This paper will define and discuss the different types of the business organisations and their potential advantages, limitation, risks, legal considerations and compliance requirements for planning and establishment of new business venture. It will also identify the medium and long term source of finance available for the business ventures as capital introduction.
In addition to above, it comprises on the in-depth analysis of market conditions in which business operates and how these conditions can affect and contribute to the growth and causes of business success or failure.
Finally, the proposal of business plan comprise on its objectives, aims and gaols as well as the financial forecast and strategies to meet inefficiency and variances in desire targets.
Individuals are available with the various options in order to start t new business which usually requires small amount of capital.
Sole Proprietorshipis less complex and simplest form of the business venture for the new entrants in the business.All the risk and reward of the business’s operation and activities held remain with the individuals due to the sole responsibility and if the business become insolvent or bankrupt, it require the individuals to utilise the personal wealth in order to settle down the debts of the business as it unable to hold the limited liability status.
1. Sole owner entitled and enjoy all the profits and rewards of the business and contribute directly to the growth of the business.
2. It require low start up and set up cost, administrative cost, simplified accounting as well as less complex statutory requirement for compliance.
3. It gives the sole right to the owner for planning, control and decision making without any external pressure or interference.
4. Maintaining the confidentiality in relation to the business financial and operational records.
5. Building coherent and long lasting client relationship by the provision of specialised and tailor made services.
1. Insufficient or restricted amount of capital and limited sources of finance.
2. Work load and less availability of man power restrict the business growth.
3. Lack of independence to owner due to the non-availability of external help.
4. Liability of the owner is unlimited resultantly personal wealth and assets may become liable in the event of insolvency or bankruptcy to settle the business debts and also chances of being sued due to the breach or negligence in business operations.
5. Sole proprietorship business dies with the death of the owner.
6. Attract higher tax bills as the income from this business tax as personal income which tax at 20%, 40% and 50% after utilising the personal allowance.
Partnershipis a type of business venture when two or more individuals engaged in the business arrangement with predetermine profit and loss sharing ratios but this venture also held liable the partners personally in the event of insolvency. This business venture spread the business operational and financial risk over the partners.
1. Higher business growth, profits and lots of opportunities available as large amount of capital invested by the partners from various resources.
2. It is easy to establish and less compliance requirement as compare to limited companies and there is no complex procedure for joining and resigning of the partners.
3. Improvement in decision making abilities as many brains involved on the decision making panel that comes up with new ideas and techniques.
4. Less work load and share the tasks among the partners according to their skills and capabilities.
1. Dispute and conflict of interest among the partners that affect the profit making abilities of the business.
2. Liability of the partners is also unlimited in this business venture like sole trader and similarly personal wealth held liable to pay off debts in the event of insolvency and bankruptcy.
3. Under this arrangement the power dissolve among the partners but all the partner mostly hold the equal level of power that raise the disagreement that potentially lead the partnership to dissolution.
4. Negative impacts on the business reputation and creditability if the partnership goes wrong and associated partner found in immoral activities.
There are the various sources of finance available to each type of the business organisation which are summarised below.
Sole proprietorship businesses often have limited financial resources but they can raise the finance through the following resources.
1. Private Investorare those who provide the various types of loan and credit line to the sole traders for business start-up or helping in buying the equipment through the leases by taking the personal guarantees or collaterals with minimal rate of interest.
2. Angel investor is the private equity provider to the sole trader for the new business establishment or to support the existing business ventures. These types of investors are also become the silent or sleeping partner in the business, who cannot involve in the management of the business but share the proportion of profit.
3. Business Grants are also often provide by the central government to promote and support the small business in the market by providing them short and medium terms loan on easy term and conditions but in order to obtain this loan individual has to meet the certain criteria prescribed by the government.
4. Personal or close contacts is the most common source of finance where the individuals borrow the short term loan from close relatives or friends and also use the personal saving for business start-up but in most of the cases this source raises very limited amount of finance.
Partnershipbusiness can raise more finance for start-up of business venture as compare to the sole trader due to the availability of partners in the business but the partnership also have approximately similar option for finance as sole proprietorship.
1. Personal saving is the most common source of finance to establish the partnership where the two or more individuals become together to establish the business venture by investing their private equity or saving s and share the profit on agreed terms and condition of the contract.
2. Bank Loan is also the option available for the partnership, where they can borrow the short term loans for business. It can raise more finance if the partnership is limited liability partnership as sit provide the creditability and confidence to the loan providers.
3. Addition of new partner is also the option available to the partner, who will bring the capital at the time of joining and it will also cause the dissolution of power and decrease the profit sharing.
4. Disposal of the personal assets can also helpful in most of the case to raise the finance for new partnership business establishment or to support the existing business ventures.
Limited Companiescan raise the finance through various sources, it highly depend on the size and nature of the business. Identification of appropriate source of finance is vital importance in the whole process of business establishment as the companies wants to satisfy their financial needs by keeping the cost of capital as lowest as possible. Companies can borrow the medium and long term loan as per financial needs.
it is the statutory requirement for individuals to consider and comply with all legal consideration.
1. Business Licensemust be obtained from the relevant authority or the local council that permit to run the business. It states the nature of business, closing hours etc.
2. Registration with Companies House is the statutory requirement for the business as limited company prior to use LTD or PLC with the name of the business.
3. Registration with HMRC as self-employed, Partnership or limited company for the payment of direct and indirect taxes.
4. Abide by Relevant Laws and Regulations is also mandatory for the business in order to run the business operations smoothly such as employment law, minimum wage rate law, health and safety law, work timing regulation act, indemnity insurance and fair trading law etc.
5. Intellectual property rights are also necessary to obtain in most of the businesses, if the business is entering in the market as first mover and also to secure themselves against the potential infringements of copy rights.
