Assignment 1- Mfrd 4j5n2v

Assignment 1 Group 2: • Minh Châu • Đức Hoà • Sơn Bách • Thanh Tùng • Đạt Khuê • Hải Linh (a, b) What amount of owner’s capital will the business need? What will it do? We start our business with a small handmade shop. Firstly, we need a place for us to sell things which is about 5 square meters. This shop should be near some schools or be located in entertaining area. The host usually requires at least 6 month deposit. It’s about 9 mils. There are 6 people to in this business so we do not have to hire anybody else. We will distribute work equally to everyone and each of us will be paid 1.3mil per month. It’s about 7.8 mils. However, in case the business won’t get profit during the first 3 months we should have 23.4 mils to pay salary for employees. We tend to pay about 10 mils for the materials and tools. Moreover, we have to spend money for water and electricity fee. It could be about 2.4 mils per 3 months. In sum, we must spend about 44.8 mils to start the business. That means we must contribute 7.5 mils per person.

(c) What category would it fall into – manufacturer, trader, service business? Our shop actually focus on selling goods so we are seen as trader . However, we can be called manufacturer and service business as

well. Our goods is hand-made accessories so we have to make all the goods by ourselves. For this reason, not only a trader, we are also a manufacturer. Customers like something unique, different from other and satisfy their will. Hand-made shop meets all that requirement. Customers can give their order to us ( their expectation of the goods for example ) and we will try our best to satisfy their demand. That service is the advantage of hand-made shop and make it different to other normal accessories shop. According to that, our hand made shop can be seen also as service business. In conclusion, our business is the combination of 3 categories: manufacturer, traders and service business.

(d) What form of ownership would be suitable – sole trader, partnership, limited company? Our group intends to set up a handmade shop which is only a small business we can manage to finance with our own capital. We ourselves buy tools and raw material needed and make all the things to sell. Profit which is gotten from the business will be divided fairly into each of us. It seems to consider that our business falls into partnership form. However if there were any troubles, all of us would have responsibility. In partnerships, owners share of capital contributions and share of profit but they do not have any legal responsibility with the business. It is different from the business we are involved. Although we are not one person in quantity to run the business, we all can be considers just like one person because we share the same work, same profit and same responsibilities. With these reasons, we think that we fit in the sole trader form.

(e) Things to buy to get our business started: Rent workplace: 1.5mil per month (deposit 6 months: 9mils) Buy tools and materials: 10 mils Staffs and employees: 1.3mil per person (7.8 mils per month) Other fees: 0.8 mil per month.

(f) Would you need other forms of finance and, if so, what would be the appropriate ones? We are going to open a handmade shop with small scale with 6 people who will contribute the capital. It is not necessary to borrow capital from banks or other investors. With the capital of 7.5 mils per person we can manage to pay for shop renting, salary and other fees.