Building & Construction
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By the end of this module, participants will be able to:
Register their own business entity which involves the set-up
requirements
 Demonstrate an understanding of reconciliation accounts
 Effectively be able to read and analyse balance sheets
 Effectively be able to read and analyse income statements
 Understand the importance of financial records and how assist
in monitoring profitability
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Question:
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Think of your environment, and think of a
particular area you would consider investing
your resources in to start your own enterprise?
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What is a Construction Business
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A business is usually defined as a commercial enterprise
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Some are run by only one person who carry out all of the
required functions
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Others employ thousands of people and provide goods and
services to people all over the world
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What Business do?
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Who are the stakeholders? – Anyone who has an
interest in the success of a business
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Customers
Managers
Employees
Owners
Local Community/Environment
Suppliers
Government
Creditors
Sole Proprietorship
 Sole proprietorship is a business owned and run by someone for their own benefit.
The business’ existence is entirely dependent on the owner’s decisions, so when the
owner dies, so does the business.
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Advantages of sole proprietorship:
All profits are subject to the owner
There is very little regulation for proprietorships
Owners have total flexibility when running the business
 Very few requirements for starting—often only a business license
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Disadvantages:
Owner is 100% liable for business debts
Equity is limited to the owner’s personal resources
 Ownership of proprietorship is difficult to transfer
 No distinction between personal and business income
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Partnership
 These come in two types: general and limited. In general partnerships, both owners
invest their money, property, labor, etc. to the business and are both 100% liable
for business debts. In other words, even if you invest a little into a general
partnership, you are still potentially responsible for all its debt. General
partnerships do not require a formal agreement—partnerships can be verbal or
even implied between the two business owners.
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Limited partnerships require a formal agreement between the partners. They must
also file a certificate of partnership with the state. Limited partnerships allow
partners to limit their own liability for business debts according to their portion of
ownership or investment.
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Partnership
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Advantages of partnerships:
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Shared resources provides more capital for the business
Each partner shares the total profits of the company
Similar flexibility and simple design of a proprietorship
Inexpensive to establish a business partnership, formal or informal
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Disadvantages:
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Each partner is 100% responsible for debts and losses
Selling the business is difficult—requires finding new partner
Partnership ends when any partner decides to end it
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The Partnership Relationship is a Fiduciary one.
That means partners are placed in a position of trust
with each other and have the following duties:
To make full disclosure to each other of all issues
relevant to the business.
 To declare any personal financial benefit received by
a partner carrying out the firms business.
 Not to compete with the firm without the consent of
the other partners.
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Lapse in time.
Most partnerships are formed in the beliefs that they
will be continued indefinitely but a specified lifetime
may be stated in the a partnership agreement.
 The sole purpose of the partnership is achieved.
 Death or bankruptcy of a partner.
 Illegality: If the purpose of the partnership
subsequently become illegal, the partnership contract
is frustrated.
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Corporation
 Corporations are separate entities and are considered a legal person. This means,
among other things, that the profits generated by a corporation are taxed as the
“personal income” of the company. Then, any income distributed to the
shareholders as dividends or profits are taxed again as the personal income of the
owners.
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Advantages of a corporation:
Limits liability of the owner to debts or losses
 Profits and losses belong to the corporation
 Can be transferred to new owners fairly easily
 Personal assets cannot be seized to pay for business debts
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Disadvantages:
Corporate operations are costly
Establishing a corporation is costly
Start a corporate business requires complex paperwork
With some exceptions, corporate income is taxed twice
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Capital may be raised in two ways:
By selling shares (Share capital): buyers
become company members.
By obtaining loans (loan capital): the lenders
do not become members by virtue of their
loan. They are creditors of the company.
Market Analysis
• Market Size
• Market Segments
Marketing Strategy
• Objectives of Business
• Niche versus Mass Marketing
Market Research
• Primary and Secondary
The Marketing Mix
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Price
Place
Promotion
Product
Management Structure and Organizational
Design
• Top Managers, Middle Managers, Front Line Managers
• Operatives
Leadership and Management Styles
• Autocratic, Democratic, Laissez-Faire, Transformational
Motivation
Recruitment and Training of Employees
Workforce Planning
Communication
Profit and Loss
Break Even Point
Balance Sheet
Budgeting
Revenue