Creating, Financing, and Marketing a Business

Creating, Financing, and Marketing a Business

Pros and cons of the partnership as a form of ownership

One of the major advantages of partnership as a form of business is that it is very easy to set up. The legal requirements are much less than those in the corporations which are based on the concept of Limited Liability Company. Another advantage is that partnerships offer flexibility of agreement terms and conditions. This means that each of the partners can share the responsibilities of the business as per their own potential and level of interest in the business. The distribution of profit takes place as per the pre-decided terms of the partnership. The partner that takes the most risk is legible for highest return on his investment. The ownership in a partnership is not always transferable unlike sole proprietorships (All Business, 2010).

One of the major risks of the partnership is that a wrong decision on the part of a single partner can be detrimental for the business and hence, can affect the overall return of all the partners. Another risk is unlimited liability.

Funding options for small businesses

There are three major types of funding options available to small businesses. These are debt financing, equity financing and grants.

The debt financing refers to the availability of credit or loans to the small businesses. A business that has a good credit reputation in the market will not find it hard to get the required amount of credit. However, this cost of borrowing money has to be compared with the cost of equity financing for cost benefit analysis. Equity financing for a small businesses may mean as one coming from friends and family and those that can be attained through angel investors. This also includes the venture capitalists. Grants refer ...