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 join 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.