Engineering Entrepreneurship

Doing Business in Malaysia
*Planning Your Business
*Starting Your Business
*Managing Your Business
*Growing Your Business

Planning Your Business
*Planning is a very important thing that an entrepreneur needs to do.
*The success and failure of a business depends on it.

Forms of Business in Malaysia
*Sole Proprietorship
*Small Business Enterprise

Sole proprietorships:
*only Malaysian citizens or permanent residents can register.
*Personal names or trade names can be used as business names
*The relevant authorities, like the Registrar of Business, reserve the right to
reject any submitted name if it is deemed misleading or inappropriate in their

Like sole proprietorships, only Malaysian citizens or permanent residents can register partnerships. Personal names or trade names can be used as business names,

The most common type of company in Malaysia is a company limited by shares (public limited and private limited companies).

Private limited companies:
cannot sell shares to the public, and are distinguished by the appellation "Sendirian Berhad", shortened to "Sdn Bhd" or "S/B".

Public limited companies source their capital by:
selling shares to the public, and are distinguished by the appellation "Berhad", shortened to "Bhd".

Registering Your Business
*A business can be defined as an organization that provides goods and services to
others who want or need them.
>every form of trade,
>profession or
>other activities that is carried out for the purpose of maximizing profit.
*You are required to register your business with the Companies Commission of
Malaysia (CCM) under the Companies Act 1965 and the Registration of Businesses Act
1956 .
*Businesses that can be registered under the Registration of Businesses Act 1956 at
the Commission of Companies Malaysia are:

Sole proprietorship – a business wholly owned by a single owner.
Partnership – a business owned by two persons and not more than 20

Sole Proprietorship
*owned by one person
*need not be operated by that person alone
*can even have large numbers of employees.

Advantages of Sole Proprietorship
*Absolute freedom in decision making.
*All profits will be your personal property.
*No reports of accounts are required.
*Need to pay personal income tax and not business tax

Limitations of sole proprietorship
*You are responsible for the debts and risks of the business.
*Legally, there is no difference between your personal and your business property.
*Your liabilities are unlimited, which means risks and failures in the business
will involve your personal property.

*Pool capital and work together with at least one more person.
*Partners are joint-owners of the business.
*Share the business profits and risks.

Advantages of Partnership
*Partnership means having more expertise and more resources for capital.
*Partnership means business risks can be distributed and shared among partners.

Limitations of Partnership
*All partners carry the same responsibilities
>You are liable for risks and debts of the business even if it is caused by the
actions of your partners.
>With unlimited liability, each partner is also liable to use their private
resources to meet the partnership's debts.
*Disagreements and disputes may occur
*A Partnership’s lifespan is limited – it may end if any one of the partners has
>mental disorder,
>falls bankrupt,
>resigns or

*Companies are registered legal entities formed by several persons.
*Companies can own property, draw contracts and employ people.
*All companies in Malaysia are governed by the Companies Act 1965.

Limited Companies
A company and the people who own it are regarded as different entities regardless of percentage of shareholding in the company.

There are three types of limited companies:
*A company limited by shares where the members’ personal liabilities are limited to
the par value of their shares.
*A company limited by guarantee where the members' liabilities will be restricted
to the amount each agrees to contribute to the assets of the company.
*An unlimited company where there is no limit to the members’ liabilities.

Rights and Responsibilities of a Company
*A company has separate rights and responsibilities
*A company can take legal action and can have legal action taken against it.
*Shareholders are not liable for the company’s business management.
*Shareholders are protected against the loss of more than the nominal value of
their shareholding.
*The company’s operation is governed by the Companies Commission.
*The company must pay various taxes.
*Companies must publish financial reports checked by authorized auditors

Starting Your Business
*Registering Your Business
*Franchise System
*Licenses and Permits
*Business Locations and Sites

Managing Your Business
*Human Resource Management
*Accounting and Auditing Needs
*Standard and Accreditation
*Take Over and Mergers
*Winding Up the Company

Growing Your Business
*Developing Your Business
*Incentives, grants, awards
*Human Resource Development
*Public Listing
*Bursa Malaysia and MESDAQ
*Marketing and Advisory Service
*Protection of Intellectual Properties

Entrepreneurship and Small Business

*The process of creating and managing a business to achieve a desired objective

Small Business
*Any independently owned and operated business that is not dominant in its
competitive area and employs fewer than 500 people

10 Reasons to Start a Business
*Be your own boss.
*Get to do what you are interested in.
*Your firm = Your deadlines.
*You can be creative.
*It can be very profitable.
*You can have a second career.
*The big dream really can be a reality.

