MANAGEMENT OF SMALL AND MEDIUM ENTERPRISES

BBBA 302

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 FACULTY OF MANAGEMENT STUDIES
DEPARTMENT OF BUSINESS
ADMINISTRATION
Course Title MANAGEMENT OF SMALL AND
MEDIUM ENTERPRISES (SME)

5TH MARCH, 2025

EVANS OPOKU GYIMAH
 THE ENTREPRENEUR
Outline
1.1 Definitions
1.2 Characteristics of an Entrepreneur
1.3 Entrepreneurial Process
1.4 The Growth of Entrepreneurship
1.5 Benefits and Disbenefits
1.6 Categories of Entrepreneurs

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 Learning Outcomes

By the end of this lesson, students will be able to:

• Define who is an Entrepreneur
• The characteristics of an Entrepreneur
• The Process involved in Entrepreneurship
• Why the Growing importance in Entrepreneurship
• The Benefits and Disbenefits of Entrepreneurship
• The types of Entrepreneurs

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 DEFINITIONS
• The word ‘Entrepreneur” derived from the French,
literally meaning someone who “takes between” or “goes
between”.

• Entrepreneurship, according to Onuoha (2007), “is the

practice of starting new organizations or revitalizing
mature organizations, particularly new businesses
generally in response to identified opportunities.”

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 THE ENTREPRENEUR

eter Drucker JOSEPH SCHUMPETER

ATHER OF MODERN MANAGEMENT
ECONOMIST AND FORMER FINANCE
MINISTER OF GERMAN-AUSTRIA

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 DEFINITIONS CONTD
Schumpeter(1965) defined “entrepreneurs as
individuals who exploit market opportunity
through, technical and organizational
innovation”

Frank H. Knight (1921) A person

‘’competitor” , using critical judgement to
decide whether to engage in business activity
or not in condition of uncertainty and risk
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 DEFINITIONS CONTD
• Bolton and Thompson (2000) have defined entrepreneur
as “a person who habitually creates and innovates to build
something of recognized value around perceived opportunities.

J.B. Say (1803) defined an entrepreneur as someone who

consciously moves economic resources from an area of lower,
and into an area of higher, productivity and greater yield.

Peter F. Drucker(1985) Someone (a person or an enterprise)

who creates something new, something different, in condition
of risk and uncertainty.

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 DEFINITIONS CONTD
Your Own Definition
Who is an entrepreneur?
An entrepreneur is a person who turns ideas
into viable business or commercial opportunities.
An entrepreneur
 Is an individual who works 24-hours ,
 Has a business idea
 And who is willing to take risk
 To implement that idea
 Assuming full responsibility for its execution,
success, or failure.
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Examples of well-known entrepreneurs include
Bill Gates, the chairman and CEO of Microsoft
Corporation

Steve Jobs, the co-founder of Apple company

Mark Zuckerberg, CEO of Facebook

CEO, McDan Group of Companies

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CHARACTERISTICS OF AN ENTREPRENEUR
• Internal Locus of control
• High Energy Level
• Need to Achieve
• Self Confident
• Not troubled by Unstructured Situations
• Creative
• Innovative
• Sense of Urgency

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 CHARACTERISTICS OF AN ENTREPRENEUR
Entrepreneurs share several key characteristics that
contribute to their success.
These include:
 Internal Locus of Control – Entrepreneurs believe
they control their own destiny. –

