Comparative Analysis Of Social Entrepreneurship And Business Structures: An Essay.

You believe you or your venture associates have the necessary skills to run the venture.  However, you are exploring the entrepreneurial process leading to value creation for your startup.   You are required to identify a business structure for your proposed venture and research the financial planning requirements that may affect the operations of the type of your business.  Your report should address the following issues:

1)Background information of your proposed business and the value you are providing to who.

2)Possible business structures, including their advantages and disadvantages. Recommendation as to the most suitable business structure of your proposed business.

3)Management and resourcing considerations, structure and responsibilities (i.e., the people/roles/capabilities needed to develop the business) and their relevant responsibilities in developing and growing the business.

4)Protection of your idea relevant to business names, domain names, copyrights, designs, trademarks and patents.

5)The resources and support from various stakeholders that may be useful in starting, financing and managing your venture. Discuss the type of financing (as well as the players) that you may seek for your venture and are appropriate through various stages of growth – that is at each life cycle stage of your venture (Development, startup, survival, rapid-growth and early maturity.)

Social Entrepreneurship

Social entrepreneurship or entrepreneurial activities are found at the peak in the recent years. The entrepreneurs are considered the lifeblood of the economy. The entrepreneur has the fundamental agent in most of the production, distribution, and growth theories. Entrepreneurs are considered national assets, which is to be refined, motivated, and remunerated to the greatest possible extent. There is a various comparative analysis done by the entrepreneurs are done to evaluate the market success, failure, mission, objectives which will be there in the business (mccarthy, 2016).

The resource allocation and performance measurement are done by the entrepreneurs to know the financial position and funding that will require in the business. Other decisions are also taken by the entrepreneurs, which include a decision regarding the compensation of staff, rent expenses given by the owner, and other expenses. Additionally, the various financial and non-financial stakeholders are working as social entrepreneurial. These are accountable to the society and are greater in number, which is varied in nature. This will result in greater complexity in managing the relationship (Wolfe and Nix, 2016).

There are various type of business structure to which the business can be started which includes sole proprietorship, partnership, company, joint ventures, not for profit making, trust etc. The entrepreneurs have the varied ideas and strategies to implement in the business and create the value addition in the product or services provided (Benington and Geddes, 2013).

The product offered by business is in a food truck with a wide variety of foods in the truck to satisfy the customer at most. Food is the requirement of every person in the world, so its demand always find on peak in the market. The only way to survive in the market is to create add on value for the customers. Benefit is an important tactic used by the entrepreneurs to retain the customer for the long term. The food chain will provide their services in various parts of the region, as it is movable in nature and can move from one place to another (Paranque and Willmott, 2014).  The business is targeting the every age group in the community by offering the variety of food products in the market. This variety of food mainly includes the Belgian Fries, Italian Soda, and Signature Packaged Sauces by the business.  

The structure of the business is found to be hierarchical in nature by the p[partnership form of business so that the information must be received by the top level management that is the owners of the business and then pass on to the workers and other persons. 

Resource Allocation and Performance Measurement

A partnership form of business is one of the most common forms of business to run a business in Australia.

The partnership firm can be easily formed by the members. There are very less formal with fewer legal obligations in starting up the partnership form of business.

Partners share the responsibilities of running the business. This will allow them to make most of their abilities. The partners will have the equal responsibilities and authorities in the business due to the equal share in the business until and unless stated in the partnership deed. Sin partnership, partners distribute their work according to their capabilities and knowledge (Porter, 2014).  One of the partners has the accounting skills so all the bookkeeping work will be done by that partner. Other may have skills for sales and therefore will be a salesperson in business (Grant, 2016).

Less formal with fewer legal formalities

Partnership form of business has the less formality in form of legal issues. The formation and winding up of the firm can be done easily without any formalities. The partnership form of business can is started when two or more persons come together for a common purpose and can wind up existing firm when any partner leave the firm and can enter into the new firm if they want (Bubb, 2014).

Compared to a limited company, the affairs of the partnership business can be kept confidential by the partners. They are not required to share the information with anyone except their partners. The disclosure of each and every accounts and information in public is not compulsory in case of partnership firm (Nordqvist, Sharma and Chirico, 2014).

Ordinary Partnership form of business has the unlimited liability, which means their personal assets can be affected. In the partnership form of business, the partners are equally and jointly liable for the losses and profits did in the organization. If one partner get insolvent, others collaborates will be liable to pay the debts (Iyer, 2013).

