Monday 13th of May 2024
Business ownership is the goal of most driven individuals with dreams of making it big. Working i
...ndependently and controlling an organisation fills...
Business ownership is the goal of most driven individuals with dreams of making it big. Working independently and controlling an organisation fills them with enthusiasm and inspiration to achieve greatness. The success stories of role models like Jeff Bezos, Mark Zuckerberg, Steve Jobs and other business legends further fuel the fire of passion in these individuals.
However, many of them are novices with little corporate experience. They are not even aware of the process of establishing a business and the various entities that can be created. So, here is everything you need to know about a business, its types and different company sizes to become a successful entrepreneur. This information will help you enter the business domain with the required knowledge for a perfect kick-start to your entrepreneurial journey.
What Is A Business?
A business is a commercial organisation that sells goods and services to customers to generate revenue. For example, a clothing store, a grocery store, a textile manufacturing entity, a chemical factory, and an IT company are all businesses operating in different sectors. They sell goods and services that customers need to live comfortable lives, such as cars, food, beverages, legal consultations, medical advice, clothes, shoes, books, medicines, luggage, computers, phones, TVs, electronics, etc.
Businesses that expand into nationwide brands or multi-national companies become trustworthy names, such as Vodacom, South African Airways, Castle, DStv, etc. Some of the organisations are non-profit and do not work for revenue. These charity organisations work for the greater good or a social cause. A few well-known charitable entities in the country include Endangered Wildlife Trust, Operation Hunger, ACT Africa, Baby Box and Nkosi’s Haven.
How Is A Business Built?
Businesses can be built from scratch or acquired by buying a business for sale in South Africa. Both require sufficient funds for setting up and purchasing. Every venture comprises different departments; the most common ones include administration, human resources, marketing, sales, IT, accounts, management and production. They work in tandem to accomplish the business goals specified by the entrepreneur in the business plan.
Besides the structure and money, the organisation needs a commercial property, responsible and qualified workers and equipment to start operating. The business plan defines the objectives, budget, target audience, products, marketing strategies and working procedures. Employees follow the roadmap to generate sales and reach the breakeven point. Once the venture reaches this milestone, it starts finding ways of enhancing revenue and beating the competition to stay afloat.
Different Types of Businesses Structures in South Africa
South African businesses can be divided into various types based on their structures. Look below to know about the most suitable type for starting up or acquisition.
A sole proprietorship is a business type that is owned and run by an individual. The owner is held accountable for the tax and legal liabilities of the business. Thus, the sole proprietor has to pay personal income tax on the revenue generated by the entity because he keeps all the profits. However, if the business fails, the owner’s personal assets get seized to compensate the bank for the outstanding loan amount.
A partnership business is owned and operated by two or more individuals who combine their funds and resources to build an organisation. They share the profits, losses and liabilities. It reduces risk because losses and expenses get distributed among partners.
A private company is a separate legal entity owned by shareholders. The business name ends with (Pty) Ltd and continues to operate even after one of the shareholders passes away. There is no limitation to the number of shareholders in a private company, and the shares are not available to common people. The shareholders have limited liability in a private company.
Public companies are businesses that are listed on the Johannesburg Stock Exchange and their names end with (Ltd). These companies come out with their shares that can be bought by the public to get funds with long-term maturity.
Non-profit companies are made for a social cause, and the profits earned are not retained by the director or the members of the organisation. They are working to make a social impact and get tax exemptions.
The state-owned companies are businesses owned completely, largely or partially by the state. These entities perform commercial activities on behalf of the government, such as Alexkor, Broadband Infraco, Airports Company South Africa, etc.
Different Types of Company Sizes in South Africa
The size of the business varies according to the capacity of its operations. It is determined by assessing their revenue, assets, production capabilities and market share. So if you are planning to purchase a business for sale in South Africa, you must know its size.
Small businesses are mushrooming in the country rapidly and make a significant contribution to the GDP, besides employing more than 50% of the workforce. These entities employ up to 50 workers. A very small business has up to ten employees, and micro businesses have five employees. The turnover of small businesses ranges from R5M to R32M, depending on the type of industry.
Medium-sized businesses employ 100 to 200 workers, and the total turnover of these entities ranges from R3M to R64M. The highest revenue in the medium segment is generated by wholesale trade, commercial agents and allied services and the lowest by agriculture-based businesses.
Large companies have more than 250 employees and generate overwhelming revenue from their expansive operations to become highly successful. For example, Naspers is an internet conglomerate from Cape Town that has current revenue of 8.41 billion. Other large companies in the country include Sasol, Anglo American Platinum, MTN Group, etc.
Wrapping Up
Business ownership sounds easy, but building an entity from the ground up is challenging. Aspiring entrepreneurs must have in-depth knowledge of the business structures and company sizes before starting up or acquiring an existing venture.
Profit is the most valuable part of a successful business. It is the building block of stability and scalability. Without profits, the business cannot...
Everyone has hobbies and interests, and pursuing them makes them happy. Some love performing arts, while others favour sports or academic excellence....
Business2Sell is one of the biggest and trusted marketplaces for buying and selling businesses in South Africa. Our website is visited by thousands of buyers and sellers every day, which makes it the most active and dynamic online platform for transactions. We are committed to providing our clients with advanced technology and value for money services.
