When starting your own business, there are many things that an entrepreneur should consider. There are strategies, key activities, key partners, values propositions, customer relationships, and revenue streams, among others. Of course, a business owner should decide on the name of the venture. But most importantly, the entrepreneur should decide on the business model for the future business. This essay reviews three existing business models in order to decide which one fits best for Mommy and Me apparel company.
One of the simplest types of business models is a proprietorship as its simplicity can be considered its biggest advantage. There are no legal formalities that are needed to be done in order to start, as compared to other types of business models. The only thing that may be required for dealing or manufacturing types of proprietorships is a tax identification number (TIN) (Keane et. al., 2018). Proprietorship means owning the property or a shop used for business, which means that the business and its owner are one legally. This makes an entrepreneur and his property vulnerable as all the responsibility for the business can be considered personal. In addition, the income of the business will couple with the personal income of the business owner, hence creating an additional tax liability.
Another type of business model to consider is a company. The term itself is very common for different sorts of ventures, however, there is a legal definition, which clarifies the terms. According to The Companies Act of 1956, a company refers to a group of individuals associated with sharing a common purpose (De Luca, 2018). They have clear, specific, and declared goals, which was the reason why they are together. Companies can be classified as private limited, public, or non-profit. The difference between public and private limited business models is in the company’s policies on inviting outside deposits and the transferability of its shares. A company is associated with a lot of paperwork that needs to be done. It includes submitting a memorandum of association, where the goals and objectives of a company are to be listed (De Luca, 2018). Unlike proprietorship, a company provides protection to the personal assets of its owner and shareholders. The company allows inviting stock investment capital as well as saves taxes. Its disadvantage is the difficulties associated with paperwork.
The third business model for this essay is a franchise. This is a simplified model of running a business, which allows an entrepreneur to avoid many problematic phrases such as ideation, brand development and marketing, the supply chain, and legal problems (Subawa et. al., 2020). The franchisee buys the rights to use an established brand and receives support from a franchiser. This makes franchises an easier option for entrepreneurs who are not experienced in the business. The lack of freedom and creativity in running the venture is considered its main disadvantage.
My business idea is to create a Mommy and Me apparel company, which would become a trademark brand. Therefore, the option of a franchise model is not suitable for me. If comparing the proprietorship with the company model, the company suits better as it allows me to invite outside investment capital. Secondly, registering a company is a much more complex process, but in order to meet the ambitions of creating a brand that acts as a trademark, a company model provides a long-term solution. Finally, having legal associates within the company and the declared list of goals and objectives are the reasons, why company is a better suit. Therefore, the company model is the best option to meet the business goal of launching the Mommy and Me apparel venture.
References
De Luca, P. (2018). Company Business Model Analysis. In Analytical Corporate Valuation (pp. 3-41). Springer, Cham.
Keane, S. F., Cormican, K. T., & Sheahan, J. N. (2018). Comparing how entrepreneurs and managers represent the elements of the business model canvas. Journal of Business Venturing Insights, 9, 65-74.
Subawa, N. S., Widhiasthini, N. W., & Permatasari, N. P. I. (2020). Local brand franchise competition in the disruption era. International Journal of Productivity and Quality Management, 31(4), 445-460.