Procedures for General Partnership Establishment - Coursework Example

?Business Report College Table of Contents Summary 3 2. Introduction 3 3. Main body 4 3 Procedures for General Partnership establishment 4 3.2 Financial risks 5 3.3 Target customers 5 4. Conclusion 7 5. Recommendations 7 6. Bibliography 8 1. Summary There is high demand of electronic toys in Witney, Oxfordshire. We decided to open an independent shop in this area. The business entity we will apply is the general partnership. There are laws that must be obeyed when conducting this business. Our goal is to ensure that customers get the best products. We will also ensure that we maximise our profit. There are financial risks that occur in this type of business. Furthermore, some problems with the customers may occur. All these problems should be solved in order to achieve our goals. 2. Introduction Through our research, we found out that Witney; in Oxfordshire do not have an independent shop that sells toys. Our main targets are the kids. We realised that the demand of electronic and traditional toys at this town is very high. Jay and I have decided to run this new business venture. We agreed to start a partnered business. This business will have two stakeholders i.e. Jay and me. Our vision in this business venture is to ensure that our customers are served with the best products in the market as well as ensuring that we achieve our business goals which maximising profit with minimal costs. It is our responsibility to ensure that this vision is achieved without incurring unnecessary costs. We will also ensure that risks are reduced to the best of our ability. Our starting cost will include ?25,000 that we borrowed from the bank and ?25, 000 from my savings account. Jay will not contribute anything from his account. This report will deal with the type of business we chose and the research we have done on this business. It discusses the reasons why we chose this business. It will also touch on our target customers and the possible problems that we will face in this business. 3. Main body The type of business we decided to operate in is the general partnership business. This is a business entity that involves two or more partners who agreed to do a business. We chose this business entity because it is easy for two of us to run. We will be sharing profit and losses equally. In addition, both of us are liable to any debts that may occur. This business entity was also the best for us because it does not require a notarial deed. We will make our agreement private i.e. the agreement will only be between me and Jay. 3.1 Procedures for General Partnership establishment Weiss et al. says there is no formality in forming our general partnership. This is because our agreement is private. We decided to write an agreement in order to avoid future misunderstandings. However, there are rules that govern the business partnership. For our partnership to exist, we must first register it by following the rules from Company Act 2006 (Van, 2007:21). For us to form this company, we must first give our names to the memorandum of association and ensure that we comply with the requirements that are needed for one to register our company. The registrar must receive the memorandum of association form our company. For us to be registered, we must submit our company name, postal address location and business entity of the company. We should also state that our company is a private one. After all these, the application will to be delivering to the England’s registrar of companies (Degenhardt, 2010:54). After our company has been approved, Partnership act 1890 should also be adhered to. For our partnership to exist, there rules that must be followed. The partnership should ensure that we share profits equally as stated by our agreement. Both of us will be liable to all company’s debt. Our partnership will now have a firm name. We will manage our business fairly. Profits and control of assets will be done equally (Degenhardt, 2010:59). 3.2 Financial risks There are possible financial risks that are likely going to occur in this business. One of the risks that we might experience is in case our business fails to pick at the required rate; we are going to incur a lot of losses. I will be the disadvantaged one because I invested more than what Jay did. In case the company fails, I will lose all my savings that I invested in the company. Another risk is that, we are both liable for the loan we borrowed from the bank despite the differences in our contributions. This means that we must pay equal amounts in order to complete the bank’s debt. If any disagreement occurs between us, the business may collapse and I will lose all my savings that I had invested. Jay will have nothing to lose (Fassin, 1993:125). We will liable for all the goods we get from any supplier. We will not be able to pay cash on all goods that are supplied to us. Therefore, this means that we will be responsible for the debt that the supplier owe us. If the business fails, we will both be liable for this debt. 3.3 Target customers The target customers of this business are the kids. From