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Creating, Financing, and Marketing a Business, Research Paper Example

Pages: 3

Words: 908

Research Paper

Introduction

The below assignment would create an overview of the different business structures and models learned during the Business course. The parts will answer some of the research questions, and also provide an overview of the relevant recent literature regarding the topic, to reveal the most important mechanisms behind managing a business and maintaining cash flow.

Partnership as a business model

A partnership is formed when two or more people go into business together, provide the necessary knowledge, experience and capital for setting up the venture, and share the profit, as well as the responsibilities. At the beginning of the partnership, a detailed agreement needs to be drawn up to define the level of investment, responsibility, influence and share of profits, to avoid disagreements later on. The document describing the above is called a partnership deed. There are different advantages and disadvantages of partnerships, and in the below part some of the most important ones will be detailed.

Advantages:

Business partnerships are easy to form, and there are no registration requirements. The availability of larger resources is also a determining factor, and partners can make better decisions using multiple sources of experience and sharing responsibility.

Limitations:

Within partnerships, all of the partners have a joint unlimited liability. The vulnerability of this form of organization comes from the fact that any of the partners can leave the firm, and the company needs to deal with the challenges, nevertheless. As the total number of partners cannot be larger than 20, the capital is limited, and the shares cannot be transferred outside the members of the partnership.

Funding options for small businesses

Starting up a new business venture involves taking personal risks, according to Kelly and McGowen (2010.  pp. 92.) There are four different sources of funding most authors mention; namely: personal resources, loans, angel investors and venture capital. Using personal resources to fund a business is risky, and it might create tension in personal relationships, however, for small startup costs, many entrepreneurs choose to use their credit cards or savings. Startup loans can also be used to fund a new business, however, they are hard to obtain, there are some government funded schemes to support new ventures, entrepreneurs can take advantage of. Angel investors might be private persons with large tangible resources, and they would offer an investment for a return. As such, these angel investors are not really angels, as they look at their own interest. The more viable the business idea is, the more likely it is that a business will find individuals to help with initial funding. Most of the angel investors would expect 30-40 percent yearly growth as a minimum, according to Kelly and McGowen (2010. pp. 93.)  Venture capital investor companies look for a share in the future company in exchange for initial funding. The share they expect to get can depend on the level of investment they make, and sometimes it can be as high as 60 percent, which is not a good solution for an entrepreneur looking for independence.

Managerial accounting and financial control

Managerial accounting – unlike financial accounting – deals with business activities within the organization. The regular evaluation of budget, operation costs and cash flow, as well as creation of business plans and predictions make the approach supports multiple managerial cost benefit tests, helps making informed decisions and this is why many organizations develop their systems independent of financial accounting. Managerial accounting uses cost assessment, opportunity evaluation, expenses overview and internal audit methods to develop and improve strategies within the organization, according to Maher et al. (2007.  pp. 34.) The managerial accounting approach analyzes cost-benefit ratios and makes a decision, prediction and business plan based on the evaluation results. In many cases, internal audit involves productivity, supply chain and external factor analysis as well. Instead of creating a financial record of the complete operations system of the company, the model works with product costs and process costing. In manufacturing, the Just In Time method is often used within managerial accounting.

Basic components of marketing processes

Before creating a marketing strategy or plan, a firm needs to carry out different analyses, namely: external analysis to evaluate marketing positions, customer analysis, to evaluate potential and current base of clients, a SWOT analysis, (strengths, weaknesses, opportunities and threats) and setting the marketing goals and objectives. The basic 4p model is then used (product, price, place, promotion) to create an implementation plan, which would be carried out and evaluated, controlled and monitored during the marketing process. (Ferrell et al. 2002.)

The roles of social responsibility and technology

A business today needs to take social responsibility and innovation seriously, to create a positive image about the organization in the public. The role of these two factors have increased in recent years, and social responsibility, as well as innovation and technology have been a part of brand management and marketing structures for decades, according to Mark-Herbert and von Shantz. (2007)  As the importance of stakeholder relationships have increased, so did the role of communicating missions, business ethics, innovation in marketing messages, to differentiate the organization on the market and create a competitive advantage.

References

Kelly, M., McGowen, J. (2010) BUSN Cengage Learning. Business and Economics.

Maher, M., Stickney, C., Weil, R. (2007) Managerial Accounting: an introduction to concepts, methods, and uses. Cengage Learning.

Ferrell, O.C., Michael D. Hartline and George H. Lucas.  Marketing Strategy. Orlando: Harcourt, Inc., 2002

Mark-Herbert, C., von Shantz, C. (2007) Communicating Corporate Social Responsibility –Brand management. EJBO Electronic Journal of Business Ethics and Organization Studies Vol. 12, No. 2 (2007) Online http://ejbo.jyu.fi/pdf/ejbo_vol12_no2_pages_4-11.pdf

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