Entrepreneurship and Small Business Management

The three main categories of small and new business ownership are sole proprietorships, partnerships, and private corporations. The majority of enterprises run by one person alone are known as sole proprietorships (Zimmerman & Chu, 2013). Businesses with at least two owners are called partnerships. Private corporations are legally recognized as state-created businesses. Private corporations’ assets and liabilities are distinct from their owners’ (Scarborough 2016).

My passion in entrepreneurship and small business management during college led to an unquenchable fascination with developing businesses and employment possibilities for others. I have been involved in intensive research over the last few years to try and identify the best small business model that I can venture into. My wide research involved drawing comparisons between the available business units as highlighted in the table below:

Business Form

Basic Structure

Pros

Cons

Sole proprietorship

Formed and owned by an individual.

The owner takes full responsibility for all decisions about the business.

Easy and cheap to form.

All profits from the business belong to the owner.

Very flexible and easy to control because there are minimum consultations.

Very easy to end the business in case of bankruptcy or change of mind.

Unlimited liability-one can lose everything if the business fails.

Very limited sources of funding because much of the investment comes from personal savings and small loans.

Limited lifespan of business because it can end when the owner dies.

Partnership

Formed and owned by two or more people

Ease of organization because they require creating of articles of partnership

Combined knowledge and skills because there are more than one people to consult from

Availability of greater financing because every partner contributes to the total investment in the business.

Unlimited liability which means that all debts are personal

Each partner is responsible for the actions of all the others hence difficulties in reconciling partner disagreements

Profit sharing among the partners

Limited lifespan meaning the partnership ends at death or withdrawal of a partner.

Private corporation

A legal entity created by the state. The assets and liabilities are separate from the owners.

Ownership is a small group who are involved in managing the business (Scarborough 2016).

Limited liability whereby owners only lose up to the amounts invested

Unlimited lifespan meaning the continuity of the business proceeds even at the death of a member

Great sources of funding

One major disadvantage is double taxation where the corporation pays tax from its business dealings and the stakeholders pay the dividends (Scarborough 2016).

Other disadvantages are the complexity information and rigidity in decision-making

My biggest interest in business is to be a chief supplier of a major commodity in the market. I would like to win a government contract to supply processed milk to kindergarten children across my State. To be able to conduct this business effectively, I analyzed the small business forms above and picked the one that would suit my business best.

I picked a partnership because I realized I would need a lot of capital to start this business and in running it too. This capital could easily be sourced from a partnership consisting of at most ten members. The business will be very involving and therefore I thought I will need more people in making the major decisions of the business rather than making personal decisions. We will be required to distribute roles across all of us hence I feel a partnership will be most appropriate.

Downsides of a Partnership

Main concern is the conduct of individual partners considering that any misconduct from a partner would be borne by all other partners (Zimmerman & Chu, 2013). As partners, we will ensure that everyone is made aware of this fact and severe consequences shall be stipulated to help govern the conduct of each member.

Why the Other Forms Could Not Work For My Business

A sole proprietorship would be inappropriate because the business needs a great source of capital which I couldn’t afford, the small business needs specialized personnel in marketing and perishable food refrigeration, transportation, and raw material sourcing- all of which I could not attain hence the need for a partnership. A private corporation is relatively more complex to form than a partnership (Scarborough et al., 2016). The business would not be of a national concern hence needless to start a corporation.

Conclusion

Starting a business can be a daunting task but entrepreneurs should be bold enough to take a risk and achieve their dreams. Being an entrepreneur provides freedom from being dictated while working for other people in formal employment.

References

Zimmerman, M. A., & Chu, H. M. (2013). Motivation, success, and problems of entrepreneurs in Venezuela.

Scarborough, et al (2016) Essentials of entrepreneurship and small business management