 Entrepreneurs believe they control their

success and take responsibility for their actions.
Example: In Ghana, Patrick Awuah, the founder of
Ashesi University, believed he could change the higher
education system through innovation and
perseverance. SERVICE EXCELLENCE
 CHARACTERISTICS OF AN ENTREPRENEUR
 High Energy Level – They exhibit great enthusiasm
and stamina in their pursuits. Entrepreneurs work long
hours to bring their visions to life.
o Example: Aliko Dangote of Nigeria worked
tirelessly to build the Dangote Group, now a
multinational company.
 Need to Achieve – Entrepreneurs are goal-oriented
and driven to succeed. Entrepreneurs are driven by
personal goals and a desire to accomplish something
meaningful.
o Example: Elon Musk's need to revolutionize the
automotive industry led to the success of Tesla.
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 CHARACTERISTICS OF AN ENTREPRENEUR
 Self-Confidence – They possess strong belief in
their abilities. Entrepreneurs must have confidence
in their ideas and abilities.
o Example: McDan Group's Daniel McKorley from
Ghana took risks in logistics and aviation with
confidence, leading to great success.
 Not Troubled by Unstructured Situations – They
adapt well to ambiguity and change. Entrepreneurs
thrive in unpredictable environments and adapt to
change.
Example: The rise of fintech companies like Paystack
in Nigeria shows adaptability to market needs.
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 CHARACTERISTICS OF AN ENTREPRENEUR
 Creative – Entrepreneurs generate new ideas
and solutions. Entrepreneurs think outside
the box to find unique solutions.

Example: Sangu Delle, a Ghanaian entrepreneur, used

creativity to create investment solutions through his
firm, Golden Palm Investments.

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 CHARACTERISTICS OF AN ENTREPRENEUR
 Innovative – They continuously look for ways to improve
and disrupt industries. Entrepreneurs introduce new
products or services that improve people's lives.
Example: Kwame Nkrumah’s industrialization drive was a
form of national entrepreneurship, introducing new
industries in Ghana.

 Sense of Urgency – Entrepreneurs act quickly and

decisively to seize opportunities. Entrepreneurs act
quickly to seize opportunities.
Example: Jeff Bezos saw an opportunity in e-commerce
and founded Amazon before it became mainstream.
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 ENTREPRENUERIAL PROCESS
The entrepreneurial process follows a structured path
from idea generation to business maturity and potential
exit.
There are Basically Six Process involved in the
Entrepreneurial Process
 Innovation
 Triggering Event
 Implementation
 Growth
 Maturity
 Harvest
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 ENTREPRENUERIAL PROCESS
 Innovation
 This is where the entrepreneur identifies and develops
a new idea, product, or service.

 It involves creativity, problem-solving, and

market research to develop a unique product, service,

or business model.

Example: A software developer notices a gap in the

online registration for SHS 1 admissions. Many parents
have to travel long distances just to register their
children. EVANS OPOKU GYIMAH
 ENTREPRENUERIAL PROCESS
 Triggering Event Stage

The triggering event stage is when an entrepreneur

experiences a significant moment or situation that
compels them to take action and start a business.

This could be due to personal circumstances,

external opportunities, or unexpected challenges.
An event that motivates the entrepreneur to act.

Example: Job losses due to COVID-19 pushed many

Africans into entrepreneurship.
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 ENTREPRENUERIAL PROCESS

 Implementation – Launching and executing

the business idea.

 Turning the idea into reality by starting the

business.
Example: Moringa Connect in Ghana turned
shea butter into global beauty products.

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 ENTREPRENUERIAL PROCESS
 Growth – Expanding the business, scaling up operations,
and acquiring more customers. Expanding operations and
increasing profitability.

Example: Zoomlion Ghana Ltd grew from a small company

to a leading waste management firm in Africa.

 Maturity – At the Maturity Stage, the business has

reached stability, has a strong market presence, and
focuses on long-term sustainability and expansion.

 The business becomes established and well-known.

Example: Fan Milk Ghana has matured into a household
brand. SERVICE EXCELLENCE
 ENTREPRENUERIAL PROCESS
 Harvest – Exiting the business, reaping financial
rewards, or passing it on to others.

 At the Harvest Stage, the entrepreneur decides to

exit the business , reaping financial rewards or
passing it on to others.

 Entrepreneurs sell the business or pass it to the

next generation.
Example: Many family-owned businesses in Africa
pass from parents to children.
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 GROWING IMPORTANCE OF
ENTREPRENEURSHIP
 Industry Structure
 New Technologies
 Deregulation and Privatization
 Formation of New Business Communities
 Increasing Demand for Variety
 Government Incentives and Subsidies
 Increasing Flow of Information
 Easier Access to Resources
 Entrepreneurial Education

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GROWING IMPORTANCE OF ENT CONT
• Return on Innovation
• Entrepreneur as a Hero
• High Regards for Self-Employment
• Increasing Dissatisfaction at Job Places
https://www.yourarticlelibrary.com/
entrepreneur/15-major-macro-level-reasons-for-
growth-of-entrepreneurial-activity-in-india/
13427

