Introduction Betty Wilson is contemplating opening a Christian coffeehouse in North Carolina and as part of this process, she must make several important decisions before starting and naming her business. This paper will address the options confronting Betty by analyzing the various business forms available, selecting partners and assigning roles, determining whether or not to open a franchise, and naming her business. The paper will conclude with applying a Christian worldview to Betty’s situation.
Business Forms Choosing the correct business form is one of the most important decisions a business owner will ever have to make (Fleischman & Bryant, 2000). Betty must select which form of business she would like to operate and should consider some significant factors such as tax responsibility, liability, control, formation, and operation when deciding the appropriate business form to pursue. The following will identify the three major forms of business organizations and include advantages and disadvantages of each. Sole Proprietorship The sole proprietorship is, “a business owned by one person, who has sole control over management and profits” (Kubasek, Brennan, Browne, 2015, p. 422).
It is the most common form of business in the United States (66%) with only 1% of sole proprietorships reporting revenue exceeding $1,000,000 per year (Starting and Naming a Business, n. d. , Slide 3). Some of the advantages of this form of business include ease of formation/operation, pride of ownership, no special taxes, and less government regulation at all levels (Kubasek et al. , 2015; Starting and Naming a Business, n. d. ). Although there are many advantages to a sole proprietorship, there are also disadvantages.
The most significant drawbacks are personal liability for almost all assets, limited financial resources, limited benefits, and the amount of time required for the business to grow (Kubasek et al. , 2015; Starting and Naming a Business, n. d). Partnership The Uniform Partnership Act (1997) defined partnership as, “an association of two or more persons to carry on as co-owners of a business for profit. ” Advantages of a partnership include the ease of starting, relatively small initial investment, and the profits of the partnership are taxed only as income to the partners—the partnership itself does not pay taxes (Kubasek et al. , 2015).
Some of the disadvantages of a partnership include additional liability exposure, sharing profits, disagreements among partners, and terminating the partnership (Starting and Naming a business, n. d. , Slide 4). The U. S. Small Business Administration (SBA) identifies the two most common forms of partnerships as general partnerships and limited partnerships. General partnership In general partnerships, it is assumed that profits, liability, and management duties are divided equally among partners (SBA, 2014). Any unequal distribution must be documented by the partners in the partner agreement. Limited partnership.
The SBA (2014) defined limited partnerships as partnerships that “allow partners to have limited liability as well as limited input with management decisions. ” These limits are dependent on the percentage of investment the partners contribute. Corporation A corporation is, “an entity formed and authorized by state law to act as a single legal person and to raise capital by issuing stock to investors who are the owners of the corporation” (Kubasek, et al. , 2015, p. 438). All corporations are either private (stock is not traded on national exchanges) or public (stock is traded on national exchanges).
The advantages of forming a corporation are, “having more money for investment, limited liability, separation of ownership and management, ease of ownership change, a(nd) perpetual life” (Starting and Naming a Business, n. d. ). The disadvantages are expensive initiation costs, double taxation, and difficult to terminate (Starting and Naming a Business, n. d. ). Based on the above information, I would recommend to Betty to establish her coffeehouse as a sole proprietorship based on its simplicity. I would also recommend to continually reassess this decision since the business will inevitably shift and another business form may better serve Betty’s needs (Fleischman & Bryant, 2000).
Selecting Partners and Assigning Roles Betty’s husband, sister, and neighbor expressed an interest in participating in Betty’s new venture. When selecting personnel and determining their roles, Betty should evaluate these people carefully along with their work histories and motivations to participate in the business. John John is Betty’s husband and he is “open to making a contribution of capital to the business, but he has no interest in participating in its operation or management. ” John is the best candidate to partner with Betty.