What Is a Small Business?
*Any independently owned and operated business
>Not dominant in its
*competitive area
>Does not employ more than 500 people

Industries That Attract Small Business
*Retailing and Wholesaling
*High Technology

Advantages of Owning a Small Business
>Freedom of choice
>The option of working at home
>Requires less money to start &maintain
>The ability to focus on a few key customers
>The chance to develop a reputation for quality and service

Disadvantages of Small Business Ownership
*High stress level
*High failure rate
*Managerial inexperience or incompetence
*Inability to cope with growth

Traits Needed to Succeed in Entrepreneurship
>Helps entrepreneurs focus on details
>Facilitates network building
>Facilitates planning
>Facilitates networking
*Openness to new ideas

Common Mistakes Made by Start-up Businesses
1.Failing to spend enough time researching the business idea to see if it’s viable
2.Miscalculating market size, timing, ease of entry, and potential market share
3.Underestimating financial requirements and timing
4.Bringing in unnecessary partners
5.Overprotecting sales volume and timing
6.Making cost projections that are too low
7.Hiring too many people and spending too much on offices and facilities
8.Lacking a contingency plan for a shortfall in expectations
9.Bringing in unnecessary partners
10.Focusing too much on sales volume and company size rather than profit
11.Hiring for convenience rather than skill requirements.
12.Neglecting to manage the entire company as a whole.
13.Accepting that it’s “not possible” too easily rather than finding a way.
14.Seeking confirmation of actions rather than seeking the truth.
15.Lacking simplicity in vision
16.Lacking clarity of your long-term aim and business purpose.
17.Lacking focus and identity.
18.Lacking an exit strategy.

The Keys to Starting a Small Business Success
*A comprehensive business plan
*The right form of ownership
*Adequate financing

Financial Resources
*Equity Financing
>Owner’s funds
>Venture capitalists
*Debt Financing
>Loans & collateral
>Lines of credit
>Trade credits

Types of Small Businesses
*The purchaser of a franchise

Advantages of Franchises
*Management training and support
*Brand-name appeal
*Standardized quality of goods and services
*National advertising programs
*Financial assistance
*Proven products and business formats
*Centralized buying power
*Site selection and territorial protection
*Greater chance for success

Disadvantages of Franchises
*Limited product line
*Possible market saturation
*Less freedom in business decisions
*Franchise fees and profit sharing with the franchiser
*Strict adherence to standardized operations
*Restrictions on purchasing

Developing Trends Impacting Small Business
*Demographic Trends
>Baby boomers & Echo boomers
*Technological Trends
>Increase in Internet usage
>Major breakthroughs in technology
*Economic Trends
>Economic turbulence creates economic threats and new opportunities

Types Of Entrepreneurs

Types Of Entrepreneurs
Self Employed
1.Manages own business
2.Few workers
3.Team Building
*They will always look forward to improve or expand their business
*Their business expansion depends on the number of workers
*In order to achive their goals, they work effectively in a team
*Examples: Retailer, Lawyer, Doctor.

Free Mover
Set up a company,
*Sell their own products
*Examples: Ramily Burgers, Aminah Hassan’s sauce

*Company or manufacture that grants franchises
*They develop effective business using branches at different locations
*Examples: KFC, Pizza Hut, Radix Fried Rice

*A license to sell another’s products or to use another’s name in business or both

*The company that sells a franchise
*US headquarters


Large Enterprise:
*This type of entrepreneur will explore a large scale of business which involves
big capital and a lot of employees.

Product or Service
*Product: Honda, Toyota Cars

Product or Service
*Service: DHL,
*Western Union

Capital Accumulator:
*Financial Institutions
>Large Amount of capital required
>Multi level management
>Examples: Maybank, AmBank, Insurance companies.

