Struggle3

632 pj4 readings

Step 1: Research the Steps to Create and Manage a Small Business

You decided to take a week of vacation time from Colossal to devote yourself entirely to developing your new business venture. The new business is a solar energy–fueled charger that charges a variety of products on the go, including cell phones and other electronic devices. You begin by going into your home office to work on the task at hand—the preparation of a narrated PowerPoint to practice your presentation to potential investors. The presentation will address all of the key issues related to the legal form and organizational structure of your business. Specifically, you will include the following in your narrated PowerPoint:

· A name for your business, a brief mission statement reflecting the primary goals of the business, and an explanation for why you chose this name and mission statement. You will explain how this mission statement is drafted so that it is clear, concise, and meaningful to your business’s stakeholders.

· An examination of the three most appropriate legal forms of business for your venture. Include a detailed examination of the advantages and disadvantages of these three forms and an evaluation of these six factors:

· creation and maintenance

· continuity

· ownership and control

· personal liability

· compensation and division of profits

· taxation

· A choice of the best legal form of business for your new company from the three you considered and a full explanation of your choice.

· A detailed diagram of your organization chart and a rationale explaining structural decisions reflected in your organization chart, including:

· the titles of the different individuals and why you chose those titles

· the tasks the different individuals and groups will have for contributing to the aims of the company

· the reporting structure (who will report to whom and why)

· a choice regarding outsourcing the human resources function, including a detailed analysis of the pros and cons of outsourcing the human resources function

· all other relevant factors (for example, will your business structure be functional, centralized, decentralized, etc.), including how your chosen structure will contribute to your long-term aims of going national and international, or how it will need to be modified to achieve these aims

After reviewing the above outline of your presentation, you recall the  recent conference call  with your potential business partners, Roza and Gary. You realize that you will need this information to make the best legal and organizational decisions for your business. You’re asked by one of your collaborators to examine some resources on  creating and managing a new business  and on drafting a  mission statement .

In order to complete this task, you realize that you must do some additional research to address the legal and strategic implications of your decisions if your business is to get off the ground.

Conference Call for New Venture with Gary and Roza

Four icons: gears, light bulb, smartphone, two people

You: Gary and Roza, it’s great to be working with you. I think we make a great team based on our skill sets. Let me tell you more about the new product and how it will be invaluable to the solar energy industry. It’s a solar energy–fueled charger that charges a variety of products on the go, including cell phones and other electronic devices. We need to come up with a name for it.

I showed you the prototype last month. It’s just about ready to roll, but now I just need some time to work the kinks out. I project that it will take approximately two years to develop this prototype for large-scale distribution, but once the product is on the market, there is excellent growth potential. Think of how much money people could save on electricity by using this product to recharge their cell phones and other electronics.

However, you know that my skills are in engineering, and you probably know that finance, marketing, and politics are not my strong suits. Also, I have to admit that I’m not very interested in the day-to-day business operations of the company. I'd rather spend most of my time inventing new products and would like to focus on research and development.

Roza: I think this is a great product and loved seeing the prototype in action last month, but we're going to need additional investors and expertise to get this business off the ground. We should develop a business plan that will be attractive to potential investors and partners. They're going to have concerns about joining a new startup. We should work to address these from the start. My background in marketing could help with this, and I also have some experience in new business formation. First, we need to choose the right legal form of business. We also need to develop our mission statement and structure our organization to serve that mission. What do you think are the main priorities of our new enterprise?

You: Last time we discussed this we identified innovation, sustainability, and timely customer service as our top priorities. I think these are spot on.

Gary: We need to think about how we will bring in the additional skills we need to be successful. I have decades of experience managing sales in cutting-edge technology companies. Roza has a background in marketing, and you are our research and development idea person. We definitely will need someone with finance skills, and we’ll need to hire staff to handle product development, production, finance, accounting, marketing, sales, and human resources. We should organize our business with this in mind. My colleague, Katie Bourne, has expressed interest in working with us, but she would need an upper five-figure salary and benefits to entice her to leave her current position. She does not want to be an owner given her desire for work-life balance, but she would consider joining us as an employee.