This partnership will allow Betty to have total control of her business while accepting an investment from a trusted source. Alice Alice is Betty’s sister and is also a Christian, an important factor to consider when opening a “Christian coffeehouse. ” Alice’s husband opposes her involvement with the business because he would like Alice to remain at home for their two daughters, ages 13 and 15. I would recommend having Betty speak to Alice about working in the coffeehouse part time.
This way, Betty has a trusted, Christian family member working in her establishment and the hours should not interfere with Alice’s time for her teenager daughters. Since Alice is “looking for an excuse to get out of the house” and does have concerns about her husband, I would not recommend entering into a business form with Alice; I would only consider her as a potential part-time employee. Erma Erma is not a Christian; however, she expressed an interest in Betty’s Christian coffeehouse to earn additional income. Erma made a condescending remark regarding the “Christian thing having potential,” which should raise a red flag for Betty.
Furthermore, Erma indicated the new business should market Mormons and Jehovah Witnesses as future clients, which should also alarm Betty. It is evident that Erma does not understand her potential clients. For example, Mormons do not drink coffee (Welling, 2011) and some scholars do not consider Mormons and Jehovah’s Witnesses as Christians (Jackson, 2000; Slick, n. d. ). The question of these religions being Christian is worthy of further discussion; however, for the limited scope of this paper, the discussion will not be expanded here. However, it should be noted that both religions proclaim to be Christians (The Church of Jesus Christ of Latter Day Saints, 2014; Jehovah’s Witnesses, 2014).
My advice to Betty would be to exclude Erma from the business since (1) she expressed her only interest in the business as, “a way to earn some extra income”; (2) she would be a non- Christian working in a Christian coffeehouse; (3) her “Christian thing” remark was condescending; and (4) her ignorance of marketing. I would also advise Betty to become familiar with The Civil Rights Act of 1964, as Amended (Title VII), and the Civil Rights Act of 1991, which protect people from discrimination for various reasons, including religion.
If Betty chooses not to employ Emra because she is not a Christian, she must be prepared to defend her position based on a Bona Fide Occupational Qualification (BFOQ). This defense allows an employer to discriminate in hiring on the basis of religion when such a characteristic is necessary to performance of a job (Kubasek, et al. , 2015, p. 562). Hiring only Christians for a Christian coffeehouse would allow Betty to discriminate on the basis of religion; however, she must be consistent in her hiring practices if using this qualification. To Franchise or Not To Franchise During her research, Betty “came across a few franchise opportunities” and is considering this option.
A franchise is, “a business model that involves one business owner licensing trademarks and methods to an independent entrepreneur” (SBA, 2014). There are many additional federal and state laws, Uniformed Commercial Code (U. C. C) rules, and other regulations Betty must learn before making her decision; although franchising may be a better financial choice for her. For instance, “franchising firms create more market and economic value than do non-franchising firms in the U. S. public restaurant sector” (Aliouche and Schlentrich, 2009, p. 93).
Selecting a Name Numerous marketers contend the name of a business is the most important brand element of a business and recommend names be “memorable, meaningful, and emotionally support the desired brand image” (Petty, 2008, p. 190). Betty’s selection of “The Gathering Place” initially appears to meet these criteria; however, a search of the North Carolina Secretary of State’s Office (2014) revealed “The Gathering Place” name was utilized in 2012 for a non-profit organization in Rocky Mount, NC. Furthermore, there are 16 additional variations of “The Gathering Place” (i. e. , “The Gathering Place, Inc. ; “The Gathering Place of the Blue Ridge, LLC; etc. ).
As a result, I would advise Betty to select another name that is unforgettable and significant to her. Christian Worldview and Conclusion Betty has some very important decisions to make regarding adopting a business form, selecting partners and assigning roles, franchising, and naming her business. She is doing her due diligence by thoroughly researching her options and is also acting in accord with her Christian worldview. For example, Luke 14:28 (ESV) relates, “For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it? ”
Betty should be comforted with this scripture knowing that she is preparing to open her business as one prepares to accept Christ. Betty should also be encouraged to know that Christian companies tend to do better than secular companies for a number of reasons including, abiding by the “golden rule”; expression of their values (to customers/vendors); loyalty to suppliers, and recognizing the importance of fair and honest negotiations (Ibrahim & Angelidis, 2005). References Aliouche, E. H. , & Schlentrich, U. (2009). Does franchising create value?
