Review the Case Study Then, review "Reply." Based on what was written in the reply attachment, would you agree or disagree with what was stated? From an ethical and spiritual standpoint, provide a response.
Topic: Business Organization
Betty Wilson, a mature Christian, is thinking of opening a Christian coffeehouse in Belmont, NC. Her husband John is open to making a contribution of capital to the business, but he has no interest in participating in its operation or management.
Betty's sister, Alice, a new Christian, has told Betty that she's been looking for an excuse to get out of the house and that she would love to be a part of the business. Alice's husband, a non-Christian, opposes his wife's involvement and has told her that he expects her to remain a stay-at-home mom to their 2 daughters, Ally and Lisa, ages 13 and 15.
Betty's neighbor, Erma, a non-Christian, has also expressed an interest in participating in the business as a way to earn some extra income. Erma thinks the "Christian thing" has potential with all the big churches in the area, including a Mormon temple and a large Kingdom Hall of Jehovah's Witnesses.
In researching the coffee business, Betty came across a few franchise opportunities, some of which would require her to adopt the franchise name and trade dress but others that would only require her to move into a turn-key facility and agree to purchase a certain volume of product every month for a period of no less than 10 years. Both types of franchises offered to provide training for her and any staff she might hire.
Betty has considered operating the business as a franchise, a sole proprietorship, a partnership of some sort, a corporation of some sort, as an LLC, or even as a joint venture. She is thinking of calling the business "The Gathering Place."
Betty Wilson is pondering a new challenge in her life; she is a mature Christian woman looking to open a coffeehouse in Belmont. Her husband has agreed to be her silent investor, provided that she takes care of the entire business and management operations. Betty is now one step closer to her dream; she just needs a team to help her move forward. As she spreads the word, she soon realizes that this may be more difficult than she initially thought.
Betty's sister, Alice, was very keen to get out of the house and rid herself of some of her stay at home duties, Alice's husband however did not agree with this and has voiced his opinion strongly. Betty's neighbor, Erma, has also voiced an interest in participating in the new Christian coffeehouse. As a non-Christian however, Erma has set her focus on the income that can come from this business venture based on the surrounding Christian population. Betty must now decide her next move that will ultimately benefit herself, her family and her dream the most. She must decide whether to franchise, incorporate, become a sole proprietor or develop some sort of partnership. All contemplations must be exasperated to the fullest in order to surface which one best suits Betty's situation and needs.
If Betty decides to pursue one of the franchises that have been presented to her, she would benefit from many positive aspects that come with this type of business venture. Firstly, franchises are created and successfully launched due to the strong brand awareness that they possess. This will in turn save Betty lots of money for recruiting employees, and creating customer awareness as they will be more apt to gravitate towards a brand name they are aware of. In addition, franchises have a unique network of like-minded entrepreneurs that share in the challenges faced with owning and operating a business. Betty would be able to reference this support system as she needs and be properly trained in order to successfully manage and operate her business (DeWees, 2005). Since this is Betty's first business venture, this type of "turn-key" operation may be the perfect opportunity for her as she has little knowledge on how to manage a business on her own.
On the negative side, franchises are the concept of someone else. Therefore, Betty would be running a business under the guidance of the initial creator, not herself (DeWees, 2005). This could conflict with Betty's initial plan to operate her own Christian coffeehouse, and restrict her to give up her freedom and creativity. In addition, although franchises benefit from economies of scale, as inventory costs are lower, she must still ensure that she has the initial start up costs for the business venture. Her husband has agreed to front part of it, but there is still a substantial amount of capital required. Betty must contemplate the royalty payments that will be consistent throughout the life of the business and the lack of confidentiality due to the required disclosure of business documentations (Kubasek, Brennan, & Browne, 2012).
Should Betty choose to pursue a sole proprietorship, she would be easily able to set up the business as "the state of North Carolina does not impose any paperwork requirements to set up a sole proprietorship "(Carter, 2012). Betty would also be fully in charge of her daily operations and would only have to answer to herself, this in turn would allow her to react promptly to her business needs and enhance her customer's satisfaction as she would always be aware of what is going on. She would control the profits, vision and mission of her business, she would be able to truly set the path that she wants her coffeehouse to go down and ensure that she is proud of her accomplishments. There are also less government taxes on sole proprietorships as there is no separate tax return required for the business (DeBaise, 2010).
