Factors in selecting a business ownership

Introduction• One of the first things an entrepreneur must decide on before

embarking on his venture is the proper from of business ownership.

• Selecting the right from of business ownership is important because:– The form of business ownership will determine how the business is

organized– How the money that flows in and out – How the business is taxed

Factors in

selecting a

business ownersh

ip

Capital

Personal Asset

Span of

control

Sharing of information

• Capital– The main element that determines the type of business one should

venture in is capital.– If the individual possesses a small amount of capital, he should

venture in a sole proprietors instead a company.– This is because the cost of forming a company is relatively high.

• Personal asset– Have to be taken into account when selecting the kind of business one

wants to venture in.– Liable to the creditor if losses are incurred either in a sole proprietor

or partnership.

• Span of control– Span of control refers to the number of subordinates a supervisor has.– If an individual wants to have a bigger span of control and authority,

sole proprietorship is the best form of ownership.

• Sharing of information– If an individual decides not to share information with his counterparts,

it is advisable for him to form a sole proprietorship.– This is because in partnership and companies, there is no confidential

information the partners, members of the company or creditors.