An analysis of the financial performance of U.S. public restaurant firms. International Journal of Hospitality & Tourism Administration, 10(1), 93-108. Retrieved fromhttp://web. a. ebscohost. com. ezproxy. liberty. edu:2048/ehost/pdfviewer/pdfviewer? sid=536f7b8f-6ceb-4424-b4fe-fcc6fccfaf52%40sessionmgr4001&vid=9&hid=4207 Fleischman, G. M. , & Bryant, J. J. (2000). C corporation, LLC, or sole proprietorship? Management Accounting Quarterly, 1(3), 1-8. Retrieved from http://search. ebscohost. com. ezproxy. liberty. edu:2048/login. aspx? direct=true&db=bth&AN=12102458&site=ehost-live&scope=site Ibrahim, N. A. , & Angelidis, J. P. (2005).
The long-term performance of small businesses: Are there differences between “Christian-based” companies and their secular counterparts? Journal of Business Ethics, 58(1-3), 187-193. Retrieved from http://search. ebscohost. com. ezproxy. liberty. edu:2048/login. aspx? direct=true&db=bth&AN=17648401&site=ehost-live&scope=site Jackson, K. P. (2000). Are Mormons Christians? Presbyterians, Mormons, and the question of religious definitions. Nova Religio: The Journal of Alternative and Emergent Religions, 4(1), 52-65. Retrieved from http://www. jstor. org. ezproxy. liberty. edu:2048/stable/pdfplus/10. 1525/nr.
2000. 4. 1. 52. pdf? acceptTC=true&jpdConfirm=true Jehovah’s Witnesses. (2014). Retrieved from http://www. jw. org/en/ Kubasek, N. K. , Brennan, B. A. , & Browne, M. N. (2015). The legal environment of business (7th edition). Upper Saddle River, NJ: Pearson. North Carolina Secretary of State. (2014). Retrieved from http://www. secretary. state. nc. us/corporations/searchresults. aspx? onlyactive=OFF&Words=STARTING&searchstr=The%20Gathering%20Place Petty, R. D. (2008). Naming names: Trademark strategy and beyond: Part one–selecting a brand name. Journal of Brand Management, 15(3), 190-198. Retrieved from.
http://search. proquest. com. ezproxy. liberty. edu:2048/docview/232484499/fulltext? accountid=12085 Small Business Administration. (2014). Retrieved from http://www. sba. gov/writing-business- plan Slick, M. (n. d. ). Is the Jehovah’s Witness religion Christian? Christian Apologetics and Research Ministry. Retrieved from http://carm. org/is-the-jehovahs-witness-religion-christian Starting and Naming a Business. (n. d. ). BUSI 561 Legal Issues in Business, Module 7. Retrieved from http://search. ebscohost. com. ezproxy. liberty. edu:2048/login. aspx? direct=true&db=bth&AN=17648401&site=ehost-live&scope=site.
The Church of Jesus Christ of Latter Days Saints. (2014). Retrieved from http://www. mormon. org/ The Uniform Partnership Act. (1997). Drafted by the National Conference of Commissioners on Uniform State Laws. Retrieved from http://www. uniformlaws. org/shared/docs/partnership/upa_final_97. pdf Welling, B. H. (2011). The blood of every beast: Mormonism and the question of the animal. Dialogue: A Journal of Mormon Thought, 44(2), 87-117. Retrieved from http://search. ebscohost. com. ezproxy. liberty. edu:2048/login. aspx? direct=true&db=a9h&AN=60850776&site=ehost-live&scope=site.