CaseStudy: Starting and Naming a Business
CaseStudy: Starting and Naming a Business
Fromthe case, Shania is a Christian who is interested in starting up aChristian coffeehouse in Denver. Her main concerns include thebusiness form that she should adopt, whether to make the coffeehousea franchise or keep it as an independent business, selecting theappropriate name, and the persons to include in the business.
Thesuitable form of business for Shania Jackson
Shaniashould register the Christian Coffeehouse business as a limitedliability company. A limited liability company is a type of businessstructure that gives members a limited liability and passes throughthe taxation of a sole proprietorship and a partnership (Lisa, 2014).Shania should select the limited liability option because it hasthree major benefits over other types of business structure. First,owners of a limited liability company have freedom to manage theirbusiness without the legal obligation to establish a board ofdirectors. This will give Shania an opportunity to act the soledirector without the need to involve a large team of leaders in aboard, which is expensive for a new business. Secondly, a limitedliability companies a benefit of allocation flexibility, which meansthat people are allowed to contribute capital without necessaryowning an equivalent proportion of the company (Business FilingsIncorporated, 2015). This will give other people (such as Shania’shusband) who are willing to contribute capital, but are not willingto take active roles an opportunity to so without significant legalcomplications. Third, profits made by the limited liability companycan be passed through, which means that they can be treated asShania’s personal income and avoid federal taxation like in thecase of corporations. Therefore, a limited liability form ofstructure will help Shania access capital easily, manage the companywith a lean leadership structure, and save on taxes.
Franchisingversus starting up independently
Shaniashould go for a franchise for her new coffeehouse business as opposedto starting it as an independent operation. This decision can bejustified by three factors that favor franchising to an independentbusiness. First, operating a franchise gives the business owner theadvantage of brand recognition (Kroeker, 2015). The franchisor hasalready marketed the brand, which means that the franchisee (the newcoffee house) will assume a brand that consumers are already familiarwith. Secondly, the franchisor’s company gives the training andfollow up advice to the owner of the franchisee’s company. Thiswill help Shania, who have a limited experience and skills in thecoffeehouse business acquire the skills and knowledge that they needto compete with other established businesses in spite of the factthat her business is new. Third, starting up a franchise business iscost effective compared to an independently operated one. This isbecause the franchisor, at times provides resources that thefranchisee requires to get started and operating effectively, sincethe fall of a franchise will have a negative impact on their brand(Kroeker, 2015). For example, franchisors have promised to giveShania all the staff that she might need to higher, which means thatshe will avoid the cost of hiring and training new inexperiencedemployees.
Businessname: The Gathering Place
Thename “The Gathering Place” is already registered by anotherbusiness in Colorado. Currently, the name is held by an organizationbased in Denver and functions as a daytime drop-in facility forchildren, women, and transgender persons who are experiencinghomelessness and poverty (The Gathering Place, 2015). However, thename is not used as a trademark.
Thefact that the name that Shania has selected is already used byanother organization in Colorado implies that she has to look foranother one. Shania should consider several factors when deciding onthe name of the business. For example, she should ensure that thename communicates about what she offers and the objective of thebusiness. From the case, Shania intends to start up a coffee housewith Christian experience in the region. Therefore, the name shouldhave some indicators that the coffeehouse provides a Christianexperience. Her current name “The Gathering Place” communicatesthe Christian values of gathering together. For example, the Bibleadmonishes Christians not to give up in gathering together (Hebrew10: 25, New International Version). Therefore, Shania’s name isappropriate, but it is unfortunate that she cannot use it because ithas been registered by another organization.
Individualsthat Shania should include in the business and their roles
Shania’shusband is willing to contribute capital, but he is not willing totake part in the management or operation. With a limited liabilitystructure, Shania should include her husband as a shareholder, but hedoes not have to play any managerial or operational role. Shania’sshould also include her sister, Kelsey, in the business. Although theKelsey’s husband is a non-Christian, Kelsey is a new Christian whois expected to have values that are required in the Christian coffeehouse. Kelsey should be given the role of operating the coffeehouseas an alternative since she has been looking for an excuse to get outof the house. This will keep her busy outside the house. However,Shania should not include Carlos, her neighbor in the businessbecause she is a non-Christian. The Bible advises Christians not tobe yoked with non-believers since righteousness and darkness havenothing in common (2 Cor. 6: 14, New International Version).
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BusinessFilings Incorporated (2015). Benefitsof creating an LLC.Madison, WI: Business Filings Incorporated.
Kroeker,C. (2015). Independent business or franchise? How to decide. MenuIncorporation.Retrieved June 26, 2015, fromhttp://www.inc.com/curtis-kroeker/independent-business-or-franchise-how-to-decide.html
Lisa,B. (2014). Advantages and disadvantages of a limited liabilitycompany. LawKick,Inc.Retrieved June 26, 2015, fromhttp://blog.lawkick.com/advantages-disadvantages-limited-liability-company/
TheGathering Place (2015). The Gathering Place: A refuge for RebuildingLives. TheGathering Place.Retrieved June 26, 2015, from http://www.tgpdenver.org/contact