ASSIGNMENT

Setting up A New Business Venture



Setting up A New Business Venture

Introduction

This paper discusses about a hypothetical situation where as a potential businessman, I have been blessed with an opportunity of being financially backed up by an anonymous investor, who believes and trusts in my business vision and talent. In order to accomplish setting and executing an excellent business venture, it is first mandatory that necessary research and planning be undertaken to decide and plan which type of business venture to set up, and what sort of business to conduct. The following discussion encompasses such vital considerations and options available.

Discussion

Types of Business Organization

Selecting a type of business organization is necessary for all business entrepreneurs, this helps them in deciding which line of work they want to undertake for effective results. The main types of business organizations that all entrepreneurs seeking to start up a new business must consider are discussed as follows:

Sole Proprietorship

Sole Proprietorship or being a sole trader is the most common form of business ownership found in the world. This includes an individual being their own boss at work, and managing all the related day-to-day business activities themselves. Sole trader-ship is found in professions such as plumbing, window cleaning to large business entities such as designer houses and retail shops (Businesscasestudies.co.uk, 2002).

Such type of business organizations has many advantages and disadvantages. The advantages includes the easy formation or set up of the organization as both legal and financial costs are minimum and registering the business is also not a complicated process. Along with the important fact that the owner is at his own, in terms of decision-making and operations, hence he is not accountable or answerable to any superior at work. Most importantly, is the fact that the owner is entitled to all the business profits to him alone, and does not have to pay or provide anyone else, allowing him to invest the profits back into his business and grow its operations.

The major disadvantages of sole proprietorship states, firstly, that these sole traders face problems in obtaining a reliable capital source, such as a loan from a bank or an individual, for business start-up. Due to this, usually sole trading businesses tend to remain and operate at a small scale. Ina addition, the sole traders have to put in extra work hours and hire few employees to share and manage the workload. This is coupled with the fact that these sole traders have unlimited liability, that is in case of high loss or insolvency, they are liable to lose all that they have invested in the business; their assets, capital invested and even personal property and assets pledged with the business (Arielae, 2009).

Partnerships

A typical partnership may have a minimum of two and maximum of twenty partners in a partnership agreement; however, large firms are allowed a larger number of partners in them, such as a law firm. These partnerships are usually common amongst lawyers, doctors, vets and accountants (Businesscasestudies.co.uk, 2002).

The advantages of partnership includes the easily formation of ...