What is a Private Enterprise?

Definition: A Private Enterprise is an entity that operates under the ownership and management of individuals that freely decided to develop a given business idea. Its freedom from government intervention is what makes it different from a government institution.

What Does Private Enterprise Mean?

These entities are the corner stone of free markets, since they allow individuals to possess ideas, concepts and assets that work together to produce positive financial results through wealth creation. Under a market economy, private enterprise should be enforced to promote the system’s development and growth. Individuals are empowered and motivated to pursue their self-interest through business enterprises, with the incentive of wealth creation that can be amassed to themselves through full ownership. They are also entirely managed by private individuals, therefore excluding governments from having a vote in the company’s decisions and courses of action.

These enterprises can be owned by one or more individuals through shared ownership. In most countries, these entities are subject to federal taxes to help maintain the nation’s proper functioning and they are also subject to external regulative bodies that enforce things like labor laws and ethical business practices. They are free to pursue any legally permitted business activity and to develop any projects they consider fit to achieve the enterprise’s goals.


Lucas and Tim are business entrepreneurs. They live in Australia and they have developed several business ideas together under a free market economy. Even though they have created some businesses that have failed in the past, they have the freedom to establish new ones since they have done everything by the law. The country actually promotes their activities through many entrepreneur support programs sponsored by government agencies that aim towards increasing employment rates.

The businesses they currently own have an aggregate value of $2 million and they have created more than 100 direct jobs and more than 300 indirect ones. They also contribute at least $150,000 in taxes annually and promote social aid programs for people going through unfavorable financial situations. This is all possible through private enterprise.

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