On the other hand, Betty would be fully liable for the business should it fall through. This means Betty could lose her vehicle, her house or any other assets should the coffeehouse become bankrupt. This is a risky business and her husband should be concerned with what type of business venture Betty is choosing because this will ultimately affect him as well. This in-turn may make it difficult for Betty to raise that initial capital needed to start the business because it may be risky (Foster, 2004).
Partnership/ Joint Venture/ LLC:
If Betty decides to pursue a partnership, she would benefit by sharing the workload and stresses that come from running a business. In a partnership, the different networks and creativity that merges together fosters an environment that fuels new and innovative ideas can increase a business success due to the compatibility of owners (Kolk, VanTulder, & Kostwinder, 2008). She would also be able to generate the initial capital required to start up the business in addition to her husband's contributions.
On the other hand however, Betty should be wary of a partnership as she could get bonded into a business venture with someone who does not share the same views and morals as her. She also could be stuck with the blunt of the workload depending on the partner's work ethic. She will have to share her profits as well and mutually agree on what both partners feels is a fair wage. She will also still have liability for the business should it fault (Foster, 2004).
A joint venture is best for a single business project and will allow Betty to focus solely on her coffeehouse. There will be however an imbalance of assets and capital due to the fact that Betty may have to front more than her business partners to get the business started. This could create conflict again in deciding fair terms for wages etc. A LLC could also be a potential consideration for Betty as this would ensure that she is not liable for the café's debt should at fault. The company would dissolve upon her death or bankruptcy however and this would be difficult to restart from scratch and enable her from willing the business (Foster, 2004). These potential conflicts should be addressed and contemplated seriously by Betty should she choose to become partners with her sister, Alice or her neighbor, Erma.
Alice has voiced her interest in becoming partners with Betty; however Alice's husband has also voiced his objection to this. This should be an immediate red flag for Betty in terms of Alice's husbands influence over her sister and how that could potentially affect her as a business partner. This could foreshadow what type of affect he could play in business decisions and towards Alice's outlook. Perhaps Alice will miss being home with her children, and want to back out of the partnership? Although she is her sister, she should also be concerned with her business and ensure that she will be partnering with someone who is fully capable of making her own decisions. Erma has also shown interest and has demonstrated her business savvy skills by acknowledging the profit potential in opening a Christian coffeehouse in the area. As a non-Christian herself, Erma's intentions may be more on the profit side and construe with Betty's Christian motives to create a gathering place for people, Christian's alike, to enjoy.
Finally, Betty has considered making her coffeehouse a corporation. This will provide Betty with limited liability should the business fault and will allow her to protect her assets. A corporation will last forever, so long as it is profitable, and is able to be sold, willed etc. Although there are separate tax liabilities, there is much more paperwork and documentation that is required for corporations. This will increase Betty's costs and she will have to hire an accountant to maintain her records and budget the annual reporting fee. There is also a cost to incorporating a business that Betty will have to factor in on top of her initial start up costs.
Based off the information and the opportunities presented, I believe that it would be in Betty's best interest to pursue a franchising opportunity as the sole proprietor. Betty is a mature Christian and the case does not stipulate whether she has experience running a business. Under the assumption that she does not, I believe that a franchise would best suit her needs and provide her with the necessary resources and support to launch her coffeehouse. In addition, I think that Betty would be best suited to run her business alone as neither partners seemed to be a potential asset to her. I think that Betty should be professional towards both individuals, even though one of them is blood related, and simply state that she is looking for a challenge and she has decided to pursue this business venture on her own. No hard feelings, just a personal challenge that she has set for herself. Joshua 1:9 states, "Have I not commanded you? Be strong and courageous. Do not be frightened, and do not be dismayed, for the Lord your God is with you wherever you go."
Upon researching the availability of "The Gathering Place" in North Carolina as a corporate name, there currently are businesses under that name, specifically café's (North Carolina Department of the Secretary of State, 2013). I also searched on GoDaddy.com for the potential of having a website for the coffeehouse and there was no availability for that name, or slight alternations of it either (Go Daddy, 2013). With this, I would suggest that Betty contemplate another name for her coffeehouse so that she may differentiate herself from the competition but still denote a Christian, welcoming atmosphere.