These are the questions I asked him and the answers he gave to me: What made you want to set up your own business? I wanted to feel more control in what I was doing. I was sick of taking orders from other people. What is your main line of income? Most of our income comes from upgrades of repairs. We don’t actually sell brand new computers. It’s as often as 2-3 a month.
How did you get the capital to set up your business? We were actually quite lucky as the Natwest bank offered us a contract to repair all of their machines countrywide; in return they gave us an excellent deal on a loan, and a premises in which to situate our business. The downside is that we have to be available to go out and fix their computers 24 hours a day. This sometimes means that we have to close the shop and lose a day of business.
What are your main costs, if you don’t have to pay rent? Our main cost, which surprised me a little, was the insurance, because we do on site repairs, we have to pay some ridiculous rate of insurance. Finally what advice would you give someone who was setting up their own business? I would say don’t buy cheap parts, because you have to give at least a 12 month guarantee, when you sell a computer, and cheap parts often go wrong and you end up spending more time and money fixing them than what you saved in the first place.
Different types of ownership There are many different types of ownership that I could use for my business they are: sole trader, partnership, franchise and limited companies.The owners of a limited company have limited liability, this is important because if the company goes bust, they will only lose the money they put into the business, they will not be forced to sell their personal possessions. The registrar general keeps records on all U.K. limited companies. Two documents have to be sent to the registrar of companies to set up a limited company.
They are the memorandum of association gives the details about the name of the company, the address of its registered office, a statement that the shareholder will have limited liability, the type and amount of share capital and a description of the business activities of the company. The articles of association gives details about the voting rights of the share holders, how the profits will be shared and what duties of the directors of the company are.
The registrar of companies has to issue a certificate of incorporation before a company can begin to trade. At the end of each year, a limited company has to send audited accounts and various other documents to the registrar of companies house. These can be seen by anyone who asks to see them. Here are some advantages and some disadvantages of setting up a limited company. Advantages The biggest advantage of setting up a limited company is that is a lot easier to attract shareholders to invest in the company because of limited liability. This helps the business to grow.
Disadvantages One disadvantage of setting up a limited company is information about the business can be shown to anyone who requests to see them for example your competitors. I have chosen a partnership. This is because I think that my biggest problem will be to raise the capital to start up my business. Being in a partnership means that I will be able to get the capital. I think that the best way is to have one partner who would run the business with me, and a number of sleeping partners who would supply me with the initial capital which I would need to begin setting up the business. I think it would be better than a sole proprietor because there will be more opportunities for expansion which means I will have better economies of scale. I don’t think that my business is big enough to form a limited company. This is because it cost a lot of money to submit annual reports ETC.