Business Buyer:
*Buy an ongoing business
>Large Amount of capital required
>High level of Information required
>Examples: Sony bought Universal Pictures of Hollywood

A Techno/Cyber Entrepreneur
*Creates new ideas applying technology
*Advancement in

Their products
*Examples: Hotmail, Google,
*Yahoo, Twitter

Buy & Sell Entrepreneur
*Buy non profit making business
>Inject large amount of capital
*Turn it into Profit Making Venture
>Sell it at higher price

Types Of Entrepreneurs

One of the most important decisions any business owner will face when starting a new business is deciding on what structure the business will take.

Types of Business Organization
Some of the factors which will assist you in making that decision include.
*Your needs for capital.
*The number of people you expect to hire.
*How you plan to distribute earnings.
*Any liabilities you are assuming.
*How long you are planning to operate your business.
*Any legal restrictions.

There are three main types of business organizations:
1.Sole Proprietorship

Sole Proprietorship
*The least expensive and easiest way to start your business
*An individual on his/her own account carries out the business or profession.
*No formal procedure is required for setting up a sole proprietary concern.
*Registration & local licences

1.Business relationship agreement between two or more persons
2.The capital for a partnership is provided by the partners
3.Partnerships (other than banking companies) are generally limited in size to
twenty partners.
4.The interest of a partner is transferable only with the prior consent of the
other partner (s).
5.Generally they are formed to pool resources.

The two most common types of partnerships are
*limited partnerships and
*general partnerships.

Two or more people can form a general partnership through a simple verbal agreement
(Not recommended)

Partnership agreement:
1.The compensation for partners.
2.How long will the partnership last.
3.How will the profits/losses be divided?
4.What type of business is it?
5.What is each partner investing into the business?
6.If the partnership dissolves how will assets be distributed?
7.A settlement clause for disputes.
8.Provisions for dissolution of the partnership.
9.Provisions for future changes to the partnership.
10.Define any restrictions to expenditures or authority.
11.Provisions for death or incapacity.

1.A corporation is a legal entity that has most of the rights and duties of a
natural person but with perpetual life and limited liability.
2.Corporations can raise capital
3.Shareholders of a corporation appoint a board of directors and the board of
directors appoints the officers for the corporation,
4.who have the authority to manage the day-to-day operations of the corporation.
5.Share holders are generally liable for the amount of their investment in
corporate stock.
6.Their personal property is immune from claims against the corporation-thus, their
liability is limited.
7.A corporation pays its own taxes and shareholders pay tax on their dividends.
8.The corporation is its own legal entity and can survive the death of its
owners and shareholders.
9.Corporations hold annual meetings and require directors to observe certain
10.They are more expensive and complicated to form and require periodic filings
with the state and also require annual fees.
11.Corporate control lies with the person who has ownership of the most
shares of stock.
12.If a single stockholder or a group of stockholders own at least 51% of the stock
they can make decisions of policy.
13.The size of the corporation will affect how formally or informally it can
14.Smaller corporations might operate less formally, but still need to keep
proper documentation.


Entrepreneurship Basics
Definition of entrepreneurship
The word ‘entrepreneur’ originated from a French word ‘ENTREPRENDE’ which menas “willing to take responsibility or willing to try something new”

Oxford Dictionary:
Entrepreneur is someone who is handling a business and taking risks.

(Peter Drucker – 1985):
Innovation is the specific instrument of entrepreneurship... the act that endows resources with a new capacity to create

Key Points
The decision to become an entrepreneur is influenced by:
- an individual’s personality,
- the ethno-cultural environment,
- circumstances in society and
- the interaction of these factors.

