Textbook: Small Business Management in the 21st Century

Ch.12People and Organization

Legally Speaking

Here is the scenario: You and your team serve as consultants to business owners who need help in deciding which legal form of ownership is best for them. You are currently working with one client. You will evaluate possible legal forms of organization, consider the pluses and minuses of the alternatives, and then decide on a recommendation.

Client 1: Rainforest Adventures

Rainforest Adventures offers one-day and multiday tours of several locations in Australia. It works both with tourists and with study groups, and its clientele varies from people who want a relaxing experience away from hectic urban life to those who are keenly interested in the exotic environment. The business is dedicated to the preservation of Australia's tropical and wetland preserves. Its guides have many years of experience leading tourists through the rainforests, particularly at night when they come alive.

Rainforest Adventures was started three years ago by Courtney Kennedy, who has fifteen years of experience in the ecotourism industry. She runs the business as a sole proprietorship but is considering a partnership. (She does not want the cost or hassle of doing business as a corporation.) In questioning her, you found out the following: Kennedy is dedicated to preserving the Australian wetlands and sees her business as a way of encouraging people to support conservation efforts. However, her guides have displayed an "it's just-a-job" attitude, have become increasingly undependable, and are unwilling to share her commitment. Still, Kennedy has several trusted friends who not only have years of experience as guides but who also share her enthusiasm for environmental preservation. She is optimistic that they would be willing to join her in the business. She dreams of expanding her business to offer classes on the ecology of the rainforest but does not have enough cash, and she is afraid that a loan application will be turned down by the bank.

Options

Because Kennedy does not want to incorporate, she is left with two options: to continue doing business as a sole proprietorship or to find one or more individuals to join her in a partnership. Afterevaluating these two alternatives, you should recommend the one that you consider most appropriate. You shoulddiscuss the pros and cons of both options and explain how each applies to Kennedy's situation. If you recommend forming a partnership, you need to distinguish between a general partnership and a limited partnership, as well as explain what a partnership agreement is, what it covers, and why it is important.

@ Discuss the pros and cons of private ownership and how this relates to her current situation.

@ Pros and cons of general partnerships and joint ventures are discussed about Courtney's business. Also, explain the importance of the partnership agreement.

@ Decide what method she should organize and tell her your decision. We use information from customer interviews and what we already know about the type of business to support our decisions.

I need your original answer, not someone's answer.

Your answers should reflect the information you have learned in chapter 12.

I need a detailed answer to each of the questions.

Thank you.