Business Environment

Business Environment

1 ) Partnerships

Pros

Partnerships benefit from the ease with which they can be established with the consent of two or more individuals to start a new business venture. Partnerships, unlike corporations or limited liability companies (LLC) do not need any state or industry registration by paying fees.

Yet another benefit of starting a partnership is the fact that the partners can decide their respective roles, profit share and responsibilities in the partnership at the time of the agreement.. Typically, a corporation pays out dididends based on the number of shares that are held by the stockholder (Kotler, 1971).

Partnerships allow individuals who have the financial capacity and a business idea but lack the skill to lead an entrepreneurial venture, can enter into partnership who has those complementary skills. Together, such indiduals can achieve a lot more than they were ever to achieve on their own.

Cons

There are two sides of a coin and similarly partnerships have their pitfalls and weaknesses. Since partnerships allow more than one person to lead a business, it can has negative effects on the performance of the company long term success. If the partners come to a disagreement, it can become disastrous for the company.

The owners of a partnership are legally responsible for the actions of the company and in the case of bankruptch, the personal assets of the owners can be confiscated. This makes entering into partnership a risky decision.

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2) Funding Options for Small Business

Self-financing

When an entrepreneur invest his own life saving into the business. They can take help from their friends and close relatives.

Bank lending

Selling the idea to a local bank and convincing the lending officer to approve the loan.

Venture Capitalist & Angel Investors

Investors who provide seed financing to new ventures that have potential for making big success for both the entrepreneur and investor himself.

Government Bodies

Government organizations that provide micrfinancing loans for small businesses and guide them to grow.

3) Managerial Accounting

Managerial accouting is used for the internal purposes of an organization to help to make timely decisions regarding the controlling and management of the business entitiy.

Product Costing

Managerial accounting enables the managers to calculate the various cost drivers in the business environment including product, inventory, fixed, variable and period costs etc. These costs make it possible for managers to reduce the cost of the manufacturing process and calculate the most suitable selling cost.

Incremental Analysis

For effective management, the development of alternative is an essential skill. ...