6. Accounting System arrangement for the book keeping and preparation of financial statement and also to keep the up to date financial records of the business.
EngCois a trading name of “English and Continental Restaurants Ltd” will register as limited company and it will provide the English and continental traditional and modern cuisines under one roof with outclass customer services and satisfaction. EngCo pride itself to introduce them as a diversified and mixed cultural restaurant in the food industry.
“EngCo mission to become the largest and diversified restaurants chain in the UK and Europe that will provide all kinds of traditional cuisine of the world and multi-cultural environment with excellent customer servicesthat make EngCo a restaurant for all”
“The Restaurant for all by offering the affordable prices, safety, hygienic foods to our customers”
1.The main motive of EngCo is to maximise the shareholders wealth by increase profits from business operations and capture the maximum share of the food industry market.
2. Attain the customer’s loyalty and building the long lasting customer relations by maximising the customer satisfaction through excellent services.
3. Continuous improvement in the standard of services and introduce new form of cuisine.
4. Maintaining the competitive advantage by providing different kind of delicious cuisine and maintaining the diversified cultural environment.
5. Satisfy all other stakeholder of the EngCo by compliance with all legal requirements and provision of all relevant information required to base their economic decisions.
6. Recognition of Corporate social responsibility to attain the sustainable future and not involved in any activity that harm the environment rather just follow “go green”
7. Support the society by doing charitable and voluntary activities.
Organisational Structure ofEngCo will be the “Flat Structure” that based on the fewer Layers of the management with the high span of control and the shortest chain of command in the hierarchy to pass on the ideas and communicate with the higher management effectively and timely. This system will help the EngCo to grow as everyone in the organisation can contribute to the growth and success of the EngCo. This structure also motivates the employees as it gives them more authority and responsibility for planning, control and decision making.
EngCodivided its target market into two segments national and international level, where at national level it will focus on the resident of the London and at international level, all the tourist in UK that will be the target through extensive advertisement campaign in undergrounds, tourist buses, broachers, online presence etc. On other hand the national market also divided into three groups such as professionals, kids and families by introducing the various types of deals for each group.
The restaurant industry in the market is quite diversified and based on the range from up-market restaurant to quick serving takeaway. Despite this success and diversification of the industry there are still some gaps in the market that is the main obstacle in the realisation of full potential of this industry. One of the biggest challenge in this industry is the availability of HALAL and Non-HALAL cuisine under the same roof as still in the central London it is quite hard to find halal food easily and also to ensure the customers that there is no cross contamination in the halal and non-halal foods.
The analysis of the external environment of the EngCo is also paramount importance as the external environment directly impact on the behaviour, success, and growth of the organisation. In order to analyse the external environment of EngCo we can use the “PESTEL ANALYSIS” proposed by the Michael Porter.
English and Continental Restaurants Ltd conducted a detailed and rigorous analysis of the market and considered all other factors that could potentially affect the financial and non-financial performance and position of the business. On these facts, the above mention financial forecast projected and also believes that the EngCo business is the coherent and realistic business idea based on the real opportunities with realistic goals and objectives.
Formal report on the types of the organisations and potential sources of finance for each type of the organisation that will help to understand which business organisation is most suitable and selection of appropriate source of finance.
Business Plan that is describing the need of EngCo in the market, the market condition in which it will operate, the market gap and target market and also the organisational internal structure that will help the EngCo to achieve its aims, goals and objectives .
In the light of the above mention facts we can conclude that the EngCo should register as limited company as in this way the owners of the EngCo can limited their liabilities in the case of insolvency and also provide the more creditability and confidence to the other stakeholders and it will also helpful to raise the sufficient amount of capital through various sources. On other side, it can reasonably say that the EngCo is the solid and realistic business venture and also can be successful in achieving the business goals and objectivesbecause this based on the new and diversified and synergy between the departments to ensure the full contribution from all level of employees. It also recommended to EngCo to make detail contingency plans to meet the variances in the projected forecast and to meet the uncertainties that could arise in the external environment of the organisation to remain as competitive and diversified business in the market.
“Types of Business Organisation” by ACCA “F1 Accountant in Business” Page 6, available at https://tawashy.files.wordpress.com/2015/06/acca-2015-bpp-f1-study-text.pdf (Accessed at 02 July, 2017)
Advantages and limitations and risks of Sole proprietorship by “Small Business Pro”available at http://www.smallbusinesspro.co.uk/small-business-finance/sole-trader.html http://yourbusiness.azcentral.com/top-ten-risks-sole-proprietorship-2096.html (Accessed at 04 July, 2017)
Advantages and limitations and risks of partnership by “Company warehouse” available at https://www.thecompanywarehouse.co.uk/blog/advantages-and-disadvantages-of-partnership (Accessed at 04 July, 2017)
Advantages and limitations and risks of Limited companies by “Company warehouse” https://www.thecompanywarehouse.co.uk/blog/advantages-and-disadvantages-of-a-limited-company (Accessed at 04 July, 2017)
Source of finance for Sole proprietorship by “Chron” available at http://smallbusiness.chron.com/sources-finance-sole-proprietor-4106.html (Accessed at 02 July, 2017) Sources of finance doe business by “efianancial management” https://efinancemanagement.com/sources-of-finance/sources-of-finance (Accessed at 06 July, 2017)
Medium and long term loans examples by “Vista Academy” http://thevistaacademy.com/what-are-sources-of-long-term-and-medium-term-finance/ (Accessed at 06 July, 2017)
Business Venture Assignment Help,business assignment help,online business assignment help,business development assignment help,Online Business Venture Assignment Help,business case study writing services,business economics assignment help