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

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


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

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