Question

Organizational form: List some common forms of business organization, and discuss how access to capital differs across these forms of organization. If you had your own company, what form of business would you have and how would you access capital? Starting a business: What are some of the things that the founder of a company must do to launch a new business? Provide examples on what you would do and what type of business you would have.

Answer 1

Some common form of Business are as follows:

1. Sole Proprietorship Company- In this form of Business the owner himself manage to raise capital through self contribution or borrows from his natives. The owner himself manage the day to day business and working capital and fully responsible for potential risk of the enterprise as well profit/loss of the Business.

2. Limited Liability Partnership- This form of Business organization is a general partnership which provides each of its individual partner’s protection against personal liability for certain partnership liabilities. Generally the partners contribute towards the Capital of the organization to start the business.

3. Private Limited Company- This form of Business organization consist of one or more Directors who contribute to the initial capital on a certain a percentage basis and share the profit accordingly. It has facility to raise its capital in form of taking loans from banks etc. & selling its shares to the investors. The share of this kind of Organization is not transferable.

4. Public Limited Company- This form of Business organization consist minimum of seven Directors who raise capital from public by isssuing its shares.The share of this kind of organization is freely transferable.

If I have my own company the kind of Business Organisation I would prefer is Private Limited Company. At starting I would contribute 100% of the capital by contributing myself to start the Business, later on as per the business requirement I will be taking loan from Bank or other Financial Instituition or from Investors by selling some of my shares.

To start any Business one should do the following:

1. Market Study of the Product ( Supply and Demand Analysis, Cost of the Product)
2. Preparation of the Business Plan which should include Feasibility Studies (Financial Viability- NPV, IRR)
3. Technicial as well as Social evaluation of the product ( Technology to be used, Its ease of doing)
4. Marketing Strategy to bring the product in the market ( Digital/ other forms of marketing)
5. Choosing a Organization Structure based on the Business feasibility and Local Bye laws.( Which allows easy corporate governance,decision making, Raising of fund and Tax Benifits)
6. Registering a organozation to company Registrar. ( all the legal aspects to form and run the business)
7. Launch of the Business.( Through proper marketing and assembling all the instruments to produce the product)

I would like to have a Business in Real Estate development of Housing Sector. I would prepare the Busienss Plan which would consist the above mentioned Points. Adding to that I would start sending proposals to different Investors and show them the profitability margin as it will require a large volume of Capital as well as other resources.