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he desire to venture into a business and take it to great heights simmers in the hearts of many individuals. But the task is not as easy as it seems. A great deal of planning and management is required in order to have a successful business.
If you desire to commence a business, the foremost thing to decide is its structure. The structure of the business often tells about the remainder of the business’ needs. Broadly speaking business structure can be of three different types- sole proprietorships, corporations and partnerships.
Sole proprietorships, as the name suggests are those where a single individual is the proprietor or the owner of the business. The proprietor has complete hold and so all the rights of the business. He alone has to take decision in all the legal and tax matters. What is magnetizing about the sole proprietorship business is the autonomy of the owner. It is wonderful to be your own boss and do things at your discretion. Also the profits that are incurred belong to you only and are not to be shared with anyone else.
But there are always two faces of a coin. So if there are merits, there are demerits too. If a proprietor singly reaps fruits of profits, he alone runs the risk of running the business and in some cases even its downfall. The proprietor not just invests the capital but also pays taxes, employs workers; maintain good terms with them etc. In other words he single-handedly bears the onus of managing his business.
The other form of business is a partnership business. Partnerships are basically different types of sole proprietorships where more than one person owns the business. In a partnership business a single individual cannot take any decisions regarding the company without consulting and the consent of other owners. This is because if a business is started by a group of people each one of them invests a fixed amount of money in it. So all the expenses such as capital, management costs etc. are shared in a partnership business. However quite often these businesses fail badly due to disputes amongst their owners.
Somewhat akin to business partnerships yet different from it is a limited partnership. In a limited partnership, a person desires to be a part of a running business by investing a limited amount of money in it. In such a case the investor has limited rights and responsibilities while the owner/s enjoy complete autonomy.
The third type of business structure is corporation. A corporation is a legal structure of a company in which owners and shareholders become one in the ownership of the business. Nowadays many businesses are becoming corporate by filing several records with the state from where they operate. In case of a corporation the debts and losses do not affect the business owners. Also corporations enjoy various tax advantages. But many proprietors dislike corporations for they lose their autonomy, as other people are also involved in taking decisions.
Corporations can be of different forms such as- the limited liability corporation, non-profit and minority owned corporation.
Once you settle the structure of your dream business, make a business plan. A business plan acts as a blueprint of a business. It gives a brief description of the operation, aims, means to achieve those aims, proposed targets etc. of the business. The other significant details of the business such as its location, names of authorities and so forth can also be included in a business plan. Business plan is a great help in arranging finances for your business.
With a perfect business plan, you are ready to turn your dreams to reality.
Mansi aggarwal writes about business formation.