We also need a visionary CEO. Ideally, a person with connections and experience in the solar industry. Since our last conversation, I spoke to Elijah Hecal, a forward-thinking figure in the solar energy field, who is known for being a rainmaker. Hecal has expressed some interest, but it will take significant incentives to get him on board. He will want to see the potential to make a lot of money. I know some companies use stock options to retain executives; perhaps we should look into that possibility.

We also need to think about raising some start-up capital. I have about $100,000 I can invest in this company. How about you guys?

Roza: Unfortunately, at this time, I don’t have much money to invest. But I do have some connections with a wealthy potential investor, Carmen Palombo. I’ve already talked with her, and she thinks our product has a lot of promise. Carmen would like to play an active role in running the business and could invest approximately $500,000 up front. However, she would want to join the three of us as founders of the company. She was very firm about requiring an ownership stake as well as some protection for her own very considerable personal assets. I’ve told Carmen about our plan to start locally, go national within a few years, and then international. She seems very interested. I suggest we plan a dinner with the four of us in the near future. I’ll check for available dates with Carmen and circle back to you.

Gary: Great idea, Roza. Let’s definitely plan that dinner. We’ve talked about this before, and none of us mind sharing ownership if Carmen is willing to put that kind of money into this business. Even if Carmen does join us, I’m still concerned that we may not have the right level of capital and expertise to ensure our success, especially with the growth we anticipate. We should look into getting some additional advisors or put together a group of people to help us with large-scale management. We should find a way of getting some advisors regularly involved in the company.

You: This is great! I’m really excited to be working with you both and I’m looking forward to meeting Carmen. I agree with everything that’s been said today and will take a stab at developing a presentation for Carmen and other investors. Let’s talk again soon.

Gary: Bye.

Rosa: Have a great one!

Creating and Managing a New Business

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There are many things to consider when creating and managing a new business. Planning a business involves many considerations, including:

· choosing a business entity type

· registering with required government agencies

· acquiring licenses and permits

· opening bank and credit accounts

· adopting management agreements

· adopting a business plan and organizational structure

· adopting a marketing plan

· developing a mission statement

· developing a code of conduct or ethics code

· joining relevant professional organizations

· choosing a stakeholder set of employees, customers, suppliers, advisors, and investors

All of these actions should be researched and achieved in the 12 months or so before starting a new business.

One common reason small businesses fail is because of inadequate preparation and planning  before beginning a new business. The reality of business practice is that no one can predict every potential issue or dilemma. Nevertheless, the resolution of unknown issues will be expedited and a process will be in place to address them through instruments such as management agreements, mission statements, business plans, and codes of conduct.

Moving a business from local to national or even international involves many additional considerations of management, structure, tax, law, culture, and strategy. Preparing in advance for such an expansion is a key element of successfully expanding to other markets. Those who treat international expansion as an afterthought frequently face a more difficult time when trying to transition to other markets. Moreover, many companies have blundered by not considering the cultural norms of targeted markets when attempting to expand beyond local distribution.

Mission Statement

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In the contemporary economic environment, businesses must often take on roles beyond those of mere profit centers. A well-crafted mission statement assists in defining the role of a company by succinctly outlining its core purpose and values. All other organizational documents, such as codes of conduct, should be created to support the mission statement of the organization. Once crafted, a mission statement should play a role in employee training, advertising, and management. It is the core principle that states who a business is and what it does.

Resources

· Vision

· Values of Organizations and Leadership

· Step 2: Determine the Legal Structure of Your Business: Gather and Analyze Information

· Now that you have read a broad overview of new business creation and management, you recognize that the next step in creating your new business is to decide on one of the many legal forms of business you will use to form your new company. You want to show the investors that you really know your stuff, so you decide to select three forms of business to analyze and you’ll explain in your presentation why the option you chose is the best for your new venture.

