Factors in selecting a business ownership

1. Factors in selecting a business
ownership

2. 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

3. Factors in
selecting a
business
ownership
Capital
Personal
Asset
Span
of
control
Sharing of
information

4. • 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.

5. • 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.