ORGANIZATIONAL PLAN DISCUSSION ON B a s e d o n t h e P e r s p e c t i v e o f P a k i s t a n

An Organizational Plan is basically a “to do” list for an organization. It lists out the plan of work, programs, and organizational growth over a period of time - six months, a year or five. The tasks involved, who is responsible for them, and when they’ll be done. Set priorities for work Make sure tasks get done on time Focus on one thing at a time Share work among staff, board members & volunteers Make goals clear to investors Get a handle on big projects by breaking them down See the big picture of what organization is doing An Organizational Plan Helps To:

Management’s ability and commitment to the new venture are significant to investors. Investors demand that the management team not operate the business as part time venture. developing the management team management team to operate the business full time at a modest salary Drawing out large salaries for the management team is unacceptable to an Entrepreneur and considered to be a lack of psychological commitment to the business

basic legal forms are Proprietorship form of business with single owner; unlimited liability; control over all decisions; receives all profits Legal forms of Business Partnership form of business with 2 or more individual with unlimited liability, pooling resources to own a business. Corporation form of business with separate legal entity, run by stockholders having limited liability & regulated by statute

FactorsProprietorshipPartnershipCorporation OwnershipIndividual No Limitation on Number of partners No Limitation on number of stockholders Liability of Owners Individual Liable for business Liability In general partnership, individuals are liable for business liabilities. In Limited Partnership partners are liable for capital contribution Amount of capital contribution is limit of shareholder’s liability Factors of the three forms of Business Formation

FactorsProprietorshipPartnershipCorporation Costs of Starting Business Only Filing Fees for trade name Partnership agreement, legal cost, and minor filing fees for trade name. Limited partnership requires more comprehensive agreement, hence higher cost Created only by statute, Articles of incorporation, filing fees, taxes, and fees for states in which corporation is registers to do business

FactorsProprietorshipPartnershipCorporation Continuity of Business Death dissolves the business Death or withdrawal of one partner terminates partnership unless partnership agreement stipulates otherwise. In limited partnership death or withdrawal of one partner has no effect on continuity. Limited partners can withdraw capital six months after notice is provided Greatest form of continuity. Death or withdrawal of owner(s) will not affect legal existence of business

FactorsProprietorshipPartnershipCorporation Transfer- ability of interest Complete freedom to sell or transfer any part of business General Partner can transfer his/her interest only with consent of all other general partners. Limited partner can sell interest without consent of general partners. Stockholders can sell or buy stock at will. Stocks’ transfer may be restricted by agreement. In S corporation, stock may be transferred only to an individual Capital Requiremen ts Capital raised only by loan or increased contribution by proprietor. Loans or new contributions by partners require a change in partnership agreement New Capital raised by sale of stock or bonds or by borrowing in name of Corp. In S Corp. only one class of stock & limited to 75 shareholders

FactorsProprietorshipPartnershipCorporation Management Control Proprietor makes all decision and can act immediately All partners have equal control and majority rules. In limited partnership, only the general partners control the business. Majority stockholder(s) have most control from legal point of view. Day-to-day control in hands of management who may not be major stockholders. Distribution of profits and losses Proprietor responsible and receives all profits and losses Depends on partnership agreement and investment by partners. Shareholders can share in profits by receipt of dividends Attractive- ness for raising capital Depends on capability of proprietor and success of business Depends on capability of partners and success of business With limited liability for owners, more attractive as an investment opportunity

The team must be able to accomplish three functions : Execute the business plan Identify fundamental changes in the business as they occur Make adjustments to the plan based on changes in the environment and market that will maintain profitability building the management team

Once legal form of organization is determined, the entrepreneur will need to prepare a job description and job analysis. building a successful organizational culture The job analysis will be serving as a guide in determining hiring procedures, training, performance appraisal, compensation program, and job description and specification.

Job description Specify the details of the work that is to be performed and any special conditions or skill involved in performing the job. Job description should contain a job summary, skills or experience required, a summary of the responsibilities and duties the authority of the individual and standards of performance. building a successful organizational culture Job specification outlines the skills and abilities needed to perform the job including prior experience. Outlining the job specification for a trained employee is easier than for the untrained people who will be trained on the job. So the entrepreneur should focus on specific qualities that will be required, such as personality, physical traits, interest, or sensory skill.

Reviewing operating and capital budgets Developing long-term strategic plans for growth and expansion role of the Board of Directors Supporting day to day activities Resolving conflicts among owners or shareholders Ensuring the proper use of assets or Developing a network of information sources for the entrepreneurs

The member of board members should be carefully selected considering the following criteria selecting Board members Select individuals who can work with a diverse group and will commit to the venture mission Select candidates who understand the market environment or can contribute important skills to the new venture’s achievement of planning goals Select candidates who will show good judgment in business decision making

Board of Advisors Loosely tied to the organizations Serve the venture in an advisory capacity Has no legal status Meet less frequently; depending on the important venture decision Useful in a family business Selection process similar to the BOD Compensated per meeting basis or with stock Provide reality check Uses of Board of Advisors Formal part of a venture Outside advisors, such as lawyers, accountants, ad agencies, etc.

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