Good economic area - Sample Essay
Finally, if a partner dies or leaves the partnership, the partnership is formally ended. Therefore Donald Powell does not have a guarantee whether the business will carry on. Public limited companies are the largest type of business organisation and always have the letters plc after their name e.g. Tesco PLC.
I think this would be the best business organisation for almost anybody and the probability of them becoming successful would be high. However, after mentioning the advantages and disadvantages of a public limited company, Donald Powell’s funds will not be sufficient to run this type of business, as he clearly stated on the work sheet that he will set up his local retail business using his redundancy payment of 10,000. A private limited company is quite inexpensive to set up but cannot advertise the sale of its shares
If Donald Powell decided to operate as a LTD, (private limited company), he would be the owner and manager of his own business. Being an owner of a LTD has its advantages and disadvantages. If Donald Powell were to operate as a LTD, his first advantage would be the limited amount of liability. The liability of owners (shareholders) to pay the debts of the company is limited only to the money invested in shares. This encourages share ownership, as Donald Powell’s personal wealth is kept secure should the company fail.
As shares can be sold, capital is much easier for Donald Powell to raise. Thirdly, in law, the company, not the owner, is sued. So, if Donald Powell were to make a mistake, the company not Donald Powell would be sued. Donald Powell’s private limited company would be unaffected by the death or illnesses of any of the other owners. However, as I mentioned before, as capital is easier to raise for Mr Powell, it is still limited. Shares can not be advertised and therefore can only be sold to known people i.e. family and friends e.t.c… This means the amount of capital Donald Powell can raise is limited.
A private limited company’s shares are not available on the stock exchange. Lastly, the accounts for Donald Powell’s company are not private information. I think this is the best type of business organisation for Mr Powell as private limited companies are quite inexpensive to set up and would enable him to take advantage of larger scale business opportunities. His liability would be limited, shares could be sold e.t.c… However, capital would still be fairly difficult to raise.
What are the best sources of help for Donald Powell If Donald Powell were looking for public sector help, he could turn to many sources, such as the Regional Aid Programme. The Government would provide grants to attract Donald Powell’s business in relatively poor economic areas. This helps to reduce unemployment in areas of high unemployment. However, in this case, the Regional Aid Programme would not help Donald Powell as he is setting up his business in Crawley, which is a good economic area.
Secondly, there is the Department of Trade and Industry (DTI). The DTI provides a consultancy service for businesses. Therefore, if Donald Powell were experiencing any problems with his business, the business consultant would visit Mr Powell and give him advice on his business. This source can be very useful for Mr Powell.
The Central Statistical Office is another source of help as they would provide data for Donald Powell on a wide range of issues that may be useful to Donald Powell e.g. spending patterns, inflation e.t.c… Donald Powell could use these statistics to help him. The Training and Enterprise councils (TEC’s), are located in most large towns and would offer Mr Powell local services for his business e.g. local day seminars e.t.c… TEC’s would also grant Donald Powell money to start up his business for about a year. This source of help would be very useful for Mr Powell as he may lack some business skills and money to start up his business.
One source of help is where the Government would guarantee banks loan repayments for Donald Powell’s business. This encourages banks to lend and provide finance for Mr Powell, as they would not otherwise. Up to 85% of the loan is paid back should Donald Powell’s business fail. This source of help is called the Loan guarantee scheme. The British Overseas Board supports the activities of UK exporters through mounting exhibitions, providing information and publicising the activities of UK businesses in foreign countries. This source of help would not be very useful for Mr Powell, as he will not be exporting goods out of the country e.t.c…