Assignment:
In the project, you are determining the best legal form and organizational structure for your new business. The nature of the organization's business and the environment the business operates in are factors you must consider. Initially, Sunburst will operate locally, but within five years operations will go national (or international). Read about how you might plan these stages in Creating and Managing a New Business.
In the first part of this project, you will create a narrated PowerPoint presentation for potential investors and partners in your new company. In this presentation, you will analyze the pros and cons of various forms of business and recommend the best legal form of business to achieve your organization's goals.
In the second part of this project you will design an effective organizational structure for the business at its inception and in its next phase of growth. To achieve this, you'll need to create one short paper with three sections: (1) a brief mission statement reflecting the primary goals of the business, (2) a detailed organization chart, and (3) a rationale statement that explains and supports, thoroughly but succinctly, the mission statement and structural decisions reflected in the organization chart.
Creating and Managing a New Business
There are many things to consider when creating and managing a new business. Planning a business involves many considerations, including:
• choosing a business entity type
• registering with required government agencies
• acquiring licenses and permits
• opening bank and credit accounts
• adopting management agreements
• adopting a business plan and organizational structure
• adopting a marketing plan
• developing a mission statement
• developing a code of conduct or ethics code
• joining relevant professional organizations
• choosing a stakeholder set of employees, customers, suppliers, advisors, and investors
Step 1: Determine the Legal Structure of Your Business: Gather and Analyze Information
You go to your office to begin the task at hand-the preparation of a narrated PowerPoint presentation to potential investors that will address all of the issues involved in making this decision. For critical background information, see Creating Sunburst: Legal and Organizational Considerations. You will need this information to make the best legal and organizational decisions for your business.
Since one of the investors will not be able to attend a presentation in person, you need to prepare and record a narrated PowerPoint, so she can listen at her convenience. In order to complete this task, you realize that you must do some research to address the legal and strategic implications if your business is to get off the ground.
• What types of business organizations are available to entrepreneurs?
• What are the advantages and disadvantages of each alternative?
• What are the two best choices and why?
• How would you explain your choices to your investors?
Creating Sunburst: Legal and Organizational Considerations
• Ravi, who has a degree from State University in mechanical engineering, was previously employed by a start-up firm in New York City. He worked long hours for little pay, but when the business sold, his stock options paid off. As a result, he now has some time and $100,000 to invest in Sunburst. More importantly, Ravi has the knowledge and know-how to setup and manage production. Tanya, a friend you met through your alumni association, has a degree in marketing and has a few years of experience working in marketing roles. The three of you agree to form the start-up team for Sunburst.
• The team estimates that it will take approximately two years to develop Sunburst into a marketable product, but that once the product is on the market, there is excellent growth potential. You know that you will need additional investors and expertise to get the business off the ground. You need to develop a plan for a business form that will be attractive to potential investors and partners, and will address their concerns.
• Finance and politics are not your strong suits, and you aren't very interested in the day-to-day business operations of Sunburst-you'd rather spend most of your time inventing new products. The start-up team believes that the business will need someone with finance skills.
You also need a visionary CEO. Ideally, this person should have connections and experience in the solar industry. You have asked Elon Helios, a forward-thinking figure in the solar energy field, who is known for being a rainmaker. Helios has expressed some interest, but it will take significant incentives to get him on board.
• Although Tanya has little money to invest, she has excellent networking skills, and she has found a potential investor, Carmen Santiago, who thinks that the product may have potential. Santiago does not want to be involved in running the business.
• Ravi has identified a good candidate with finance experience. This individual does not want to invest in the company, but he would expect a good salary and benefits.
• The team has created a tentative business plan, which has two target stages: The first stage involves local (geographical region) manufacturing with a focus on local solar energy providers; the second stage will begin five years from start-up, at which point the business will expand nationally (or possibly internationally) targeting the market of all potential solar energy customers.
• The potential investors and participants want to know what legal form the business will take before they agree to participate. Your task is to prepare a presentation for the potential investors.
Step 3: Determine Your Organization's Structure: Gather and Analyze Information
Now that you have decided on a legal organization form for your business, which currently has a single location, you need to decide on an organization structure. Organization structure determines such things as what departments the organization will need, who will report to whom, how many levels you will have in your organization's hierarchy, and how many individuals will report to each manager (span of control). An effective structure should promote communication and coordination of efforts across the entire organization. See: Organization Structure and Design.
You begin your research by formulating a number of questions, the answers to which will be reflected in a short paper that includes your mission statement, organization chart, and your rationale for these recommendations.
1. Sunburst's primary goals are innovation and customer responsiveness. How should your mission statement articulate these goals? How can this statement be drafted so that it is clear, concise, and meaningful to organization stakeholders?
2. What key tasks must be accomplished in order to meet the organization's goals? What individuals or groups will have responsibility for delivering these processes or items?
3. Will individuals have titles and, if so, which individuals? What will those titles be?
4. To whom will individuals report? Why?
5. What are the possible impacts of outsourcing the HR function? What are the pros and cons of doing so? Make a recommendation in your paper. If you decide to keep HR in house, make sure its place in your business structure is reflected in your organization chart.
6. Consider all other relevant factors (for example, will your business structure be functional, centralized, or decentralized, etc.).
When you have formulated your preliminary thoughts and questions, begin your research. The resources below are a good start, but you should also conduct your own research to enhance your knowledge and the final product.
When your research is complete, continue to the next step, in which you will write your short paper, which will include a mission statement, organization chart, and summary of the rationale behind your decisions.
Step 4: Integrate Your Thoughts and Material
You've formulated your key questions; you've done your research; you've analyzed and refined your information and thoughts. Now it's time to put it all together and start drafting your deliverable.
• Assemble a short paper that contains the following:
o your mission statement of no more than one paragraph
o your organization chart
o your rationale, no more than five pages (12 point type, double-spaced), for your chosen mission statement and organization structure as displayed in your chart
• Be sure to attribute any sources you use in the creation of any of the documents you submit.
• Include a reference page in APA format citing any sources you used in your short paper.
When your mission statement, organization chart, and rationale statement are complete