In partnership form of business, the owners have the limited capital in their businesses the sources of funds are only two that is the owner’s capital and loan taken by the partners from any financial institution. They do not have the right like company have to call the money from the public. A partnership firm cannot issue shares as a company form of business do (Cheney et al., 2018).

A company form of business is a more complex business structure. This structure has certain rights, privileges, and responsibilities available to the members, shareholders. Company form of business can also opt for the new business but it has its own advantages and disadvantages which are as follows:

Business Structures

In company form of business, shareholders have the limited liability up to the share taken by theme in the company. Their personal assets will not get affected in case of dissolution. The number of shares taken by them will only be their liability to pay for the company.

In a company, members may come and members may go but the company goes on forever. This means that the company’s existence will not be dissolved if their members leave the organization.

The shares can be issued only in company form of business only and can have the large funds from the public only. The shares are also transferable in nature that means they can be given to anyone when he is in need of money (Dijkman et al., 2015).

Promotion of a company is not an easy task. There are numerous stages involved in the formation of a company. A lot of legal formalities are required to perform at the time of registration. The formation of the company form of business is risky as well as expensive.

In a company form of business, both ownership and management are differing from each other. As all the managerial rights are with the directors of the company whereas, all the ownership is with the shareholders of the company. In a company, the management and ownership are separated from each other (Means, 2017).

In a company form of business, the decision-making process will be delayed in the organization due to the numerous levels in the management. All the decision will be made by concerning all the level in the organization. This makes the decision-making process slow in the company. No urgent decision will be taken in the company form of business.

A sole proprietorship is the form of business in which a single person has the all the liabilities and responsibilities of the business. All the profits and losses in the business area of the sole owner only. This form of business has its own advantages and disadvantages which are as follows:

The sole trader business can be easily started up with the will and wish of the owner and he has the right time to wind up his business. There are no legal interferences in day-to-day business affairs (Janes, 2017).

The sole owner has the capability to make the faster decision in the organization. The decisions making in a sole proprietorship is fast due to the availability of sing person to decide in the business what decision to take or not (CFI, 2018).

Sole Proprietorship

In sole proprietorship, there is a lack of capital in the business due to the single owner. The funds invested in this type of business are limited to an extent.

In sole trader, the liability is unlimited. Not only had the assets of the business but also the private property of the owner gets affected to pay the debts of the firm. Unlimited liability in the business also discourages the expansion of the firm.

In this type of structure, the business is done for the welfare of the society and not for earning the profits out of it. This form of business is suitable in case of a person doing the work for the social motive and he has no intention to earn any type of profit from the business. Running of a food truck is a profit-oriented business in which expansion is possible in the business when they are earning profits out of business (Kerzner and Kerzner, 2017).

A trust is a relationship where a trustee (can be an individual or a company) carries on business for the benefit of other people (the beneficiaries). Trust may carry on the business for the benefits of a particular family and distribute the yearly profit to them. A trust is not a separate legal entity.

Another form of business structure, which the owner can use in entering into the form of business, is a joint venture. In this type of business, the pool of resources is done by the parties to have the large funds in the business. This is done to achieve the common purpose of the business. The joint venture is usually done for the new project or nay other business activity. In the food truck business, this can be also a suitable form of business to start the business (Andriof et al., 2017).

	Sole Proprietorship	Partnership	Company
Owner	Sole	Partners	Shareholders
Number of owners/ shareholders	01	Min: 2, Max: 20	Min: 7 members, Max: No limit Min: 2 Max: 50 in case of PVT Ltd.
Management control	Proprietor	Partners	Board of Directors
Liability	Unlimited	Unlimited	Limited
Legal Registration	No provision	Voluntary	Compulsory
Flexibility	Maximum	Depends on partners	Comparatively less
Source of Funds	Owner’s capital (proprietor brings in the funds)	Partners bring the funds	Shareholders bring the funds

From the above discussion, it can be concluded that the most suitable structure for starting a business in the food chain is the partnership form of business. This structure is found suitable among all the available because of its nature and size of business. This structure will be found suitable for the food chain business, which is going to be started by the partners. The partnership firm has to get its name registered without that the name can be copied by another person. The name for the partnership in food truck business will be Mistry. The business will deal with providing the fast food to their customer. They use the concept of a food truck in their business so that they can move from one place to another and provide food to a large region of the country like Australia. This form of business is suitable due to the fewer requirements of funds and the risks of the partner will be shared by all partners jointly and severally.  The partnership firm have to face few legal requirements in the eyes of law. There is no compulsion to register the firm. Without registration, the firm and its partners can also work. Therefore, to start up a partnership firm, less capital is required. Another advantage that the partnership firm enjoys is the tax liability. The tax liability is only on the share of partnership income on the personal returns earned by the partners. However, written formal agreements between the partners called partnership deed will be made by the partners. This made the clarity in the role and responsibilities of the partners and their profit sharing ratio (Caplow, 2017). 