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 GROWING IMPORTANCE OF ENTREPRENEURSHIP
Entrepreneurship plays a vital role in the global
economy. Reasons for its increasing importance
include:
 Industry Structure – Emerging industries create
new business opportunities. Many industries are
shifting towards entrepreneurial-driven economies.
 New Technologies – Technological advancements
foster innovation and entrepreneurship.
Advancements in AI and digital platforms are
creating new business opportunities.
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 GROWING IMPORTANCE OF ENT CONT
 Deregulation and Privatization – Reduced
government control enables more business
ventures. Governments encourage private
business growth.
 Formation of New Business Communities
Refers to the creation of networks where entrepreneurs,
startups, investors, and professionals come together to
share resources, ideas, and opportunities.
 Increasing Demand for Variety – Consumers
seek diverse and customized products/services.
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 GROWING IMPORTANCE OF ENT CONT
 Government Incentives and Subsidies –
 The Government of Ghana has implemented
various policies, incentives, and subsidies to support
startups and small businesses.
 These initiatives aim to promote entrepreneurship,
enhance job creation, drive economic growth, and
foster innovation.
The NEIP is a government initiative designed to support startups and
small businesses through training, funding, and mentorship.
•Previously known as NBSSI, the Ghana Enterprises Agency (GEA) provides
training, funding, and business development services for SMEs.
•It offers grants, soft loans, and technical support.
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 GROWING IMPORTANCE OF ENT CONT
 Easier Access to Resources – Improved funding, mentorship, and
training opportunities. Crowdfunding and microfinance provide
capital.
 Entrepreneurial Education – Universities and institutions are
equipping individuals with entrepreneurial skills.

 Increasing Flow of Information – Access to global

markets and knowledge through the internet. Access to
knowledge enhances decision-making

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 GROWING IMPORTANCE OF ENT CONT
 Return on Innovation – Entrepreneurs
benefit from creative ideas and solutions.
Tech startups gain high rewards.
 Entrepreneur as a Hero – Societies
admire and celebrate successful entrepreneurs.
Entrepreneurs are seen as role models.
 High Regard for Self-Employment –
•More people are embracing entrepreneurship
over traditional jobs.
Youth prefer independence.
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 GROWING IMPORTANCE OF ENT CONT
 Increasing Dissatisfaction at Job Places –
People seek freedom and fulfillment outside
of employment.

More people seek personal fulfillment in

entrepreneurship.

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 BENEFITS AND DISBENEFITS
BENEFITS
Opportunity to create your own destiny – Control
over career and life choices.

Opportunity to make a difference –

Entrepreneurs contribute positively to society.

Opportunity to reach your full potential –

Fulfillment and self-actualization.

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 BENEFITS
 Opportunity to reap huge profits –
Financial rewards and wealth creation.
 Opportunity to contribute to society and be
recognized – Entrepreneurship provides individuals with
the chance to make a meaningful impact on society
while gaining recognition and rewards for their
contributions. Through innovation, job creation, and
problem-solving, entrepreneurs help shape their
communities and economies.

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 BENEFITS
 Opportunity to do what you enjoy and have
fun at it – Passion-driven business ventures.

Turning Passion into Profit

Entrepreneurs often build businesses around their
interests, hobbies, or skills, allowing them to enjoy
their work while earning a living.

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 DISBENEFITS

 Uncertainty in Income

 Risk of loosing your entire Investment

 Long Hours and Hard Work

 Low Quality of Life until Business gets established

 High level of Stress

 Complete Responsibility

 Discouragement

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 DISBENEFITS
 Uncertainty in income – Earnings fluctuate,
especially in the early stages. No guaranteed salary.

 Risk of losing entire investment –

Potential financial losses.

 Long hours and hard work –

•Significant time and effort required.

