Write a report to Mustafa advising him on a possible solution to the problem of the best form of a business organisation if he were to expand his businessYou’ve asked me to report on the forms of business organisation most suitable for the needs of your business expansion. You’ve been a Sole Trader for 10 years, manufacturing a washing liquid for sell it to wholesalers. You have got 12 people working to you although you started on your own with very little money and now you get $30000 of profits per year.
If you want to expand your business you’ve to get $500000 + $50000. The only way of doing that is to ask for the money from the bank because you only have half of it. Being a Sole Trader and asking such a big amount of money is a waste of time because they won’t give it to the business. I think you should make your business a Private Limited Company because then, you’d have limited liability and the bank would lend you more money than if you stay as a Sole Trader or you become a Partnership.
Your futures partners would be able to buy shares and to contribute with the expansion, inverting their own money. The cost of being a Ltd. Company isn’t too much, only $500. You will have most of the control of the business but you’d have to consult your partners making before any change. I recommend that you should patent the formula of your new product because if you don’t, another firm might copy it, patent it themselves and they’ll make a new product with it.
This would put your investment at risk because then, you’d be obligated to remove that new product and all the money you have spent on it to it would be would be in vain, useless. The expand of the business as well and then, the business would have to close. I recommend that you should make your company a Public Limited Company if this product sells well because then, you’d have the advantage that everyone would be able to buy you shares so it’s very difficult to the business to fall if the following product doesn’t sell well.