It is important that every new business enterprise should be registered under one of the legal forms of business ownership. The entrepreneur should therefore decide the form of business ownership that would be appropriate for his/her new business venture. Mwalimu Njuguna operates his dairy farm on his quarter acre plot and has operated the venture since 1982.

Formal and informal Organisation

A formal entrepreneurial venture or enterprise is registered under the law while an informal venture is unregistered. If your venture or operation is to grow, then you will need to register it in order to access various support mechanisms, such as small business loans. There are, however, different types of formal and informal organizations.

Group Discussion

In a group of five students discuss what the group believes are the differences between formal and informal organizations. See if you can identify the positives and negatives of both formal and informal enterprises.