Business Report

1.- SOLE TRADER (Stay as you are):

• ADVANTAGES:

• You get all the profits.

• DISADVANTAGES:

• The risks are higher when it’s a big business.
• Remember you have limited liability.
• The bank won’t give you much money or if they do it, they would charge you a high interest rate.
• The product must sell well if you want to pay the debt back to the bank, otherwise you’ll lose everything.

2.- PARTNERSHIP: This way of business organisation means that you share everything: profits, problems and risks.

• ADVANTAGES:

• You’re able to share the risks and the problems.
• It’s a simply form of organisation.
• You’d be able to use the partner’s money to pay for the expansion.

• DISADVANTAGES:

• Remember you’d still have unlimited liability.
• You share the profits with the partners.
• It’d be easier to raise money as a Ltd. Company than as a Partnership or Sole Trader.
• Your could have arguments with your partners and this could affect the business.

3.- PRIVATE LIMITED COMPANY:

• ADVANTAGES:

• You’d have limited liability, a very important point because then, you won’t lose your personal possessions.
• It’s easier to raise extra money from the banks by being a Ltd.
• Mr. Godfrey Richards would be able to buy shares in the Private Limited Company, this way the business could use his money to expand and still have limited liability.
• With this report I am enclosing an article from the Daily News (20-05-20002) about how cheap it’s to make a Private Limited Company.
• If the company expands, you’d be able to employ people with different skills.

• DISADVANTAGES:

• There’s a lot of working paper involved.
• You’d have to publish your accounts every year, this would make your competitors to be allowed to see how your business is doing.
• You couldn’t raise as much money as being a Public Limited Company.

4.- PUBLIC LIMITED COMPANY:

• ADVANTAGES:

• You’d have limited liability.
• You’d raise a lot more capital through selling shares to everyone who wants to buy them.

• DISADVANTAGES:

• You haven’t got total control of the business.

CONCLUTION: 

        I think you should make your business a Private Limited Company because then, you’d have limited liability and the bank would lend you more money than if you stay as a Sole Trader or you become a Partnership. Your futures partners would be able to buy shares and to contribute with the expansion, inverting their own money. The cost of being a Ltd. Company isn’t too much, only $500. You will have most of the control of the business but you’d have to consult your partners making before any change.

RECOMMENDATION:

        I recommend that you should patent the formula of your new product because if you don’t, another firm might copy it, patent it themselves and they’ll make a new product with it. This would put your investment at risk because then, you’d be obligated to remove that new product and all the money you have spent on it to it would be would be in vain, useless. The expand of the business as well and then, the business would have to close. I recommend that you should make your company a Public Limited Company if this product sells well because then, you’d have the advantage that everyone would be able to buy you shares so it’s very difficult to the business to fall if the following product doesn’t sell well.