Table of Contents
Which business form to choose?
Starting a new company is a very responsible and difficult decision, especially if this organization combines commercial and social functions. Looking at the situation with Betty, it is possible to analyze all business forms.
Analyzing such option as sole proprietorship, it is possible to say that it has got a lot of advantages as well as disadvantages. People working on such business form pay the least sum of money as a tax. They are usually not dependent on somebody else, are responsible for their activities by themselves. They get more reward from their activity. From another point of view, they have all risks and can not share them with anybody else. More than that, sole proprietorship usually requires more professional skills who are really masters in their activities. In Betty’s case, this is inappropriate because she is going to offer services which can be provided by other employees more than by her. This fact contradicts this business form and excludes it.
Looking at corporation and all other business forms enumerated above in the case, except sole proprietorship. More than that, there must be a shareholder who will require dividends later. In this situation it is possible to take Betty’s husband as an investor and she could be a director. There is only “but”: corporations must be profitable and can stay without profit only several answers. It is not possible to guarantee high profits because market share is very narrow and not possible to control. In most cases such restaurant will serve as a place to gather together but not to eat a lot.
Partnership has got all disadvantages discussed above but also has got one more extra disadvantage such as a shareholder. It is necessary to pay dividends from profits.
LLC combines certain properties of both corporation and partnership. It is a legal entity which has got a right to issue shares (Jerold A., Friedland J.D., 2004)
Franchising agreement is quite popular and well developed working scheme. To be successful, it is necessary to buy the franchising license from well-known companies and locate your business in a very crowded and busy place. More than that, franchisors usually demand franchising payment regardless profits which are made. In addition, as it is said in the case, it is necessary to train all employees who Betty will hire.
Joint venture is quite specific working model because it is necessary to join two companies to reach some good results of mutual cooperation. More than that, in order to have such working scheme it is necessary to set up either LLC or sole proprietorship.
Among given forms, in order to be more independent from churches it is possible to set up LLC and focus primarily on making money. Then she can hire employees and make her own business without big connection with churches. If Betty wants to organize something more comfortable in taxes, then it will be sole proprietorship. She can set up joint venture with one of Christian organizations and work under their protection.
In this case I would suggest a working scheme that can be very comfortable in taxation and which is more widespread in religious establishment but which can earn money. This form is NGO. It can raise money and it can be a café for religious meeting.
Which partners to take?
There are 4 main direct and indirect stakeholders. In any case, it is very dangerous to invite Betty’s sister, Alice. She is a new Christian, so she does not believe in this deeply. Her husband is against this, she has got 2 teenage children who demand her attention. More than that, family business management systems do not prove themselves (Whetton D., Cameron K., 2007).
I would recommend to take Betty’s husband as an investor, then he could be more interested. He would not prevent Betty from doing her job. The last stakeholder is her neighbor. Although Erma is not Christian, she has got some skills in marketing and ready to analyze market segment and find customer base.
What name is the café’s name?
Checking information on the site about the name of such organization it is possible to say that such name exists already in different industries. Those organizations with this name which are currently exist are usually NGO. Those which are LLC and BUS are administrative dissolved and suspended. Consequently, NGOs are more sustainable for such projects.
Is “the gathering place” suitable name?
Certainly, according to marketing techniques, this name is not appropriate because it is neither eye-catching nor recognizable. Such names can make people more irritated and unwilling to visit. In addition, it does not express any mission or vision and any intention. If the name does not stimulate people to find out something, this name is not effective (Moon J., 2004). From linguistic point of view, combination of three different parts of speech makes utterances vague. More than that, name can depend on business forms and other aspects.