our research, we realised that the toy markets in England is on the rise. This is because of the large population of the children below 14 years in UK. This is going to be our major target. Our research shows that there are a few shops that sell toys only, especially in Witney. This means that we are not going to have stiff competition in this area. These customers are all aware of the market laws. There are many problems that may come up when dealing with these customers. One of the common problems in this toy business is when customers demanding for refund for delivery of toys that they do not like (Smith, 1951:178). Through our research, we noticed that some children in this town have discriminatory attitude towards the toys that they buy. Sometime, they return the goods that they had purchased. There are conditions that must be followed for this to take place. It is the duty of us to ensure that the buyer receives the toys he or she had ordered. When the buyer receives the toys, he or she should pay us. There are situations that occur when the buyer has a legal right to return goods to the seller. This is caused my many things. For example, the seller may deliver wrong quantity goods to the buyer. In this situation, the buyer has a legal right to return the goods to the seller. In order to avoid this circumstance, the seller should counter-check the quantity of goods that the buyer had ordered (Thomas, 2000:31). There are other situations when the seller may deliver larger number of toys than what the buyer had ordered. Therefore, the buyer can reject all and demand for a refund or, the buyer can return the extra number of the toys and pay for the number he ordered. This can be solved by ensuring that, the correct number of toys ordered by the customer is delivered. If the customer accepts all the toys, despite being larger that the requested amount, then the customer must pay for all toys. At times, the seller may deliver toys which are mixed with what the customer had contracted. In this situation, two things might happen. First, the customer may take what he or she had contracted and pay for them. Secondly, the customer may reject all the toys and demand a refund if he or she had paid for the toys. This problem can be solved by ensuring that toys that have been contracted by the customer are not mixed with others (Smith, 1951:179). Buyer has the right of examining toys. If the buyer is receives toys which he or she had not examined and the toys appear to be the wrong ones, then the customer has the right to demand for a refund if payment had been made. This problem can be solved by ensuring that, the customers examine the toys before paying them in order to avoid delivering toys that had will not be accepted by the customer. If the customer examines the toys online, he or she must know that the toys must be accepted after delivery and no refund will be made (Thomas, 2000:34). 4. Conclusion This toy business is the best in this town. The number of customers is high but there are also problems that must be solved. Business laws must be adhered to in order to ensure that our relationship with the customers is healthy. We should also ensure that our partnership progresses when in order to achieve our business goals. 5. Recommendations To avoid problems within the partnership, a written agreement between the two parties should exist. This will also help in reducing the financial risks that may affect the business. To avoid problems with the customers, all the business laws must be obeyed by both the customers and the sellers. This will create a friendly environment to do business. 6. Bibliography DEGENHARDT, K. (2010). Companies Act 2006. Bremen, Europ. Hochsch.-Verl. EMERY, H. C. (1914). Partnership, a concise treatise on the law and practice relating to partnerships under the Partnership act, 1890, and the Limited partnership act, 1907; with model forms and precedents under both acts, references to leading cases, text of the acts. London, E. Wilson. FASSIN, Y. (1993). FOCUS: Risks in Business Ethics and Venture Capital. Business Ethics: A European Review. 2, 124-131. GREAT BRITAIN, & NEWBOLT, F. (1894). The Sale of Goods Act, 1893 with notes. London, Sweet & Maxwell. http://www.gale.com/ModernLaw/. GREAT BRITAIN. (1890). Partnership Act, 1890: 53 and 54 Victoria, Ch.39. H.M.S.O. MILLER, SANDRA, GREENBERG, PENELOPE, & GREENBERG, RALPH. (2006). An empirical glimpse into limited liability companies : assessing the need to protect minority investors. Blackwell Publishing Inc. Blackwell Publishing Inc. NEWBOLT, F. G. (1894). The Sale of Goods Act, 1893, with notes. SMITH, J. C. (1951). The Right To Rescind For Breach Of Condition In A Sale Of Specific Goods Under The Sale Of Goods Act, 1893. The Modern Law Review. 14, 178-181. THOMAS, B. (2000). The Sale of Goods Act explained. Norwich, Stationary Office. VAN DUZER, P. G. (2007). Companies Act 2006: a guide for private companies. Bristol, [England], Jordans. WEISS, L., SERLIS-MCPHILLIPS, S., & MALAFI, E. (2011). Small business and the public library strategies for a successful partnership. Chicago, American Library Association. Read More