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What happens next?

Key Objectives:

• To consolidate understanding of key concepts within BUSS1 'Starting a Business' within the context of a real business
• To develop skills of analysis and evaluation by developing arguments and making judgements
• To develop presentation and team-working skills

Brief

Read the short case study below and complete the activities that follow:

Tracey Ellis set up the Domestic Bliss Agency in January 2006. Despite a long career working in the aviation industry across Europe, she felt unfulfilled. A growing desire to use her love of colour and creative skills and the need to do something more challenging were the key motives in her decision to become self-employed. The thought of returning back to work after three weeks holiday sparked Tracey into action and, within an evening, she had not only come up with an idea, but also a name for the new business.

Tracey's business idea was to offer a wide range of cleaning services to business and personal customers in Cheshire and the north west of England. These services would include cleaning, laundry, sewing, pet-minding and house-checking for clients on holiday. The Agency would differentiate itself from other cleaning firms by providing consistently high standards of service and by closely tailoring the service offered to customers' individual needs. Initially, in order to keep start-up costs to a minimum, the Agency would be based at Tracey's own house and she intended to use her car to transport her between clients. As the business expanded, Tracey planned to employ additional staff, known as Bliss Maids, to assist her.

Although she had never run her own business before, Tracey's employment training had allowed her to develop many of the skills and qualities required, including problem solving, self-motivation, planning and organisation. Extensive internet research helped to improve her understanding of a number of practical issues, including tax. She also quickly became aware of the need to access a range of sources of finance, especially as the business expanded.

One of Tracey's first challenges was to decide on the most appropriate legal structure she should adopt for her business. The most common choices for a new, small business such as the Domestic Bliss Agency are as follows:

• Sole traders
• Partnership
• Private Limited Company

Activities

• In small groups carry out research and make written notes on the three main forms of business ownership. This should include an accurate and concise definition of each form, plus an outline of the key advantages and disadvantages of each method. Remember to record your sources.
• Within your group, discuss which form of business ownership is most suitable for the Domestic Bliss Agency. Make sure that you consider each option and that you can fully justify your concluding decision.
• Present your conclusions to the rest of the group, supported by a brief PowerPoint presentation (if possible).
• Compare your decision with what Tracey actually did (see below).

What did happen next!

Tracey decided to set up the Domestic Bliss Agency as a private limited company. This was simply because it was the only form of business she had heard of and did not consider any of the alternatives!

The business has grown rapidly since being established in 2006. It has moved to its own premises in Lymm. Cheshire and employs a total of fourteen staff, including a full-time handyman. By March 2008, sales turnover had risen to over £250,000.

Resources

• Sara Williams, 'The Financial Times Guide to Business Start Up 2008', FT Prentice Hall
• www.businesslink.gov.uk - the 'taxes, returns and payroll' section for some useful information on legal structures.

Resources created by Naomi Birchall, September 2008.