Tip I: "Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don't have the first, the other two will kill you. You think about it; it's true. If you hire somebody without[integrity], you really want them to be dumb and lazy." (Warren Buffet. Investor, Business Magnate)
Tip II:"If we weren't still hiring great people and pushing ahead at full speed, it would be easy to fall behind and become a mediocre company." (Bill Gates. Co-Founder Microsoft, Investor)
A company represents the third stage in the evolution of business organizations, the first two being sole proprietorship and partnership respectively.
A company is an association of people formed for economic gain of its members who contribute money’s worth to a common stock (ordinary shares).
A company has a right to act as a natural being granted by law.
Benefits of Running a Company
1. Limited Liability
If a client submits a compliant to the authorities and files a lawsuit against you. To protect the company assets, the company management can seek liability insurance for the business.
2. Doing what you Love
Working in an industry you are very passionate about keeps you in check during the toughest times. As a business owner you have the ability to innovate, create and contribute immensely to society and therefore gaining personal satisfaction.
3. Easy to acquire Funding
Companies have higher chances of obtaining loans and debentures since they can afford collateral security.
4. Huge Capital Base
The availability of capital is enormous due to the big membership and their contributions
5. Business Control
Owning your own business gives you the power to be a part of every step of the decisions made that help in building the business or else you could hire people to do that for you.
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Risks of Running a Company
1. Hectic Schedule
Most business owners work very long erratic hours. Most people view hectic long work hours as a con but work schedules are mostly rough during the first days of the business. Business owners must handle most of time consuming administrative tasks as this responsibility lies in your hands, therefore you'll experience days when you will have to spend most of the nights in the office to complete these tasks.
2. Financial Risks
You will get financial trouble along the way and that is part of being in business. All money invested in companies is always at risk. There is even a possibility that you will lose all your initial capital and even fail to pay back your business loans. Even with a well thought out plan, the economy it self is capable of drowning your business and forcing it's closure
3. Stress
There are very many things to worry about as a business owner for example competition, bills to be paid, customer problems, faulty equipment. You are always going to be held responsible for the well being of the company employees
4. Undesirable Duties
You will often get very discouraged by the details of the company work for example doing paper work, but this will rarely affect you if you are passionate about your industry. You will also have to fire unproductive employees which will not be an easy task to perform.
5. Sacrifice
When running a company you will have less time to yourself than you would have working for some one else. Unlike what you have heard about business in theory, the reality is that business is very time consuming.
Types of Companies
1-Statutory Company
This is a company formed by the Act passed either by the central or state legislature. Such companies are governed by their respective Acts and are not required to have an Articles of Association (AOA) and Memorandum of Association (MOA).
2-Registered Company
This is a company formed by registration under the Companies Act. The working of such a company is regulated by the provisions of the Companies Act, AOA and MOA. A registered company may be any of the following
a) Limited by Shares Company
This is a company having the liability of its members limited by the memorandum to the amount unpaid (if any) on the shares respectively held by them.
b) Limited by Guarantee Company
A Guarantee company in which the liability of its members is limited by the memorandum to such amounts as the members may undertake by memorandum to contribute to meet the deficiency of the assets of the company in case its being wound up.
c) Unlimited Company
This is a company that does not have any limit on the liability of its members.
3-Government Company
This is a company of which not less than 51% of the paid up capital is held by the central government.
4-Foreign Company
This is a company which is incorporated outside the country but with a place of business in the country.
5-Public Company
This is a company whose AOA does not contain requisite restrictions to make it a private company. A public company needs a minimum of seven persons for its registration.
6-Private Company
By AOA a private company is described by the following features. It is required by law to add the words “private limited” at the end of its name. Restriction of membership to 50 persons excluding the past and present employees of the company who are members of the company. It prohibits any invitation of the public to subscribe to its shares or debentures.
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