Unit one: business at work

have been advantageous to this business if one partner desired to have less responsibility than the other. We already know from the case study that one partner is more creative than the other, proving that the business has allowed itself to be exposed to creativity that would not have existed had the business been a sole trader without the creative partner. However it could prove to be a problem because the profits have to be shared, or conflict could arise if the owners have different ideas about how the business should be run. The partners will have invested their own capital into the business and will have unlimited liability of their investment. They could potentially lose all of their possessions in order to repay debts caused by the business.Over the last three years however the company has continued to grow and grow and has diversified into other markets allowing itself to expand to operate as a limited company (LTD). A business becomes limited when it has been incorporated and in the eyes of the law gains a separate legal identity from its owners. Documents have to be signed such as the articles and memorandum of association that determine the agreements shareholders have to abide by whilst they remain owners for their part of the business. When a company becomes limited, one advantage to the owners is that they gain limited liability; meaning if the business fails to break even they will only lose the amount of capital that they originally invested in the business. Another advantage to becoming a limited company could be that now Hangloose can sell its shares to upto 20 of the original owners’ family and friends. They may want to do this to raise extra capital for the business to buy new premises or machinery to expand the business into a new customer base, or to employ more staff to fill vacancy situations that have arisen through the expansion of the company.3.2 ObjectivesHangloose started off as a fulltime hobby for the two owners with the idea that it could provide themselves with some extra income to subsidise their living in the halls of residence at university, although once they had left college it proved to have become a fulltime job whereby the main concern was to set up an enterprise that could survive. The short-term objectives for the owners included making sure that the business could cover all its costs using only the revenue gained from sales. This is break-even point; money is neither lost nor gained. The owners also aimed to receive a comfortable income in a reasonably short space of time. In the medium Hangloose aimed to be the market leader in their field. They aimed to have a higher proportion of market share than any other retailer in and around the Teeside area.Their long-term aim was to widen their target audience possibly extending their product range to meet the business market.Hangloose is meeting its objectives well. It is consulting the customer as much as possible and can still tailor make products for customers due to its small friendly way of being run. This causes a strong customer relation base that the business can rely on because customers will return time after time. We can see from their long-term aim however that at the moment they do not have a very wide target audience, this could be very restricting for the business because it could prevent them reaching their potential quite so quickly.Hangloose realise that in order to achieve growth in the future they will need to re-invest a large proportion of profits. This is a large risk to take in business because if it fails – the owners lose profit that they have already constructed. Nevertheless if the re-investment goes to plan it will allow Hangloose to supply a more varied range of stock appealing to a wider audience, resulting in an increase in profits for the owners.