Business_Opportunity_Scenario

Author Note The purpose of this document is to provide clear and tangible information. The data within will contain a comparison between the three main structures of business directly related to the product and a conclusion of what business decision should be made; based on the greater good of the overall product in mind. Brief Overview New home appliance which meets consumer needs. This product would be able to assist the consumer on an everyday basis. New technology is much safer than current products in the market. Possibility for development of other products based off this new technology. The market for this “type” of product is saturated. Financially resources are low. Family time will also be compensated by work. Things to be looked at include: Business Structure, Financial viewpoints, skillset, and legality. A conclusion will be made based off the information provided explaining which business decision is best and why. Sole Proprietor Advantages and Disadvantages First is sole proprietorship. Individuals who buy, own, and operate their own business. The distinct advantage you would have with this structure of business would be as followed: Complete say over everything. How it’s made, where it’s made, and cost of the product. As sole owner, all profits from the product would be put back into the company. Disadvantages of this product in a sole proprietorship play a bigger role in this case. The cost to start a business, open a factory, and begin making the product would cost a significantly more amount of money than funds available. Advertisement, The need to show off the product and promote it would have to be on a larger scale then a home garage. The market has a 2% growth yearly. Someone would be needed to infiltrate the market. Without proper training and back round this may be difficult. Partnerships Second is partnership. A group of individuals form a business. Advantages in this case would include: More financial freedom. Not limited to self-reliance. Resources would be in much higher numbers. Skills of individuals would help in development stages. Disadvantages include: Difference of opinions or how things should be done. Still become personally liable for anything that has gone wrong. Need to establish a place to produce the product. Growth of company or new products would cost significantly to do each time. Corporation Third being corporation. Company is owned by stock holders. Advantages to this would be: Funds available to start and operate factories. Advertisement would be great and vast. Disadvantages would be: loss in control, less money, more taxes, and more people to answer to. Note: (The information provided above was from class source BUS105 Unit 1 “What If” analysis. (2010). Retrieved from AIU virtual campus) Based on the facts of each business structure, bringing the product to a corporate level would be the best decision. This was determined based on multiple facts. Financial obligation played a huge role in the decision making process. The start of the company would exceed the finances available if going into a sole proprietorship. If any further growth of the company were to occur the expenses would come from out of pocket. Also the technology can be used in other products down the road which would be costly, possibly too much for a sole proprietor or partnership to handle. Many choose incorporation because business liabilities are limited to the assets of the corporation and do not extend to the personal assets of the owners (Sole Proprietorship vs. Partnership vs. Corporations, retrieved from eHow.com http://www.ehow.com/facts). A corporation already has the space, machinery, networking, and marketing readily available. A sole proprietor or partnership has to start from the bottom. Obtain licensing, continuing education and establishing insurance and capital to obtain the above mentioned. (Sole Proprietorship Startup Costs http://entrepreneurs.about.com). Overall based on the financial stability of the corporate company, their advertisement and marketing skills this would be the best decision to do with the new appliance. Future growth of the product would be too costly and put much liability on an individual. If this new technology were to be used in other appliances it would take a lot of money each time. More than a sole proprietor could possibly do. The best option is the corporate road.