SUCCESS in business involves
*LOTS of it
*24/7 lifetime of hard work

Entrepreneurial Cycle
1. Develope skills that may contribute to entreprencurial behaviour
2. Examine opportunities too fulfil needs or wants, and to solve problems
3. Generate ideas to satisfy the opportunities
4. Assess the opportunities and ideas
5. Use all available sources and resources to evaluate opportinities and ideas
6. Plan and prepare the venture thoroughly

1.Entrepreneurs are confident.
2.They’re born optimists;
3.Innovative and Creative
5.Self Determination
6.Self Determination
7.Management of Risk
8.Has Vision
9.The big picture
10.Good at seeking chances/opportunities.
11.Hard working
12.Plan and manage strategically
13.Learn from mistakes and experience
14.Commited to his/her work
15.Always strive for excellence,
16.Focused on his/her work,
17.Punctual and disciplined
18.Able to lead and manage
19.Responsible and trustworthy
20.Dare to take risk and
21.Never give up
22.A passion of business
23.More than casual interest
24.Tenacity despite failure
25.Walt Disney, Ford
26.Changes are opportunities
27.Change as normal & necessary
28.Tolerance for Ambiguity

See opportunities that others don’t
Know what customers want before they know what they want.

*Identify Opportunities
*Structure Business
*Marshal Resources
*Initiate Business
*Capture Value

Motivating Factors

Achievement and independence
*Gain control over life
*Build for family
*PROS & CONS Advantages
* Profit
*Freedom from:
*standardized pay for
*standardized work
*Autonomy & freedom to make decisions

Entrepreneurial Incentives
*Challenge of a start up
*Satisfying way of life
*More personal control
*Entrepreneurial Incentives
>Freedom from supervision and rules of bureaucratic organizations
>Escape from an oppressive culture

Entrepreneurial Incentives
Personal Fulfillment
*Freedom to achieve a satisfying way of life
*Escape from routine and unchallenging work

Entrepreneurial Incentives
Rewards of Entrepreneurship
*Make Money
*Be Your Own Boss
*Enjoy a Satisfying Life

Some Realities
*Not Everyone Wants To Be Entrepreneurial
*Not Everyone Will Be Continually Entrepreneurial


Learning Objectives
After studying this chapter you should be ready to describe:
The Basic of Entrepreneurship and It’s Risks
Types of Business Organizations
Types Of Entrepreneur According To Business Activity
Identifying, Analyzing, Evaluating and Choosing Business Opportunity.

The Basic of Entrepreneurship and It’s Risks
The word ‘entrepreneur’ was originated from a French word ‘entreprende’ which means “willing to take responsibility or willing to try something new”.

In Bahasa Malaysia, the root word for usahawan (entrepreneur) is usaha which means effort or willingness to do or complete a task.

According to the Oxford Dictionary; entrepreneur is defined as someone who is handling a business and taking business risk.

Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control (Barringer:2008).
According to Robert C. Ronstadt:
Entrepreneurship is the dynamic process of creating incremental wealth. This wealth is created by individuals who assume the major risks in terms of equity, time, and/or career commitment of providing value for some product or service. The product or service itself may or may not be new or unique but value must somehow be infused by the entrepreneur by securing and allocating the necessary skills and resources.

Why Become an Entrepreneur?
Be Their Own Boss
Pursue Their Own Ideas
Pursue Financial Rewards

The Characteristic of an Entrepreneur
From The Entrepreneur And Entrepreneurship, an individual who wants to be an entrepreneur should be an ‘all-rounder’ person.

The characteristics to be an entrepereneur are as follows:
Good at seeking chances/opportunities.
Hard working
Never dream of making fast and easy money
Plan and manage strategically
Learn from mistakes and experience

Realise the importance of his/her contribution to the society and country
Avoid selfishness
Commited to his/her work
Always strive for excellence, focus on his/her work, confident, punctual and disciplined
Innovative and creative
Able to lead and manage
Responsible and trustworthy
Has a vision
Dare to take risk and never give up

Characteristic of Successful Entrepreneurs
1)Passion for the business
2)Product/customer focus
3)Tenacity despite failure
4)Execution intelligent

Common Myths About Entrepreneurs
Myths 1: Entrepreneurs Are Doers, Not Thinkers.
Myths 2: Entrepreneurs Are Born, Not Made.
Myths 3: Entrepreneurs Are Always Inventors.
Myths 4: Entrepreneurs Are Academic and Social
Myths 5: Entrepreneurs Must Fit the Profile.
Myths 6: All Entrepreneurs Need Is Money.
Myths 7: All Entrepreneurs Need Is Luck.
Myths 8: Entrepreneurship Is Unstructured and
Myths 9: Most Entrepreneurial Initiatives Fail.
Myths 10: Entrepreneurs Are Extreme Risk
Takers……. The Gamblers.