Legal Forms of Business

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Business entities are an integral part of business practice and economic productivity. An effective business practitioner must understand the characteristics of the major types of business entities, as these attributes can dramatically affect the nature of the business's relationships. Before beginning to conduct business, one should always weigh the benefits and burdens of the different types of business entities and make a conscious decision about which type of entity to form to conduct one's business.

Depending on the type of business, the people involved, and the goals of the business, some entities may be more appropriate than others for a particular business. To make the decision about the appropriate type of entity to form, one should consider factors including the following:

· creation and maintenance—the effort associated with forming and maintaining the entity

· continuity—the continuity or stability of the organization upon given occurrences

· ownership and control—the ownership rights and control of those involved with the business

· personal liability—the potential for personal liability of those involved with the business

· compensation—the compensation and division of profits among business owners

· taxation—the taxation of the organization's earnings and its distributions of profits to the owners

Weighing these and related factors, which vary in consequence depending on the entity, informs the choice of the type of business entity best suited to one's business. Examination of these characteristics will make obvious the effect of these attributes on stakeholders of the business entity. The decision of which entity is right for a particular business impacts many facets of a business's operation, including accounting, management, and finance.

Check Your Knowledge

Choose the best answer to each question:

Question 1

Which of the following business entities imposes unlimited liability on all of the owners?

limited partnership

general partnership

limited liability partnership

S corporation

Question 2

Which of the following is a characteristic of a sole proprietorship?

A sole proprietorship is subject to double taxation.

A sole proprietorship has perpetual life, beyond that of the owner.

A sole proprietorship is formed simply by someone carrying on an activity seeking a profit.

A sole proprietorship provides limited liability to its owner.

Question 3

What are the owners of a limited liability company (LLC) called?

stakeholders

partners

shareholders

members

Question 4

Which of the following is the greatest disadvantage of a C corporation?

The C corporation is subject to double taxation.

The C corporation allows for limited liability.

The C corporation requires a board of directors.

The C corporation provides a means of seeking investment through issuing equity and debt securities.

Question 5

Which entity allows for the owners to elect whether they manage the business or they appoint managers?

limited partnership

limited liability company

general partnership

C corporation

Resources

· Business Entities

· Step 3: Determine Your Organization's Structure: Gather and Analyze Information

· After selecting the most appropriate legal form of business, you’re messaged by one of your colleagues in the collaboration, Roza Worrell:

· INBOX (1 NEW EMAIL)

· From: Roza Worrell

· To: You

· I’m glad you finalized your decisions on the legal form for the new business. Now we need to decide on the organization structure and design that would work best for our goals. We need to  determine what departments the organization will need, who will report to whom, how many levels we will have in our organization's hierarchy, and how many individuals will report to each manager (span of control).

· We really need a structure that will promote communication and coordination of efforts across the entire organization.  We also need to consider whether or not we should be outsourcing the HR function.

· After formulating your thoughts, you may also need to do some additional research on the web and in the library to enhance your knowledge for this presentation.

· Thanks for all you’re doing to make this business a reality. Good luck in your final prep for the presentation.

· Sincerely,

· Roza

Organization Structure and Design

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The structure of an organization plays a pivotal role in how everyday tasks are handled, in how resources are allocated, in employee supervision and reporting, and in coordination amongst employees. It impacts employee behavior, demeanor, and psyche in ways that are still being studied by theorists today. Organizational structure may play a role in employee motivation and even productivity.

A primary factor in creating and managing a new business involves choosing the best organizational structure for it. Some types of business are better suited for a clear hierarchical structure, while others are more apt to work within a flatter organizational structure, with fewer or even no levels of authority. From time to time, a business may reorganize, as online shoe retailer Zappos did when moving from a hierarchy to a flatter "holacracy." There were reportedly mixed results spurring from this major shift in business structure (Reingold, 2016).

As the Zappos case and others reveal, business structure plays an integral role in organizational success. Thus, one should clearly define the initial organizational structure at the outset of starting a new business and monitor it through the business life cycle, tweaking it and shifting it as necessary.

