Question

Which form of business is suitable for following types of business and why?
1. Beauty parlour 2. Small retail outlet 3. Hotels , 4. Shopping malls 5. Medium size trading concern.

Answer 1

1. Sole proprietorship as it requires personal touch- Since the scale of operations is small and the employees would work under the direct supervision of the owner, there is scope for the personal relationship with the customers.

2. Sole proprietorship as less capital is involved.- The capital required by a sole proprietorship is totally arranged by the sole proprietor. He raises the capital either from his personal resources or by borrowing from friends, relatives, banks or financial institutions. Since there is only one person raising capital, very low capital can be raised.

3. A private company as it requires more capital and managerial skill- The managing body should possess certain skills which would make them stand apart from the others. The managerial skills list should be such which help the company achieve its goals and reach newer heights while also keeping in mind the expectations of various organizations and audience to which the company serves. There are various managerial skills list including Technical, Human and Conceptual skills. One must master all these skills in order to attain the status of having great managerial skills.

4. A public company as huge capital outlay is needed.- are major purchases, such as facilities and equipment, that companies make to maintain or expand their operations. Because such purchases involve acquiring assets that provide value and usefulness for a period of several years, companies recover the cost of these acquisitions gradually by depreciating the assets over time. Ordinarily, businesses are not allowed to deduct the full costs of capital expenditures in the year the costs are incurred. Therefore, the substantial outlays of capital required for such purchases must be carefully planned out, usually years in advance, so companies can avoid overextending themselves financially and creating cash flow problems.

5. Partnership as it requires the involvement of more persons.-

A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations. Organizations may partner to increase the likelihood of each achieving their mission and to amplify their reach.