Creating, financing and marketing a business

Creating, financing and marketing a business

The pros and cons of the partnership as a form of ownership

The most strategic and significant decision for an entrepreneur is to define the form of ownership. Partnership comprises of two or more people who conduct the business with shared responsibility. Many individuals choose partnership as the form of ownership which of course has its own pros and cons.

Pros

Cons

General Partnership

Partnerships are inexpensive and easy way to start with the business.

The financial commitments are shared among the partners.

There is an unlimited share of liability and profits are divided equally.

All the decisions are to be made with consent of partners and this makes decision making slow and can lead to loss of opportunity.

Pros

Cons

Limited Partnership

Liability of each partner is limited to the amount of capital invested.

Limited partners do not have to pay for firm's debt from their personal property.

Limited partner do not have the authority to participate in management decision making.

There is unlimited liability on general partner.

Funding options for small businesses

Conducting a business requires an individual to properly manage the current and future funding needs. All the possible funding options must be identified to meet funding needs. The funding options for small businesses include the following:

Personal Savings: A small business can be started with using the personal savings as the first funding option. It saves the interest that we have to pay on bank loans. However high risk is associated to it as a person might end up with nothing to back up on .

Angel Investors: These are individuals that help small businesses by funding them with their own money and in return asking for limited or no control over business operations. These people may include family, friends or relatives.

Small Business Administration Loans: SBA Loans are provided by government agencies and banks. The SBA loans benefit the small businesses by providing small lower down payments and long term financing solutions (www.pnc.com).

Bank Loans: It is the most common form of funding option. Business owners have to pay back the loan amount and interest over a fixed period of time (Stainback, 2000).

Managerial accounting helps manager with product costing

Managerial accounting can be defined as the process of identifying, analyzing, interpreting cost and communicating the relevant data to the management for the purpose of planning, organizing and controlling business activities. Managerial accounting plays a vital role in determining the product cost. The product cost includes all the cost that is incurred for the production of the product. These costs include direct labor, direct material and manufacturing overhead. It is an integral part for managers to determine the product cost once they are provided with the relevant cost information. It is strategically important to examine and verify the cost that is used in production of each product unit. When the manager uses the accurate cost information the chances of under pricing and over pricing are reduced. The right product price can be defined only if the manager makes the right use of data (Miller & Jentz, ...