Question

In: Operations Management

Client 2: After apprenticing for another candy maker, I started my first candy business at age...

Client 2: After apprenticing for another candy maker, I started my first candy business at age 18. Unfortunately, my first attempt at starting a business (as well as my second) was a failure. After a rocky start, my third try was more successful – I have just received a fortune from the sale of my caramel business. During my world travels, I discovered new equipment that makes chocolate and decided to buy it. Today, only the wealthy can afford chocolate. With this new technology, I think I can make a chocolate that everyone can afford. In my mid-thirties, I know very little about making chocolate but I am willing to take the time to learn. I want my life to center on inventing new candies, building this new business, and laying out a new community that will be a wonderful place for the people I hire to live. I prefer to leave day-to-day operations of the company—handling production, sales, marketing and distribution—to someone else.

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Expert Solution

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I recommend a corporation organization for such clients, Due to his willingness of leaving day today operation management to someone and would like to work on the invention side. So, Limited company structure would allow the client not to be responsible for managing every day operations. Moreover because of the sale of stocks, the client will get a chance to update his factory with a latest technology on the other word, there would be more money for investment. Furthermore, the LTD structure is a limited liability which is the biggest benefit of running the business as a limited company. This means that shareholders in the corporation would not be responsible for all debts and liabilities of the corporations. The client expressed interest in serving his community, by creating a legacy of good, affordable chocolate. In addition, a professional and corporate image is created by a limited company, thus boosting the value of business. More corporations and industries like to do business with companies, instead of sole traders. This is because limited companies are considered to be more established, credible and committed. On the other side, the client should know that generally there are more costs to set upa limited company structure. Also, there will be double taxation, even on the amounts paid to stockholders in his or her company. While the client has the ownership, the shareholders also own part of the business as well. This can lead to conflict with board of directors and stockholders. The client also should know that the information relating to the owner of the company and the company are displayed on public record.

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