Risks Of Being An Entrepreneur
1)Uncertainty of Income
2)Risk of Losing Entire Investment
3)Long Hours and Hard Work
4)High Stress Level
5)Difficulty in Obtaining Customers
6)Complete Responsibility
7)Difficulty in Obtaining Loans

Types of Business Organizations
*There are three popular forms of business ownerships which are:
1)Sole proprietorship

Sole Proprietorship
A sole proprietorship is an attractive form of legal status for a new business.
It is formed under the Business Registration Act 1956(Amendment 1978) and the Procedures of Business Registration 1957.
Solely owned and operated by an individual

Characteristics of a successful sole proprietorship.
1)Willing to accept sole responsibility for the firm’s performance(success or
2)Willing to work long hours.
3)Has strong organizational skills, leadership skills and communication skills
4)Has previous experience working in the industry in which he is competing in at

A partnership is formed under the Business Registration Act 1956 (Amendment 1978) and the Procedures of Business Registration 1957.
It is a business owned by at least two or more individuals but not exceeding 20 peoples.
Types of Partnership
General Partnership
All partners have unlimited liabilities.
They are personally liable for all obligations of the firm.
Limited Partnership
Some of the partners have limited liabilities, that is, they share the firm’s profit or losses but do not take an active role in managing the business.

All companies in Malaysia are governed by the Companies Act 1965.
There are two types of companies which are:

a) Private limited companies.
Is a company limited by shares and owned by a group of people with at least two or more individuals but not exceeding 50 people.
The members’ personal liabilities are limited to the par value of their shares.
The name of a private limited company ends with the word ‘Sendirian Berhad’.

b) Public limited companies.
Is a company limited by shares with at least seven or more individuals and there is no maximum limit in terms of membership.
The company shows its status by using the word ‘Berhad’ or ‘Bhd’ after the company name.
The term ‘public’ means publicly held. The shares of stock can be easily purchased or sold by investors. The public can also buy and sell the shares of the company.

- Manage own business
- Has a few workers

Examples: retailer, lawyer and doctor who owns a small law firm/small private clinic
Team Building
- They will always look forward to improve or expand their business
- Their business expansion depends on the number of workers
- In order to achive their goals, they work effectively in a team

Ex: A tailor shop which is expands and becomes a famous and fancy boutique.

2. Free Mover
They set up a company, then produce and sell their own products. In some cases, they use their name on the products as their business marketing strategy.

Ex: Ramly Burger, Tamin Soy Sauce, Aminah Hassan’s Sauce, Hanafi Bin Ramli (HBR) and others.

3. Franchiser
- a company or manufacturer that grants franchises
- they develop effective business using branches in different location

Ex: Kentucky Fried Chicken, Pizza Hut, Mc Donalds, Ayamas, Sen Heng, Restoran Nasi Kandar Kayu, Radix Fried Chicken

4. Large Enterprise
Ex: Makro, Carrefour, Giant, IKEA, The Store.

Entrepreneur with Large Economy of Scale

“The production costs will become lower if the quantity produced becomes higher; in other words; the economy of scale can be enjoyed”

Explanation: The increase in output causes a decrease in the average cost of each unit. Products can be sold at lower price, and at the same time the volume of sales can be increased.

This type of entrepreneur will explore a large scale of business which involves big capital and a lot of employees.

5. Capital Accumulator
They start-up a banking/financial institution. This kind of business need a large amount of financial capital and assets as well as multi level of mangement staff.
Ex: Maybank, AmBank, RHB, Hong Leong, Affin Bank, Public Bank and insurance companies.

6. Business Buyer
They buy an ongoing business. They have to have a large amount of financial capital. Information on ‘business to sell’ can be obtained from the newspapers and electronic media.

7. Buy n Sell Entrepreneur
They buy problematic business entity (for example: those businesses that are involved in bancruptcy), then try to overcome/solve the problems (ex: by injecting funds) and sell the business with higher price.

