If you are planning to establish your own business, you likely have no solid knowledge of the basics yet. That is understandable, as learning about business in general and its many detailed concepts can take years to master.
Luckily, starting out with the basics isn’t that hard, and one of the things you may need to learn will be about business structures. For any aspiring entrepreneur, knowing the business structures and their differences would be very advantageous in the long run since they all carry different benefits that may assist you with your venture.
If you would like to know more about them, we discuss the most common types of business structures below:
A sole proprietorship is one of the most common types of business structures applicable for aspiring owners. Here, you own and run the business all by yourself. No one else is there to feed you with instructions and suggestions that may affect the overall process of your venture.
You are the sole decision-maker, your own boss. Everything about your brand and product, may it be the logo, the core message, and or the brand’s tagline, will come from you. This is perfect for start-up entrepreneurs since they will have more room for improvement, and they can also apply all the things they’ve learned before.
Keep in mind that its possible failure will also be in your hands since you are running the business alone. In other words, you alone will be liable for whatever happens to it in the future.
They say that two heads are always better than one, which is true—especially in running a business. Two people run a venture that follows the partnership structure, and each of them will contribute to it, be it in making significant decisions, providing assets and investments, or sharing their skills and well-needed knowledge. If you are uncomfortable working alone, then this structure would be perfect for you.
Note that partnerships are a bit tricky to handle since two people are making all the decisions. This means that both of them are also liable for whatever happens to the business in the future. Even if you were to make all the right decisions for your company, the industry might still miss all the opportunities to grow if your partner makes the wrong ones.
If you think your business would benefit from the help of more people, then you may opt for a corporation structure instead. Basically, a corporation is made up of a group of people called shareholders, and they will act as a single entity when it comes to making business decisions. You may have seen examples of this in the movies, where a group of people in suits would meet within a conference room to decide on their new sales strategies and expansions.
While it may seem like a good structure to establish your start-up on, take note that this may require more capital as it involves many decision-makers in the process.
These common examples are implemented across various industries around the world. Before you decide to implement any one of them in your start-up business, take note of the pros and cons discussed, understand their characteristics, and analyze the benefits that they may provide for your venture in the long run. From there, choose one that will help your business to succeed in the future.
To learn more about these business structures, New Business Centre offers you the best entrepreneurship programs online. We are here to help aspiring entrepreneurs and new businesses navigate the complex world of starting a new venture, including operations, sales, and marketing. Invest in a program today!
With over 8 years of content marketing experience, Richard has that rare combination of content writing strategic skills working on more than 100 websites and businesses.
His extensive knowledge and experience in all things content have been captured in our new business kit to reveal the basics you need to know when starting your business.