There are different aspects of starting a Business that can contribute to the success or failure of a Business if they are not applied. These Considerations include the legal, social and economic environments of business. There are also different styles in Business such as sole proprietorship, partnership and corporation. As an inventor who has come up with a product that is a home appliance that is versatile for everyday consumer needs and not being experienced with manufacturing, funding and having low net worth.
There are things to consider, In conducting research of which style of business to use, let’s take into consideration the following business styles: Sole proprietorship, partnership and corporation. The following are the summarized possible choices according to the What-If Analysis: Sole Proprietorship: If I decide to use this form of business I will be able to make all of the decisions, it’s simple to set up and cheap to operate. It will be quick to start and require my input alone such as funding and ideas on how to market the product.
The disadvantages would be that I will be responsible if anything is wrong with the product. If I don’t sell enough products I can go into debt and be forced to shut down production. If there is a high demand for my product I only have my personal funding to produce more which will cause a financial hardship in the future. Also, since I am not experienced I can come across useless sales tactics and not be able to come up with ideas on how to push the product out to every type of consumer. Partnership: If I decide to start my business as a partnership I can use resources from myself and my partner which doubles the funding.
I can balance off ideas from myself and my partner to create an effective business. We can share the liability and responsibility of the business and split up the work load. The disadvantages to this style of business would be that we might not agree to certain business decisions which can be detrimental to the productivity of the business. If this occurs and there is no way to move past it, we will still be bound legally as owners and will need to seek a way out. Corporation: If I decide to start my business using a corporation, I will be able to fund my business using stock.
I can have stockholders invest in my product. The disadvantages would be answering to multiple stockholders, paying high taxes because I would have to pay taxes at the corporate level and also pay dividends to stockholders. I no longer can make decisions on my company. I will have to take the input from the multiple owners in the business because they each have their money invested as well. In order to make sure that a new business is a success they have to take into consideration the legal, social and economic environment of the business.
The legal environment can be accomplished by making sure the product is safe, advertising what the product is realistically capable of and not misleading the consumers in any way. The social environment can be taken care of by making sure the business owner(s) establish a personal relationship with its consumers by having good customer service with them. They need to satisfy their consumers questions and concerns. If the product does not perform up to standard they can replace it for them or offer a full refund.
When you build a good relationship with consumers you will be able to make a greater profit and gain loyal consumers who will refer their friends and return to buy more products. The economic environment is an important factor because if the owner looks into the recent economy they can base their salaries on the markets current conditions. If there are a lot of people applying for a position, they can hire more workers for less pay. If the market is good then they can hire workers at a higher salary based on skill sets and experience.
After considerable research I have decided to start my business using the partnership style of business. I need the help and expertise of someone who has experience in starting a business. I need them to be knowledgeable about capital, information resources and effective ways of beating the competition in sales. This method of business would be successful to me, in that since I will be starting the business with lack of knowledge of manufacturing and having limited resources in funding my partner can help in those areas.
We will figure out exactly how many employees we will need, what salary we can pay them and the time we will need to contribute to get the business started off successfully. As partners we will be able to contribute funding, share equal responsibility and be able to split the workload evenly. Unlike sole proprietorship we don’t have to take on the liability or funding by ourselves. Unlike a corporation we can pay lower taxes and have more input on our business ideas and not have to lose control to multiple stock holders.