Business and Enterprise

Business and Enterprise



Business and Enterprise

Section 1

Q1.List the type of business structures that exist in the UK today

The typical business structures in UK include sole proprietorship, partnership, and company. All of these business structures have certain pros and cons, ranging from capital and managerial requirements, to legal and industrial considerations (Pride & Hughes 2011).

Q2.Discuss the relevance of the different possible structures, and explain which structures are appropriate under different circumstances

Each structure will be relevant for a specific business and entrepreneur's situation. For instance, when a business requires less managerial and capital resources, proprietorship will be an ideal structure (August, Mayer & Bixby 2009). In case where the business requires capital beyond an individual's resources, partnership may sound well. In case where the business relies extensively on risk and needs to minimize its potential liabilities, company may be formed.

Q3.Choose an appropriate business structure for designing, manufacturing, marketing and selling your electronic device

Electronic equipment manufacturing, marketing and selling requires extensive exposure and experience of information technology. Plus, continuous innovation is the essence of a successful electronic business. Hence, forming a business structure for electronic device like computers would be best catered under a partnership or a company structure. However, company formation is a complex process in UK, requiring submission of forms as well as extensive tax and business registration (Nickels, McHugh & McHugh 2005). Therefore, I would recommend the business to have a limited liability partnership structure.

Q4.Explain your reasons for the choice of LLP (limited liability Partnership)

LLP structure would allow my business to enjoy the benefit of limited liability as well as incur fewer taxes on business profits (Pride & Hughes 2011). Also, I would not need much complex business registration procedures as in case of company formation.

Section 2

Q1. Discuss the requirement for capital and explain the terms, fixed assets, stock and working capital giving illustrative examples.

The formation requirements for computers business would require different amounts in terms of capital, fixed assets and working capital. As an illustration of these requirements is presented under the following table:

Fixed Assets (Vehicle, Shop Deposit)

£20000

Stock (100 units) each £250

£2500

Capital

£45000

Working Capital

£5000

Q2. Explain why different types of business (eg service v manufacturing) have different requirements for capital.

Different businesses have different capital requirements since the production costs of the business product vary. For instance, manufacturing requires investments in fixed assets, like machinery and equipment, as well as working capital investments to maintain adequate stock levels. In case of services, the case is different. Services production requires investment in fixed assets heavily. For instance, in forming a spa, you need to have high valued equipment to start the services (Nickels, McHugh & McHugh 2005).

Q3. List possible sources of finance

In the primary sense, there are two possible sources of finance: equity and debt. Equity refers to the capital contributions by the owners of the business, i.e. the proprietor, partners, or shareholders. Debt refers to external funds borrowed from funding institutions and individuals ranging from banks and money lenders to creditors and ...