8. A Techno/Cyber Entrepreneur
An entrepereneur who is interested in creating new ideas, normally apply the technology advancement in creating, developing and marketing his new products.

Identifying, Analyzing, Evaluating and Choosing Business Opportunity.
Terdapat empat (4) langkah utama yang perlu dilakukan oleh seorang usahawan sebelum memulakan perniagaan.
*Langkah 1: Mengenal Pasti Keperluan dan Kehendak Pelanggan
*Langkah 2: Menganalisis Persekitaran, Penilaian Diri dan Nilai Masyarakat
*Langkah 3: Menilai Peluang-peluang Perniagaan
*Langkah 4: Memilih Peluang Perniagaan dan Merangka Rancangan Perniagaan

Langkah 1: Mengenal Pasti Keperluan dan Kehendak Pelanggan
Setiap peluang perniagaan bermula dari wujudnya keperluan dan kehendak pelanggan terhadap sesuatu barangan.

Keperluan merupakan sesuatu yang asas yang mesti diperolehi, dimiliki dan dinginkan dalam kehidupan seseorang seperti makanan, pakaian, perlindungan, pendidikan dan keselamatan.

Namun, manusia juga mempunyai kehendak yang merupakan keinginan atau kemahuan peribadi untuk sesuatu yang lebih sempurna daripada yang asas.

Kehendak seseorang boleh dipengaruhi oleh budaya,tahap pendidikan, tahap kemampuan dan keperibadiannya.

Maslow's Hierarchy of Needs (Teori Hirarki Keperluan Maslow)
*Penwujudan Diri
*Sosial/Kasih Sayang

Termasuk kelaparan, kedahagaan, perlindungan dan lain-lain keperluan diri.

Termasuk perlindungan daripada gangguan fizikal dan emosi

Sosial/Kasih Sayang
Termasuk perasaan kasih sayang, kepun yaan, penerimaan dan persahabatan

Termasuk faktor-faktor penghormatan seperti penghormatan diri, autonomi, pencapaian, status, pengiktirafan dan perhatian.

Penwujudan Diri
Desakan untuk menjadi apa yang termampu oleh seseorang itu termasuk perkembangan, mencapai potensi dan penunaian diri.

Langkah 2: Menganalisis Persekitaran, Penilaian Diri dan Nilai Masyarakat
Dalam usaha mencari peluang-peluang perniagaan terdapat tiga perkara penting yang perlu diambilkira iaitu persekitaran, penilaian diri dan nilai masyarakat.
*Struktur penduduk, pendapatan & citarasa
*Kajian ke atas data import & eksport
*Kajian terhadap sumber tempatan
*Rantaian industri
*Rancangan pembangunan kerajaan dan swasta
*Meneliti peluang perniagaan melalui media massa tempatan dan luar negeri
*Mengkaji masalah sosial setempat
*Undang-undang dan peraturan

Penilaian Diri
*Pengetahuan dan kemahiran
*Kedudukan kewangan
*Jaringan perhubungan (Networking)

Nilai Masyarakat
Perniagaan yang bakal dijalankan tidak bertentangan dengan nilai masyarakat setempat.

Langkah 3: Menilai Peluang-peluang Perniagaan
Proses menilai peluang-peluang perniagaan membantu usahawan memilih satu peluang perniagaan yang terbaik.
Dengan ini segala perhatian, komitmen dan usaha usahawan akan tertumpu pada hanya satu peluang perniagaan sahaja.
Berikut adalah antara beberapa proses yang boleh diambil oleh usahawan dalam menilai peluang-peluang perniagaan terbaik.
*Sah Dari Segi Undang-undang
*Kuasa Monopoli dan Tahap Persaingan
*Keperluan Modal

Langkah 4: Memilih Peluang Perniagaan dan Merangka Rancangan Perniagaan
Setelah semua proses dan langkah dilaksanakan, terpulang kepada usahawan untuk memilih peluang perniagaan yang terbaik.
Tindakan seterusnya setelah memilih peluang perniagaan terbaik adalah dengan menyediakan (Rancangan Perniagaan) Rancangan Pentadbiran dan Operasi, Rancangan Pemasaran dan Rancangan Kewangan.