Question

John, Paul, George, and Ringo began discussing the possibility of going into business together. John is a creative baker and has long dreamed of opening his own bakery. He even has a name picked out – BakeEm Fresh Daily. Unfortunately, he is a single parent raising two small children and does not feel he can afford to invest any of his approximately $4,500 in savings into such a business. His friends, however, think that they may be able to help.

Paul won $200,000 in the lottery. He does not want anything to do with the day-to-day running of a business. He would be willing to invest up to $100,000 in the business.

George inherited a small two-story building, worth $76,000, in the downtown area that could easily house a bakery. He would be too busy to help run the business, but he would be willing to let the others use his building to house the bakery.

Finally, Ringo feels that he is a born salesperson and manager. He doesn’t have much money to contribute, but he wants to work as the bakery salesperson and manager.

Based on all the different types of business organizations we have covered; you need to discuss each parties’ concerns and interests to determine which type of business organization each of these people (as individuals) would prefer.

Answer 1

Answer :-

Based on the below table , we can identify the parties interests and preferable business organization.

Name of Party	Financial Cappacity	Mode of business involvment	Preferable Type of Business	Justification
John	Not Stable	Active	Sole Proprietorship	He is ready to start own business, only contraint is investment
Paul	Highly Stable	Investor only	Partnership	He will invest but not active in operations-Like a sleeping partner
George	Stable	Active & Investor	Corporation	He is ready to invest and active in operations and others also having proportionate rights
Ringo	Not Stable	Active in Sales& Marketing	Merchandise	No investment and only interested in Sales & Marketing