Bearing in mind what you have learnt in this learning pathway, consider the following scenarios for a spa and salon called ‘Beautiful Dreamer’, and answer the questions below. (Use the rules that apply in your own country when you do this challenge.)

Scenario 1 – Image: You want to start a pet spa so that pet owners can bring their pets to the spa, but nobody else in the business thinks it will work.

  • Would investors be more inclined to invest in this type of expansion of the business if your were a sole proprietor, a partnership, or a corporation? Give your rationale.

Scenario 2 – Risk: Someone sues you for $1 million because your product turned their skin green. The business is worth $500,000.

  • What will the financial impact be on you personally as (1) a sole proprietor, (2) a partner in a two-person partnership, or (3) managing director of a corporation in which you are a shareholder?

Scenario 3 – Need for equity financing: You want to expand your business by acquiring another spa. The other spa will cost $2 million.

  • Which type of business is most likely to be able to raise the necessary funds? Why?

Scenario 4 – Control: A large corporate entity is looking for an innovative spa concept.

  • For each business type – What happens if you want to be taken over? What happens if you don’t want to be taken over?

Scenario 5 – Transferability and marketability: You want to retire.

  • How is transferability and marketability affected for the three different business types?