.
Offers grants (up to ) to existing social enterprises to expand their projects.
Kickstart:
Aims to increase employment for individuals with criminal convictions.
Provides grants to social organisations that employ them.
Developed through a joint effort of the Probation Service and the Irish Prison Service.
Example: FoodCloud
FoodCloud developed an app and platform to redistribute surplus food, matching businesses with excess food to charities in their community that have too little.
Retailers use the app to upload details of surplus food, and charities receive notifications, enabling them to collect and distribute the donations.
Cultural Enterprise
A cultural enterprise promotes:
Culture (traditions, customs, and beliefs).
Heritage (architectural, historical, or natural value).
Arts (music, literature, painting, and dance).
A cultural entrepreneur is someone who establishes a cultural enterprise.
Some cultural enterprises aim to make a profit, while others are non-profit, aiming to promote tourism, provide services for visitors, support the arts, or promote sports. Examples include EPIC The Irish Emigration Museum, the Bord Gáis Energy Theatre, or the Electric Picnic festival.
Examples of non-profit Cultural Enterprises:
Fáilte Ireland (promotes tourism).
The Natural History Museum (provides services for visitors).
The Arts Council (promotes and supports the arts).
Local GAA club (promotes sports).
Advantages:
Allow Irish people and tourists to experience Ireland’s culture.
Attract tourists, bringing money into Ireland’s economy.
Provide employment, especially in rural areas.
Offer entertainment for people of all ages.
Example: Riverdance
Riverdance showcases traditional Irish music and dance. Originating as an interval act at the 1994 Eurovision Song Contest in Dublin, it expanded into a stage show and has been performed in over 450 theatres worldwide, reaching over 25 million people.
Cultural Enterprise Supports:
The Arts Council of Ireland (www.artscouncil.ie):
Promotes and develops the arts, including dance, literature, drama, circus, street art, architecture, opera, and music.
Conradh na Gaeilge (www.cnag.ie):
Promotes the Irish language in Ireland and internationally.
Helped establish RTÉ, Raidió na Gaeltachta, and TG4.
Promotes Seachtain na Gaeilge in schools.
Types of Business Ownership
There are various types of business enterprises, ranging from bus companies to shops, publishers, and petrol stations, each set up differently.
The main types of business enterprises include:
Sole Trader
Partnership
Private Limited Company
Franchise
Co-operative
Not-for-profit Organisation
i. Sole Trader
A sole trader is an individual who owns and runs their own business. Examples include newsagents, butchers, carpenters, solicitors, and mechanics.
Advantages:
Easy to set up.
Makes all decisions.
Flexible opening/closing hours.
Retains all profits after tax.
Disadvantages:
Unlimited liability.
Must provide all finance.
Long hours, few holidays.
Difficult to compete against larger businesses.
Unlimited Liability
Unlimited liability means the sole trader is responsible for all business debts, potentially using personal possessions to repay them.
ii. Partnership
A partnership is formed when between two and 20 people set up a business together. Partnerships are often formed by professionals like doctors, dentists and accountants. The partners should draw up a written agreement about how the business will operate. This is called a ‘deed of partnership’.
Advantages:
Can raise more money as a group.
Larger range of skills.
Better decisions.
Disadvantages:
Unlimited liability.
Potential disagreements.
Profits divided between partners.
iii. Private Limited Company
A private limited company is formed when between one and 149 people combine their resources to start a new business with limited liability. The people who put money into the new company are called shareholders because they each buy a share of the new business. The money they invest in the business is called the capital.
When it comes to making important decisions, each shareholder has one vote for every share they own. The name of a private company must be followed by the letters ‘Ltd’ or the word ‘Limited’.
Limited Liability
Limited liability means that if the company closes because it owes too much money, the shareholders will only lose the amount they invested in the company. Their private possessions, for example their home or savings, will not be used to pay off the debts of the company.
Setting up as a Private Limited Company
Register the new company with the Companies Registration Office (CRO).
Elect a board of directors and appoint a managing director.
Begin trading upon receiving a ‘certificate of incorporation’ from the CRO.
Advantages:
Limited liability for owners.
Raise more money.
Attract better employees.
Better group decisions.
Disadvantages:
Difficult/expensive to set up.
Many rules to follow.
Profits shared among shareholders.
iv. Franchise
A franchise is an arrangement where one person is given permission to set up a branch of another person’s business in return for a fee or a percentage of their sales. Examples of franchises include McDonald’s and O’Briens Sandwich Bar. The original owner of the business is called the franchiser. The person who gets the franchise is called the franchisee.
Advantages:
Less risk (established business).
Benefits from group advertising.
Bulk buying reduces costs.
Franchiser expands without extra work.
Disadvantages:
Franchisee pays fees and percentage of profits.
Limited control (must operate like other franchises).
Bad reputation of one branch affects others.
v. Co-operative
Co-operatives (also called ‘co-ops’) are organisations formed by people with a common interest. These people join together to try to achieve something that they could not achieve on their own. There must be at least seven members to form a co-operative. Examples of co-operatives in Ireland include: The Tipperary Co-operative Creamery Ltd., Blackstairs Group Water Scheme Society Ltd., North Kerry Arts, Culture and Heritage Society Ltd.
Advantages:
Profits divided based on business done with the co-op.
Equal say for each member.
Members have limited liability
Disadvantages:
May not raise enough money.
Difficult to compete with other businesses.
vi. Not-for-Profit Organisation
A not-for-profit organisation is set up to meet a charitable or social need in the community. All income earned is used by the organisation to provide or improve its services. Not-for-profit organisations may be run by volunteers. They may also have some paid employees.
Examples: Sports clubs, e.g. Three Rock Hockey Club, Charities, e.g. The Simon Community, Schools, e.g. Coláiste Phadraig, Lucan, Hospitals, e.g. Cork University Hospital, Voluntary groups, e.g. An Taisce.