Forms of Business Ownership
The main forms of business ownership are sole proprietorship, corporation, partnership, and Limited Liability Company, also known as LLC.
- A sole proprietorship is a form of business owned by an individual entitled to its profits and responsible for any legal liabilities. A sole proprietorship is also known as a sole trader or just proprietorship.
- A partnership is a form of business ownership with two or more owners. In partnership, all owners share the profits and liabilities. The partners have a binding agreement on sharing business profits, the decision-making processes, channels to follow when dissolving a partnership or bringing new partners into the business.
- A corporation is a legal business entity created with the purpose of making profits by individuals, stockholders, or shareholders. Corporations, unlike sole proprietorship and partnership, operate distinctly or separately from their owners. In corporations, businesses can own assets, remit taxes, loan and borrow money, sue persons or other companies, and be sued.
- Limited Liability Company is a form of business ownership that protects its owners from any legal liabilities the business may incur.
Business ownership structure to recommend to Gabrielle
The perfect business ownership fit for Gabrielle is a partnership form of business. Depending on the agreements with Gabrielle’s partner, she can flexibly prioritize her job’s demands while also managing her small side-business on her own schedule. In addition, partnership business ownership is simple to establish and easy to organize, taking into account any complementary skills from her partners. A partnership business also ensures the start-up costs contribution for Gabrielle is low, unlike a sole propriety form of business. Therefore, considering these factors, a partnership form of business best suits Gabrielle’s small side business.
Why most small businesses fail within two to ten years
- Inaccurate business plans: Small businesses with inaccurate business plans are likely to fail after some time.
- Mismanagement of business resources can be a major setback for a small business. This can lead to a lack of vital resources to continue business operations.
- Inadequate capital: Small businesses with insufficient capital may fail after some time due to a lack of funds to operate.
- Overly investing on fixed assets: Investing too much on fixed assets may lead to a small business spending resources on property that does not convert to cash and consequently failing.
- Little to no market research: Any small business opting to have a long lifespan must study its market and strategize appropriately.
Traits of an Entrepreneur
Entrepreneurship demands business owners to have some traits to succeed. These traits include:
- Ability to be flexible: There a several unplanned changes within the business environment an entrepreneur must adapt to and provide critical solutions to thrive.
- Being decisive: For entrepreneurs to be successful, they need to make sound business decisions and judgments under pressure, which are in the interest of the business.
- Team players: For entrepreneurs to succeed in their ventures, they must be team players.
- Entrepreneurs must be visionaries: They must have a clear picture and direction of their ventures and how each objective and goal works towards achieving their vision.
- Entrepreneurs must be motivated: While every venture experiences setbacks, successful entrepreneurs must always be motivated and focus on the venture’s goals.
Financing options for small businesses
Small businesses opting to grow may need funding to meet expected growth targets. These financing options include:
- Angel investors: These individual investors provide financial support and guidance for start-up businesses.
- Crowdfunding: These are funding platforms where small businesses obtain funding from several investors as opposed to a single investor.
- Grants: Small businesses, especially research and science-focused businesses, can obtain funding support from government grants such as US Small Business Administration.
- Community Development Finance Institutions are nonprofit community finance institutions providing affordable financial support to small businesses on repayment terms.
- Loans: Small businesses withgood credit scores and cash flow may obtain financial support from loan institutions.
Target market: Photography
Market segmentation: Couples photography
Gabrielle needs to focus her photography business next to Fort Worth Wedding Venue – Hotel Drover.
- A brief analysis of the Hotel Drover Wedding Venue
Hotel Drover offers Gabrielle with available couples looking for wedding photography sessions. Most couples who wed always prefer their photos taken by professional photographers. Gabrielle situating her business next to the wedding venue, offers her ready customers nearly every week. Therefore, Gabrielle’s photography business will most likely do well with the availability of customers.
How Gabrielle can create a competitive advantage over her competitors
Gabrielle can gain a competitive advantage by delivering superior value and meeting customers’ expectations through the following strategies:
- Cost leadership strategy: This strategy aims to sell photography services at a lower price than Gabrielle’s competitor. In the long run, Gabrielle will be able to gain a larger market share through underpricing.
- Differentiation: Gabrielle can offer differentiation in the photography services that provide more value compared to her competitors. Through this, she gains a larger market share.
- Best-cost strategy: This strategy aims to provide customers with better quality photography services in the market while simultaneously lowering costs for obtaining such value.
Concepts of relationship market
This concept of marketing focuses on business-customer loyalty and long-term customer relations. The goal of relationship marketing is to create strong, even emotional, customer connections to a brand that can lead to ongoing business, free word-of-mouth promotion, and information from customers that can generate leads (Shanthi, 2019)
Gabrielle can benefit from this form of marketing by creating a long-term relationship with customers, acting as referrals. In the long term, this will create new customers for Gabrielle’s business and consequently improve her competitive advantage in the market.
Promotional mix elements that Gabrielle can adopt to grow her business
- Advertising: involves a paid, non-personal way of creating mass awareness of a product or services of a business to its potential customers. Outstanding advertising can reach a large target customer base for Gabrielle to influence new customers and market advantage.
- Personal Selling: This involves physical communications and presentations to potential customers of products and services a business offers. Gabrielle can use personal selling by presenting her prior photography services to influence new customers who will lead to the growth of her photography studio.
- Public Relations: Is maintaining a favorable brand image and relationship for a business with its stakeholders and other publics. Public relations largely determines whether a customer will want to transact with a business. Good public relations for Gabrielle’s business can promote its growth through influencing customers’ opinions about the business and thereby have a long-term relationship with the business.
Pricing technique: Price-quality relationship
- Price-quality relationship: refers to the perception among customers that the price of a good and service is a direct match for the value of the good or service. Gabrielle’s potential customers are likely to view high-priced professional portraits to be of high quality and low-priced professional portraits to be of low value.
- Pricing Gabrielle’s photography services: Pricing informs consumer perception and buying behavior. It is imperative to ensure the price of the photography services directly complements the quality of the service. For example, Gabrielle will need to sell high-quality photographs at premium prices while average photographs at average prices. (A standard wedding photograph session price to be $1750 per 6 hours shoot)
Gabrielle’s monthly revenue
- Particulars: (Gabrielle has four photo sessions each week)
Total monthly photo sessions in one month 16.
Monthly revenue equals $1750 *16
Monthly revenue is $28,000
Gabrielle’s annual revenue
Annual revenue equals $28,000*10
Annual revenue is $280,000
Additional revenue product and services for Gabrielle
Gabrielle can add additional revenue to her photography business by selling parent and wedding albums customized with her customer’s details, such as the wedding date. In addition, she can also sell wedding thank you notes, wall prints, and canvas.
Shanthi, R. (2019). Customer relationship management. MJP Publisher.