Home / Youth & peacebuilding / Youth Entrepreneurship / How Does The Business Operate?

How Does The Business Operate?

A business organization needs careful planning, coordination, implementation and controlling so as to ensure its proper management and smooth operation.

In addition to profits from your business, its success will also depend on the legal form in which it operates, the organization’s internal structure and procedures, its employees, and compliance with legal obligations and responsibilities.

In depth…

Before starting your entrepreneurial activity, you should decide which legal form you will select for your business. Different forms of business organizations exist, including sole proprietorship, partnership, corporation, limited company, co-operative, and franchise. However, the options may vary depending on the country or countries where you will operate.

As you select the legal form for your business, you should take into account such factors as advantages and disadvantages, ease of creation, legal costs, longevity, necessary financing, taxes and tax exemptions, liability (limited versus unlimited) and administration.

When you run a business you have legal responsibilities, and you should be aware of the regulatory system that applies to your situation. Things to consider include taxes, payroll deductions, labor standards, copyright, health and sanitary regulations, licenses and permits, environment and safety, and human rights.

The internal structure of your organization will depend on its legal form and applicable laws and regulations. Often business organizations have a main representative body (e.g. the General Assembly), which makes decisions by voting, and an executive body (e.g. the Executive

Committee) which guides and coordinates activities of the organization by delegation from the representative body. Usually, organizations also have a finance officer or an internal auditor – a professional responsible for internal control and who checks financial records of the organization and reports findings to the representative body.

The productivity of your business will to a large extent depend on the people you employ and the way they are managed. In return for their wages, employees bring knowledge and skills to benefit your business. Therefore, the selection and performance of your workers will greatly influence the success of your business.

When recruiting employees you should:

  • Determine the work to be done in your business:
    • Step 1: List the kind of work to be done and the skills and attitudes needed;
    • Step 2: Estimate the number of workers involved;
    • Step 3: Determine who should do the work.
  • Attract suitable applicants and interview and select the right workers.
  • Help the new worker settle in and understand your business (induction).

Another important feature of successful businesses is procedures that ensure looking toward the future, for example regular staff meetings; regular evaluations of the business, the market, and the competition; careful analysis of financial statements; attention to small problems; and identifying and implementing new ideas or products.

A business organization should also have human rights policies and processes in place appropriate to its size and circumstances. First, it must institute a policy commitment to meet the responsibility to respect human rights. Second, it must undertake ongoing human rights due diligence to identify, prevent, mitigate and account for its human rights impact. Finally, it must have processes in place to enable remediation for any adverse human rights impact they cause or contribute to. These obligations are detailed in the UN Guiding Principles on Business and Human Rights.

What Is Record-Keeping?