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?