References

Reingold, J. (2016, March 4). How a Radical Shift Left Zappos Reeling. Retrieved February 07, 2017, from http://fortune.com/zappos-tony-hsieh-holacracy/

Resources

· Structured for Success: How the Structure of Today's Professional Organizations Are Changing

· Creating an Organizational Structure

· Organizations and How They Grow

· Organizational Structure

· Organizational Chart

· A Flexible Organizational Structure as a Way of Knowledge Management in SMEs

Outsourcing the HR Function

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Outsourcing is a technique used by some companies in which they transfer or contract out certain work to external companies, typically in an effort to save costs. Outsourcing the human resources (HR) function involves the transfer of the tasks usually performed internally by human resources employees to external companies. Depending on the structure of the organization, the human resources office often handles such matters as managing employee compensation and benefits, recruiting new employees, ensuring compliance with employee rights and safety laws, overseeing employee relations, and often the provision of certain employee training.

There are advantages and disadvantages associated with outsourcing the HR function. In addition to the potential cost savings, outsourcing the HR function provides companies with a means of garnering expertise in the growingly complex areas of employee rights and employment compliance without hiring additional staff. Outsourcing the HR function may also give companies, whether large or small, a layer of protection from some lawsuits. By outsourcing, a company can more readily focus on its primary purpose and avoid potential distractions.

Outsourcing the HR function, like any outsourcing, creates distance between the employees of a company and the outside contractors. This distance may lead to a culture mismatch between the company and its contractor, delays in processing, and reliance on another company to manage a critical function (i.e., loss of control). The best HR managers align their actions with the organization's strategic goals. HR managers typically have organizational and financial knowledge that comes from being a part of the company. Can the outside contractor provide the necessary alignment with the company's strategic interests? This outside contractor may or may not be as dedicated to making process improvements as your own company is, and so, particularly when in a long-term contract, may not expend resources to improve the quality of service.

For multinational organizations, there are special challenges. Best HR practices may not transfer effectively between countries due to cultural and institutional differences. Can the outside contractor adapt to local practices and customs while standardizing the best HR practices across country borders?

These, and other, advantages and disadvantages of outsourcing the HR function should be weighed carefully and discussed prior to action.

Resources

· What Is Human Resources?

· The Changing Role of Strategic Human Resources

· Risks Associated With Outsourcing

Step 4: Prepare Your Presentation

Using the information you gathered from your reading and research, you now are ready to prepare a narrated PowerPoint. Because you want to record yourself and critique your own work, it should follow the form of asynchronous presentations. After doing some research, you find that the best presentations are organized by using the following guidelines:

· Tailor your presentation to suit the audience.

· Include a title slide, with your name on it, introducing the presentation.

· Include only the major bullet points for each issue on the presentation slides.

· Include no more than 15 slides (not counting title page or references list).

· Cover all the elements of your plan as outlined in Step 1.

· Use your narration to provide the supporting rationale for each major bullet point.

· Include a script of your narration in the Notes section of PowerPoint.

· Include a clear summary of your major conclusions and any recommendations on the conclusion slide.

· Include a reference page in APA format citing any sources you used to develop your presentation.

· Title your files using this protocol: lastname_New Venture_date.ppt.

Check Your Evaluation Criteria

Before you submit your assignment, review the competencies below, which your instructor will use to evaluate your work. A good practice would be to use each competency as a self-check to confirm you have incorporated all of them. To view the complete grading rubric, click My Tools, select Assignments from the drop-down menu, and then click the project title.

· 1.7: Create neat and professional looking documents appropriate for the project or presentation.

· 1.8: Create clear oral messages.

· 2.5: Develop well-reasoned ideas, conclusions or decisions, checking them against relevant criteria and benchmarks.

· 7.1: Analyze the legal forms of business organization and make recommendations to support business decisions.

· 9.1: Design organizational structure, systems and processes that support the strategic goals of the organization.