 Low quality of life until business is established

– Initial sacrifices and struggles.
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CATEGORIES OF ENTREPRENEURS
The Following are the Diverse mix of people who make up the rich
fabric of Entrepreneurship;
Young Entrepreneurs
Women Entrepreneurs
Minority Entrepreneurs
Immigrant Entrepreneurs
Part-Time Entrepreneurs
Home- Based Businesses
Family Businesses
Copreneurs
Corporate Dropouts
Social Entrepreneurs
Retiring Baby Boomers

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CATEGORIES OF ENTREPRENEURS
Entrepreneurs can be classified into various
categories based on their background and business
approach:
Young Entrepreneurs – Individuals who start
businesses at an early age. Often start early.
o Example: Mark Zuckerberg started Facebook in
his early 20s. Average age: 18-35 years.
Women Entrepreneurs – Female entrepreneurs who
contribute to economic development.
•Esther Afua Ocloo – Founder of Nkulenu Industries, one of Ghana’s first food
processing companies.
•Patricia Poku-Diaby – CEO of Plot Enterprise Ghana, a cocoa processing
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company.
 CATEGORIES OF ENTREPRENEURS
Immigrant Entrepreneurs – Foreign-born
individuals who start businesses in new countries.
Migrants creating businesses in host countries.
o Example: Lebanese and Chinese traders in
Ghana.(YangYang,CEO ZONDA)

Part-Time Entrepreneurs – Individuals who run

businesses while maintaining another job.
Run businesses alongside regular jobs.
Example: Many lecturers engage in consulting.

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 CATEGORIES OF ENTREPRENEURS
Minority Entrepreneurs – Entrepreneurs from
underrepresented groups.
o Example: African-Americans in Silicon Valley
tech startups.

Home-Based Businesses – Entrepreneurs

operating businesses from home.
Example: Online food vendors in Ghana.

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 CATEGORIES OF ENTREPRENEURS
Family Businesses – Ventures run by family members
across generations. Passed through generations.
Example: The Melcom Group in Ghana.

Copreneurs – Couples who jointly manage businesses.

Couples in business together.
Example: Bill and Melinda Gates Foundation.
Charter House in Ghana

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 CATEGORIES OF ENTREPRENEURS
Corporate Dropouts – Former employees who
leave the corporate world to start their own
ventures.

Left the corporate world to start businesses.

Example: Many former bankers now run fintech
startups.

Social Entrepreneurs – Entrepreneurs who address

social issues through business solutions.
Focus on solving social issues.
Example: Bright Simons of mPedigree.
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 CATEGORIES OF ENTREPRENEURS

Retiring Baby Boomers – Older individuals starting

businesses after retirement.

Start businesses after retirement.

Example: Retired teachers running private
schools.

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 CEO Stratcom Ghana

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Conclusion
Entrepreneurship is a powerful force that
drives innovation, economic growth, and
personal fulfillment.

Understanding the entrepreneurial process,

characteristics, benefits, and challenges will
help aspiring entrepreneurs make informed
decisions and navigate the business world
effectively SERVICE EXCELLENCE
 YANG YANG
CEO ZONDA TEC

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BUSINESS FORMATION AND OWNERSHIP

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 BUSINESS FORMATION AND
OWNERSHIP
Outline
1.1 Overview
1.2 Forms of Ownership of SMEs in Ghana
1.3 Ways of Owning a Business

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 Learning Outcomes

By the end of this lesson, students will be

able to:
• Appreciate the Overview of Business
Formation and Ownership
• Understand forms of ownership of SMEs
• Understand how to own a Business in
Ghana

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 AN OVERVIEW
Business formation and ownership
involve the processes and structures under
which businesses are established and
operated.
In Ghana, as in many parts of the world,
individuals and groups form businesses
for profit, economic growth, and job
creation.
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 AN OVERVIEW
There are countless Business owners in Ghana.

1. Owning a Business does not make one an Entrepreneur.

2. One can own a Business within a day by operating his or her

own shop.

3. People own Business in their private homes.

4. People own Business through rendering services.

5. People own a Business by following the legal process of

going to register with the Registrar General.
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 FORMS OF BUSINESSES
There are Basically Four forms of
Businesses namely;
1 Sole Proprietorship
2 Partnership
3 Corporations

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 SOLE PROPRIETORSHIP
Definition :
A sole proprietorship is an unincorporated
business with one owner who pays personal
income tax on profits earned.