Partnership

In managing the partnership numerous things taken into consideration by the partners, who include creating the partnership norms, designing the structure for the open and honest communication, creating the collaborative work plans in the business. Lastly implementing evaluation and monitoring strategies in the firm.

The management in the partnership form of business is done by the partners with their mutual consent. All the decision-making in the partnership form of business is done by the partners of the firm. The partners have the equal right to participate in the management and decision making of the business until and unless stated in the partnership deed or decided by the partners. The management process in the partnership form of business is done by the partners by distributing the work in the firm according to their capabilities and knowledge. For say, if a partner has the knowledge of accounts then he will be responsible for the entire bookkeeping work in the firm. Other partner groomed in the sales and marketing skills, then he will be doing the work of promotion and advertisement in the market (Greenwood and Miller, 2010). The resources in the partnership firm are arranged by the partners only. All partners will bring up the capital or they have the option to take the loan from any financial institution.

The business needs to have the resources, which includes the stores and supplies, equipment and machinery, which cost to around $2, 50,000. In addition, the business has to give the wages to its labour on monthly basis.

The responsibilities in the partnership firm are found to be equal to all the partners. The following are the responsibilities towards duties, government and others are as follows:

Record Keeping and Duties

Every partner’s shares equally in the responsibilities of maintaining the financial records and ensuring the partnership maintain its appropriate licensees to equally contribute to the business. All the keeping of the information is done by the partners only.

Paying Business taxes

In the business of partnership firm tax liabilities arises to all the partners. The responsibility to pay federal and state income taxes rests equally with each business partner regardless of managerial role.

Liabilities and debts

In partnership form of business, each partner are responsible for the all the debts of the business. In setting up of debts, partners personal assets may get affected, if the partnership fails to meet the obligations of the business. However, by forming a limited liability partnership by the partner, risk can be mitigated by each personal responsibility for business debts (Bäckstrand, 2008).

Company

Intellectual property protection is protection for inventions, symbols, names, and images which are created in the mind. This can be protected by using the copyrights, patents, trademarks, and trade secrets in the business. In this partnership of food chain, the partners can make use of the patents so that no any other person can copy their idea or theme of the business (Weber, Alfen and Staub-Bisang, 2016). The protection of the website domain is available in the partnership form of business. Mistry will be the name of the firm which the firm needs to be registered under the law.

Finance is considered the lifeblood of the business. Finance is needed to start up the business without this the business cannot be started. There are two types of finance available in starting up a business, which is the equity financing or debt financing. Availability of finance has its advantages and disadvantages in the business. Application of both the funds will somewhat risky and profitable too. The financial needs will depend on the size and nature of the organization. The operation level will depict the finance requirement of the business. If the business needs regular funds in the capital then the business will require more funds as compared to the business, which required fixed capital (Polzin, Flotow, and Klerkx, 2016).

In the business of food chain store, the business requires a regular flow of funds to operate in the market and continuing supplying their product to its customers. Debt and finance are two sources of finance. Government grants to finance certain aspects of business may be an option in the form of subsidies or exemption in taxes for first five years in the business (Miglietta and Battisti, 2016).

Equity Financing

Equity refers to the exchanging a portion of ownership of the business for a financial investment in the business.

Personal Savings

Personal savings are the funds, which are taken by the partner itself from its own in the form of capital. Depending on the partnership agreement, each partner will have to contribute an equal amount to start the business.

Angel investors

Angel Investors is the new form of finance in which the business investment is done by the third party. This investment is done with the aim to help in sustaining and growing the small business in the region. They are focused on the profitability statement of the company and the security of their funds if they like the proposal of business; they invested their money in the business. Partnership in food truck can opt for the angel investor (Khmel and Zhao, 2016).

Trust

Debt financing

Debt financing is taking the money from creditors with the stipulation of repaying the borrowed funds plus interest at the specified future time. This source may be secured or unsecured source of funds. Partners can take a loan from the bank and other financial institution. Other option partners have is to take the loan from one of the partners who has surplus funds. However, in debt form of funds, the payment of interest is mandatory, as it is the liability of the firm or partners to pay (Semerád, Radvan, and Bart??ková, 2016).

