I am considering opening a new organisation and I have considered the different possibilities that are available to me. I have written a quickly list of all the advantages and the disadvantages that I needed to consider when opening my organisation. The organisation I decided to open after considering all the good points and all the bad points was an electronics shop. The reason I decided to open an electronics shop is because I have a general interest in this subject area and a lot of people are becoming more aware of the advantages that technology offers.
Also customers will always be returning to the shop to either get latest bits of technology or upgrades to existing products. The reasons I thought that opening such an organisation would be risky is because a lot of the stock may become obsolete, specialist knowledge needs to be required and keeping up to date with the latest technology will require a lot of research. The three other businesses which I was considering to open were a newsagent which I felt would offer me high income if the location of the shop was based in a deprived area.
The reason I decided not to open up a newsagent because the income would be slow but steady, as the product which are sold are not to expensive and don’t make a large profit. Also a lot of consideration would need to go in the location of the business as they will need to be placed in the right location for the business to be successful. The second organisation which I was considering to open was a garage, I thought that this would be a good idea because of the large profit margins as this is a specialist industry, and it is not too common in areas.
The disadvantage of opening such an organisation is the start up cost would be very high and the machinery would cost a lot of money, the organisation would need the right legal documents and employees would want higher wages as this is a specialist industry. The third and final organisation which I considered to open was a mobile phone shop, the reason I thought that this would be a good idea is because profit margins would be high because mobile phones would be bought in bulk from another country and sold in the UK for a mark up price.
Customers would always want mobile phones therefore new customers will be generated all the time. The reason I decided not to open such a business is the organisation would need to stay up to date with all the latest technology to increase market share, specialist knowledge is required amongst staff to give advice to customers and general enquiries. And also a lot of the stock will become obsolete because of the introduction of latest technology.
As I am opening an electronics shop I will be a sole trader the reason I am going to be a sole trader is because it allows me to make all the decisions myself, and everything in the organisation is run how I want it to be run. I will not need another person approval before I make decisions for my organisation. The reason I feel being a sole trader is the best for the organisation is because it is unincorporated and this means that my business is not a registered company, therefore, not other businesses will not want to associate with me because I am not a registered organisation.
I will not have a separate legal entity as I am a sole trader and I am unincorporated. As I am going to set up my organisation as a sole trader I will be in total control of the organisation and the decisions that need to be made, also as I am a sole proprietors I will receive all income generated by my businesses which I can keep or to reinvest in new stock or latest advancements in technology. If the organisation needed to be closed for any reason then it will not be dependant on the other person, all the decisions are made by myself.
Along with the advantages of being a sole trader there are several disadvantages, as my organisation is a sole trader then I will have unlimited liability and legally responsible for all debts against the business. This will mean the business and the personal assets will be at risk. I will also need to ensue that I have enough funding to start up my organisation so that I don’t need to keep dipping into my private funding.
The reason I decided not to be a partnership is because I feel that two people running the organisation that I have chosen is to much as I will only need to control the staff I have efficiently for my organisation to be successful. There was only one main advantage for me considering being a partnership and that was that I will need to take out a smaller loan as I will not be investing as much in the organisation as when I will be when I am a sole trader. I feel that I have made the right decision for my organisation and being a sole trader will pay off in the long run.