What is enterprise?

 

An enterprise is an activity or a project that produces services or products. There are essentially two types of enterprise:

  • business enterprises, which are run to make a profit for a private individual or group of individuals. This includes small business.
  • social enterprises, which function to provide services to individuals and groups in the community.

Business enterprises

There are lots of different enterprises in your community; many are small businesses. Sometimes one person owns and runs them; sometimes they’re a family business; other businesses are owned and run by partners who aren’t family relations.

People usually decide to set up small business to earn an income from producing and selling products or delivering services to individuals or other businesses.

To earn an income from a small business, the enterprise has to run at a profit; that is, some money should be left over for the business owner once all the costs of making the product or delivering a service have been met.

There are some common types of small business, as well as franchises and other types of small business.

Common small businesses

Some small businesses are easy to recognise because they have a shopfront or a site where you can see them in operation, making or fixing things and serving customers. For example:

  • restaurants
  • corner shops, milk bars
  • printing works
  • furniture repair shops
  • hairdressing salons
  • smash repairers
  • small factories
  • farms.

Franchises

An individual franchise operation is a small business that is linked to a larger enterprise. Petrol, food, clothing, mortgage consultancy—almost any product or service is available through some type of franchise operation.

Franchising is a way for successful, proven enterprises to extend their reach, and for individual investors to take part in their success. There are three parts to a franchise:

  • the franchise—the business idea, process, product, brand-name, and so on,
  • the franchisor—the person or organisation that owns the business idea, process, product or name that they sell,
  • the franchisee—the person who buys and uses the business idea, process, product or name.

Some people describe buying a franchise as a bit like getting married. It’s a transaction that requires commitment from all parties, and one that should not be taken lightly. To be properly prepared, both parties need to:

  • know each other well first
  • be satisfied that the agreement between them is fair
  • be certain that they can meet each other’s requirements
  • know what to do if either party wants a ‘divorce’.

In Australia, the Franchising Code of Conduct helps franchisees make sure they have enough information about the franchise to make good business decisions. The code also provides a way of resolving issues if things go wrong. To find out more about franchise businesses, visit the Franchise Association of Australia.

Other small businesses

Most trade related services are also small businesses; for example, plumbers, electricians, builders. They’re not as obvious as shops and farms, because they deliver their services directly to the customer, and don’t always have a workshop or a shopfront. Often they do business mostly over the phone, at times and sites that change according to their clients’ requirements.

There are thousands of self-employed small business operators in Australia working as, for example:

  • builders
  • painters
  • electricians
  • plumbers
  • cleaners
  • cabinetmakers and carpenters
  • computer technicians.

A large group of self-employed people operate small businesses from their own homes, including:

  • engineers
  • designers
  • information technology specialists
  • caterers
  • writers, artists and musicians
  • personal trainers
  • dressmakers.

Medical and health practitioners also operate as small businesses. Examples include:

  • doctors
  • dentists
  • optometrists
  • counsellors
  • naturopaths.

 

Social enterprises

Social enterprises are organisations led by local communities. They, too, are small businesses, but they have been set up for a social purpose. Social enterprises need to be successful just as business enterprises do, but their success is measured in terms of social rather than monetary benefits.

Some examples of social enterprises are:

  • community-based child care centres
  • health care centres
  • sports clubs
  • Meals on Wheels
  • housing cooperatives
  • charities, such as Guide Dogs Australia or CanTeen.

These enterprises must find a way to cover the expenses they incur while providing their services. Often they fund themselves using a combination of government funding, fund-raising and fees charged to users of the service.

If you are interested in finding more information about community work and social enterprises, go to Support for Young Entrepreneurs.

You can also talk to the community development officer at your local council, for information about social enterprises in your area.