In this partnership, the partners will bring their capital in an equal ratio that is 1:1:1 and each partner will contribute $50000 to business. The partners have the equal liability and responsibility in the business. Partners will take a loan of $100000 from bank @ 10%. This amount will be sufficient to start up the business of food truck chain (Gupta, Pistorius and Vijge, 2016).

In a partnership with food chain business, there can be five stages, which include the launch, growth, shakeout, maturity, and decline. In the first phase, business requires the funds to manage the resources to start the business. These resources include a place where partners are providing their services, resources needed to make the food, labor salary, and property rights so that no one copy the name of the business. The sales have been increasing which can be analysed from the sales forecast given in the appendix (Refer Appendix 2). All the promotion activities are done in this stage only so that the people come to know about the new service in the market (Chkanikova  and Lehner, 2015).

In the second stage, growth will expect in the business. From this stage, business starts earning profits and sales will increase. The finance is needed at this stage to have available resources in the business and the demands of the customer are fulfilled (Ashkenas, Ulrich, Jick, and Kerr, 2015).

After this stage, business will explore in the market and there will be requirements of huge funds to run the business. At this time, business will need more working capital in its business to meet the regular expenses of the business. The profits and sales will show an upward trend in these two phases (Kondoh, 2015).

The last stage in the cycle is related to the declining stage of the business. Both profits and sales will move downwards due to the availability of substitute in the market. To recover from this phase, business should start innovative in the existing business. This makes the business revive and the customer will continue to be the contributor in high profit and sales. For the revival of the business, the requirement of funds will be there (Haugh, 2005).

Joint Ventures

The financial performance of a firm can be measured by seeing the sales and profitability of the business. The financial performance in small business can be measured by analyzing the profits, inflows, and outflows of cash, market valuation of business and goodwill of the firm.  Food truck business aims to have high sales throughout the year and expect 10% of the profits (Knai et al., 2015). The most important area in any form of business is the profitability criteria. The financial performance in the partnership form of business can be measured by the amount of profits earned by partners.

From the Appendices, it can be analysed that the Mistry can able to earn the profit in first year, which will gradually increase in next two years (Refer Appendix 3). 

The possible opportunities that partners have in the partnership form of business are sharing of responsibilities and work. There will be a mutual support and motivation in the partnership form of business. In partnership, partners enjoy the benefit of spreading the risk, which will definitely enhance the business during both the start-up and growth phases (Negi and Anand, 2015). The risk of investment will spread in all the partners equally as decided in the partnership deed. In starting the venture, the opportunities is that the business will grow in the future and make lots of profit. This will enhance the business and help to grow in the market. From this profitability in the business, partners will also able to earn the profits in the long term.

The risk associated with starting up the business in partnership is the insolvency of partnership firm or partners. From this, all the liability will be pay by the remaining solvent partners. The biggest risk in starting the partnership is that the personal assets of the partners will also get affected when the firm assets are unable to pay the firm’s debt. This factor will be considered as the biggest threat to the partnership of business. In starting the food chain, the risk might arise in case of serving the good quality food to its customers. If the Mistry will unable to give the quality food and good service experience to their customer, it will spoil their image in the market which leads to low sales and profitability and ultimately leads to the insolvency of the firm.

In partnership, partners do not have total control over the business. Decisions are shared and sometimes business faces the difference in opinion and can disagreements. This will hamper the performance of the business and may lead to dissolution. The firm will face difficulty in arranging the funds for the business. The arrangement of the funds (Woerner and Wixom, 2015).

Advantages and Disadvantages of Different Business Structures

Conclusion

From the above discussion, it can be concluded that the entrepreneurs are the lifeblood of the economy. Entrepreneurs contribute to the economic growth of the country. Without them, the new innovative idea will not be generated in the society. For starting up the new venture, entrepreneurs develop the management funding through various stages of growth and finance. There are many options available to an entrepreneur to start up their venture. This form of business includes partnership, company, not for profit organization, trust, joint venture, sole proprietorship and others. All the forms of business have its own advantages and disadvantages. In this business plan, there are three people and the partnership form of business is found suitable for them. The business will deal with providing the fast food to their customer. They use the concept of a food truck in their business so that they can move from one place to another and provide food to a large region of the country like Australia. This partnership is going to be started with a name of Mistry and each partner will share the profits and losses equally. Each partner will contribute an equal amount, as there capital and the business will take a loan from a financial institution to start the business. All the resources and responsibilities are shared by each of the partner severally and jointly in the business. The business will face growth stages while managing their finance. The business performance is measured in terms of their sales and profits margins by the partners. The decision-making in the business will be done on the mutual consent by each of the partner. This business is associated with risk and opportunities, which are managed by the partners.

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