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Chris Palke
BUSI 561
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Advise Shania on which of the business forms under consideration best accomplishes her
business goals. Thoroughly explain the reasons for your recommendation.
Entrepreneurship in the business environment has become a staple of America. The
United States has seamlessly always been considered the “the land of opportunity” which
generally attracts the best and brightest into our business environment. When an individual plan
to start a business, the first key decision to consider is the type of legal entity the organization
will operate under; a sole proprietorship, corporation, limited-liability corporation, or potentially
a partnership. There are several options to consider that effect ownership rights, liability
concerns, and potential tax implications; all which play an intricate role in the initial financial
and managerial decision for an organization. Under the presented scenario, the most feasible
options in opening a coffee shop would be a sole proprietorship or a limited-liability corporation.
Under a sole proprietorship, Shania could limit initial administrative costs structuring her
organization as she could essentially operate under who her name but reference DBA (doing
business as). The primary issue that arises with a sole proprietorship is the personal liability that
gets attached with the business; in other words, if a creditor or consumer decided to sue the
company, the parties would have claims to the personal property of Shania, above and beyond
the assets and equity available within the organization. That aspect alone has tipped the scales in
many new entrepreneurs opening and operating their business as a limited liability corporation.
According to an article from the Journal of Accountancy, “LLCs are entities formed under state
law that give the owners liability protection while avoiding the double taxation inherent in C
corporations and the ownership restrictions of S corporations. Where partnerships have partners
and corporations have shareholders, LLCs have members. All states presuppose at least one
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member, but there is no upper limit on the number of members” (Schwidetzky, 2018, p.7). As a
result, the most ideal option for Shania would be to operate under an LLC to offer both personal
and financial protections with liabilities correlated to the organization.
Advise Shania on whether her company should become a franchise or should open as an
independent coffeehouse. Explain your recommendation.
In today’s business environment many organizations have opted to offer an easy, turnkey
option for potential business owners through an organization known as a franchise. Under a
franchise, you would receive a uniformed concept regarding training, marketing, layout of the
store, administrative assistance, and help from a corporate office. Of course, these options come
with typically, a hefty up-front royalty fee and moreover, a continued royalty and profit-sharing
contract over a specific maturity. In other words, the right franchise can pave the way to success
however, the level of profitability may be hampered due to royalty fees. In an article outlining
the benefits of a franchise, the author outlines that many potential business owners continue to
lean towards franchises due to established process and procedures along with managerial and
financial support however, success in a franchise is contingent on the ability to follow a proven
model (Schappacher, 2019). When starting a business from scratch; marketing, training, business
acumen, human resources, and many other considerations are left in the lap on the potential
business owner. Starting from scratch allows differentiation and the ability to adapt to changing
situations however, the challenges and liability endured in such a situation is what allocates the
opportunity to be successful very quickly. The case study omits key information that is key in
considering which direction Shania should move with her business. However, based on what we
do know, it appears that she does not hold the experience necessary in business and coffee
operations to be successful by herself or simply with partner. Based on the scenario, moving
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forward with a franchise would offer her the training and resources to be successful and only
hinder her the level of profitability in the short-term.
Perform a corporate name search at this website to determine if the name Shania is
considering is available for use in the State of Colorado. Also assess whether the name is
available as a trademark. Even if the name is available, advise Shania on whether it is a
good choice. Explain why or why not.
The Colorado Secretary of State website indicated that the name “The Gathering Place”
is already in use by a non-profit organization located in Woody Creek, CO. While the business
name is not available, it appears reregistering for a trademark under that name is a possibility.
Regardless of the options and availability of Shania’s ideal business name, the search results in
Colorado provided 20 different organizations with a name that is similar or includes “The
Gathering Place”. These results raise pertinent information regarding the name choice of the
organization; first, it doe not provide a clear indication of what her business does in terms of
products or services, secondly, its overused, and does not offer a unique perspective that will
allow potential consumers to remember the name. Lastly, potential consumers may eventually
confuse your product or store with a location or another organization that holds a similar name.
These ideas are further built upon from an article outlined by Forbes;
“Picking the right name is crucial: It creates an image of the brand in the mind of potential
customers, it shares the idea of what the company or service is about, and it's the most
important keyword for internet searches. Selecting the wrong name for a company or product
can set a product back by months, if not destroy it all together. Using a name that's already
trademarked means extra expenses for rebranding, ranging from development and research
costs to expenses for new websites and business cards. And using a name that's overly
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descriptive, or contains too many common words, makes it difficult to remember or to search
for.” (Council, 2017, para. 5)
Advise Shania on which of the interested persons she should include in her business, why,
and in what role(s). If she chooses not to take in a particular party, what reasoning should
she give each person, if any? Your analysis must include biblical perspectives, such as
biblical considerations of marriage and of business relationships with non-believers.
In the provided case study, Shania has three people that are interested in working or
providing capital for her business venture. Specifically, Shania’s husband has communicated the
desire to help out financially, however, has no desire to participate in the operation or
management of the business. This is a common practice in the business environment; there are
managing and non-managing partners. As a result, the level of ownership is allocated
accordingly based on managerial and financial contribution to the overall equity of the
organization. Shania should include her husband into the organizations. The Bible tells us
according to Mark 10:9, “and they twain shall be one flesh: so then they are no more twain, but
one flesh. What therefore God hath joined together, let not man put asunder” (English Standard
Version). The scripture outlined under this verse speaks to why Shania should include her
husband into the business but also, why she should not include her sister, Kelsey. The Bible verse
tells is that a man and women, when married as of one flesh and no person or thing should
attempt to get between or separate a man and wife. In the case study, it is apparent Kelsey’s
husband is not onboard with her involvement in the potential business, and encouraging the
opportunity would take her away from her husband and her children. In consideration of Shania’s
neighbor, Carlos, he would be a good option for the business as he looks for growth and niche
opportunities in their potential market. While he may not be Christian, the Bible tells us
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according to Matthew 5:16, “let your light so shine before men, that they may see your good
works and glorify your Father in heaven” (English Standard Version). This scripture points to the
notion that we may introduce non-believers to the Lord through our living with a Christian
purpose and treating others like we would want to be treated.
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Reference
Council, F. A. (2017, May 23). Nine Factors For Finding The Right Name For Your Business.
Retrieved from https://www.forbes.com/sites/forbesagencycouncil/2017/05/19/nine-
factors-for-finding-the-right-name-for-your-business/#14c6ba9e56ca.
SCHAPPACHER, E. (2019). Fit for a franchise: Franchising can have benefits over starting from
the ground up, but there are several factors to consider before deciding whether to join a
franchise. Landscape Management, 58(5), 28. Retrieved from https://search-ebscohost-
com.ezproxy.liberty.edu/login.aspx?direct=true&db=bth&AN=136489699&site=ehost-
live&scope=site
Schwidetzky, W. D. (2018). The pros and cons of LLCs. Journal of Accountancy, 226(6), 1–7.
Retrieved from https://search-ebscohost-com.ezproxy.liberty.edu/login.aspx?
direct=true&db=bth&AN=133395542&site=ehost-live&scope=site
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