It is the most common business structure in

Ghana and many African countries due to its
simplicity and low start-up cost.

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 SOLE PROPRIETORSHIP
Examples:
 Ghana: A local trader selling goods at Makola Market,
 Kwame Gyan Enterprises (a small-scale agro-
processing business),
 Auntie Muni Waakye.
 Africa: Small-scale farmers in Kenya selling produce
directly to consumers,
 Aliko Dangote’s early cement trading business,
 Jeff Bezos’ early Amazon setup in his garage,

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 SOLE PROPRIETORSHIP
Advantages
Least costly form of ownership to begin
Complete control over business decisions.
Profit incentive- Profits belong entirely
to the owner.
Total Decision Making Authority
No Special Legal Restriction
Easy to Discontinue- Easy to start and
discontinue
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 SOLEPROPRIETORSHIP II
Disadvantages
Unlimited Personal Liability- The owner's assets
are at risk.
Limited Skills and Capacity-
Difficulty in Raising Capital- Raising funds is
challenging.
Feeling of Isolation - Decision-making and
workload can be overwhelming.
Lack of Continuity of the Business- The business
ends when the owner dies.
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 PARTNERSHIP
A partnership is an association of two or more individuals
pooling resources to co-own a business with purpose of
making and sharing profits.
• Examples:
 Ghana: Two friends starting a catering business together,
 PWC Ghana (PricewaterhouseCoopers partnership in auditing and consulting),
 Kufuor & Co. Legal Firm.
 Africa: Nigerian fintech startups co-founded by multiple entrepreneurs, Safaricom’s
 M-Pesa (Kenyan mobile money service co-founded by multiple stakeholders),
 MTN & Ecobank partnership for mobile banking in Africa.
 World: Law firms and investment firms often operate as partnerships
 Google’s co-founders Larry Page and Sergey Brin initially operated as a
partnership, Ben & Jerry’s Ice Cream.

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PARTNERSHIP AGREEMENT/DEEDS
A Partnership Agreement protects each
partners interest in the Business.

It spelt out in writing the terms under which the

partners agree to operate.

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 PARTNERSHIP AGREEMENT/DEEDS
 Generally, the Partnership Agreement can include
any term the partners want ( unless they are illegal).
 The standard Partnership Agreement will likely
include the following;
 Name of the Partnership
 Purpose of the Business
 Domicile of the Business
 Duration of the Partnership
 Names of the Partners and their Legal Addresses.
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 PARTNERSHIP AGREEMENT II
 Contribution of each Partner to the Business

 Profit and loss sharing ratio

 Admission of a new Partner

 Sale of Partnership Interest

 Dissolution of Partnership and share of Assets and Liability

 Salaries, loans, drawings to each partner including interest on

loans and drawings
 Absence or Disability of one Partner

 Alteration or modification of the Agreement

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 PARTNERSHIP
ADVANTAGES AND DISADVANTAGES
 Easy to Establish- with shared responsibilities.
 Complimentary Skills - among partners
 Division of Profit and Losses- ( Shared financial burden )
 Large Pool of Capital - More capital compared to sole
proprietorships.
 Ability to attract partners
 Minimal Government Regulation
 Flexibility in operations
 Difficulty in dissolving a partner’s interest without
dissolving the partnership.
 Lack of continuity
 Potential for personality and Authority conflicts.
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 PARTNERSHIP
Disadvantages
 Unlimited liability – At least one partner is personally liable.
 Capital accumulation refers to the process of gathering financial
resources, assets, and investments to grow a business over time.
Still limited compared to corporations.
 Difficult to dissolve – Difficulty in dissolving a partner’s interest
without dissolving the partnership. A departing partner can cause
complications.
 Lack of continuity.
 Potential for personality and Authority Conflicts – Disagreements
may arise, affecting businessSERVICE
operations.
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 CORPORATIONS
• The Corporation is the most complex three
forms of Business ownership.

• It is a separate entity apart from the owners.

It can sue and be sued. It makes contracts,
own property , pay taxes.

• The court has defined the corporation as an

artificial being, invisible, intangible, and
existing only in contemplations of the law.
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 CORPORATIONS

The life span of the corporations is

independent of its owners, the shareholders
can sell their interest in the business without
affecting its continuation
Examples:
 Ghana: MTN Ghana, Fan Milk Ghana, Ghana Oil
Company Limited (GOIL), Kasapreko Company
Limited.
 Africa: Dangote Group (Nigeria), Shoprite (South
Africa), Ethiopian Airlines.
 World: Apple Inc., Amazon, Toyota, Coca-Cola.
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 CORPORATIONS
ADVANTAGES AND DISADVANTAGES
 ADVANTAGES
 Limited liability – Owners' personal assets are protected.
 Limited liability refers to a legal structure where the owners or shareholders
of a business are not personally responsible for the company’s debts or
financial losses beyond their investment.
 This means that if the business incurs debts or faces legal action, the personal
assets of the owners (such as houses, cars, and savings) are protected.
 Ability to attract Capital-Corporations can issue shares.
 Ability to Continue Indefinitely-Perpetual existence – The company continues
even if ownership changes.
 Transferable Ownership
 Broad Range of Managerial and capabilities available. Better management structures –
Specialized departments for efficient operations.

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 CORPORATIONS
DISADVANTAGES
High Cost and Time involved in the
Incorporation- Legal and administrative
expenses.
Double Taxation-Corporations pay
tax, and shareholders also pay taxes on
dividends.

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 CORPORATIONS
DISADVANTAGES
Potential loss of control by the founders.
Founders may lose decision-making power to
investors.

Large requirement of Regulatory and Red

tape.
Bureaucratic processes – Requires compliance
with government regulations.

Potential for Diminished Managerial

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 WAYS OF OWNING A BUSINESS

Starting a New one

Buying an Existing Business
Buy a Franchise
Buy Shares
Business Incubator

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 WAYS OF OWNING A BUSINESS
Entrepreneurs can own a business through different
means:
1. Starting a New Business
 Requires an idea, business plan, and capital.

 Example: Kwame Despite (Despite Group) started from

scratch and built a media empire.
 Africa: Strive Masiyiwa (Econet Wireless, Zimbabwe)
founded a telecom giant from scratch.
 Global example: Mark Zuckerberg (Facebook, now
Meta) launched his company as a student.

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 WAYS OF OWNING A BUSINESS
. 2. Buying an Existing Business
 Purchasing a business with an existing customer base
and reputation.
 Example: A Ghanaian entrepreneur acquiring an
existing restaurant,
 Kofi Amoabeng’s acquisition of UT Financial
Services.
 South Africa’s Naspers acquisition of PayU
Africa.
 Global example: Elon Musk acquired Tesla instead
of founding it. Known for pioneering electric vehicles
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 WAYS OF OWNING A BUSINESS
3. Buying a Franchise
 A way to operate under an established
brand.
 Example: KFC Ghana operates under a
franchise model.
 Africa: Steers and Debonairs Pizza
franchises in Nigeria.
 Global example: McDonald's franchise
model.
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 WAYS OF OWNING A BUSINESS
4. Buying Shares in a Company
 Purchasing shares makes one a part-owner of a
company.
 Example: Ghana Stock Exchange (GSE) allows
individuals to invest in listed companies like
Ecobank Ghana.
 Africa: Jumia Technologies (Africa’s Amazon)
listed on the New York Stock Exchange.
 Global example: Warren Buffett investing in
Coca-Cola through Berkshire Hathaway.
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 Business Incubator
5. A program supporting startups with funding
and mentorship.
Example: Meltwater Entrepreneurial School of
Technology (MEST) in Ghana.
Africa: Tony Elumelu Foundation supporting
African entrepreneurs.
Global example: Y Combinator, USA –
incubated companies like Airbnb and Dropbox.

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 Conclusion
Understanding business formation and ownership structures is
crucial for anyone looking to start or invest in a business.

Whether through sole proprietorship, partnership, or

corporation, each has advantages and disadvantages.

Additionally, owning a business can take different forms,

including starting from scratch, purchasing an existing
business, or investing in shares.

By following legal processes and making informed decisions,

entrepreneurs can build sustainable businesses that contribute
to Ghana’s economy and beyond.
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